If the S&P 500 and Nasdaq Composite are going to maintain their weekly winning streaks (S&P 500 up five straight and Nasdaq up eight straight), they are going to have their work cut out for them today. Entering today, the S&P 500 is down 0.6% for the week and the Nasdaq Composite is down 0.4%.<\/p>\n\n\n\n
Their work, though, promises to be a little more taxing today seeing that the futures for the major indices are all indicating a lower start.<\/p>\n\n\n\n
Currently, the S&P 500 futures are down 34 points and are trading 0.8% below fair value, the Nasdaq 100 futures are down 173 points and are trading 1.1% below fair value, and the Dow Jones Industrial Average futures are down 200 points and are trading 0.6% below fair value.<\/p>\n\n\n\n
That negative disposition is wrapped up in some skittishness about global growth prospects after a batch of preliminary June manufacturing PMI readings for Japan, Germany, France, the UK, and the eurozone all printed contractionary readings (i.e., less than 50.0).<\/p>\n\n\n\n
This understanding has fostered some favoritism for the dollar (U.S. Dollar Index +0.5% to 102.85), some weakness in WTI crude futures $68.46, -1.05, -1.5%) and copper futures ($3.82, -0.07, -1.7%), and some strength in Treasuries.<\/p>\n\n\n\n
The 2-yr note yield is down eight basis points to 4.72% and the 10-yr note yield is down eight basis points to 3.72%. Those are decent moves, although they are taking place within the confines of a nine-month trading range, which is to say they are not “trend shifting” moves even though they are an offshoot of growth concerns.<\/p>\n\n\n\n
The preliminary June IHS Markit Manufacturing PMI and Services PMI readings for the U.S. will be out at 9:45 a.m. ET. They aren’t typically market moving, yet they will help round out today’s interpretation of the global economic outlook.<\/p>\n\n\n\n
On a related note, Treasury Secretary Yellen told Bloomberg News<\/em> that she sees a lower risk of a U.S. recession on account of inflation coming down and the labor market’s resilience.<\/p>\n\n\n\n Her assessment of matters seems to align with the stock market’s breakout effort in recent weeks, although the Treasury market is seemingly less convinced. Since May 24, the Invesco S&P 500 Equal-Weight ETF (RSP) is up 4.3%, the Russell 2000 is up 4.6%, and the market-cap weighted S&P 500 is up 6.5%, yet the 2s10s spread over the same period has widened to 100 basis points from 63 basis points.<\/p>\n\n\n\n Seeing is believing for the stock market, though, and it just hasn’t seen enough in the data yet to convince it that the economy is destined for a hard landing. That point notwithstanding, the flight to safety into the mega-cap stocks this year reflects at least some type of slowdown concern.<\/p>\n\n\n\n