The Tuesday Market Minute
- Global stocks mixed, with weakness in Asia offset by record highs in Europe, as investors track the impact of supply chain disruptions on the post-pandemic recovery.
- Stock futures temporarily hit by major internet outage linked to CDN provider Fastly
- Germany’s industrial output slumps 1% in May as input shortages crimp activity even as order books remain swelled and demand remains firm.
- President Joe Biden will launch a “Supply Chain Disruptions Task Force” to explore targeted efforts to counter unfair trade policies that lead to critical shortages.
- Benchmark 10-year note yields ease to 1.564% in overnight trading while the dollar index gains 0.2% to trade at 90.129.
- CDC data shows 140 million Americans have now been fully vaccinated against the coronavirus, with around 302.8 million doses administered as of Monday.
- U.S. equity futures suggest a mixed open ahead of export trade data at 8:30 am Eastern time and April JOLTS job openings data at 10:00 am Eastern time.
Wall Street futures traded mixed again Tuesday, while Treasury yields retreated and oil prices slipped lower, as investors continued to gauge the impact of supply chain disruptions on the global economic recovery.
With President Joe Biden proposing ‘targeted’ efforts to minimize shortages in key commodities and inputs — including semiconductors — and Germany posting a surprise slump in industrial output even as order books remain swelled with post-pandemic demand, economists and investors are starting to calculate the lagged impact of pandemic-related delays in goods from around the word.
That impact, which has prompted profit warnings from both the tech and industrial sectors, was also played out in last week’s softer-than-expected May jobs report, which was bolstered by a surge in hiring in the services sector that masked shortages in other corners of the economy.
As a result, traders have been paring bets on a near-term move by the Federal Reserve to begin normalizing interest rates — likely first through the tapering of bond purchases — as they wait for further clues as to the health of the recovery.
Benchmark 10-year Treasury note yields retreated to 1.555% in overnight trading following the German data release and the Fastly outage, although the dollar index held firm at 90.103 thanks in part to a weaker euro and a softer pound.
Oil was also drifting south amid concerns that input shortages, as well as Asia’s stubbornly-high coronavirus infection rates, would tame demand over the second half of the year.
WTI crude for July was marked 23 cents lower at $69.00 per barrel while Brent contracts for August slipped 22 cents to trade at $71.27 per barrel.
Lower Treasury yields are giving Nasdaq Composite futures a boost, the the tech-focused benchmark set for a 30 point bump at the start of trading.
Contracts tied to the Dow Jones Industrial Average, meanwhile, are suggesting a modest 55 point pullback while those linked to the S&P 500 are priced for a 0.5 point gain.
Macro concerns have yet to blunt the relentless rise in so-called meme stocks, however, and Reddit/retail favorites AMC Entertainment (AMC) – Get Report and GameStop (GME) – Get Report continue to move higher in pre-market trading Tuesday despite reports that market regulators are set to change disclosure rules that could lead to publishing short interest, including positions in derivatives, on a daily or weekly basis.
Bitcoin prices were under pressure, however, and trading south of $33,000 amid some of the largest customer outflows on record and news yesterday that U.S. authorities sized more than $2 million in ransom payments made in the cryptocurrency by the cyber hacked Colonial Pipeline.
In overnight trading, Asia stocks were modestly lower, with the Nikkei 225 closing 0.19% in the red at 28,953.56 points and the MSCI ex-Japan benchmark lipped 0.21%, while a boost in travel and leisure stocks and a softer euro helped the Stoxx 600 index rise 0.35% to a fresh record his of 455.43 points.