Market Commentary - June 29th, 2022

Morning Commentary (June 29th, 2022): A lackluster close yesterday after worse than expected consumer confidence data (Consumer Confidence Index: Actual 98.7 | Median 100 | Previous 103.2) caused major indices to erase morning gains. Persistent inflationary fears drove more pessimistic short-term expectations about the labor market, earnings potential, and business conditions at large.

Without an obvious positive catalyst in sight, it feels as though we’ll continue to tread water, albeit range bound to the local lows. At a press conference yesterday, Richmond Fed President Tom Barkin, commented that more aggressive rate hikes were reasonable–in line with Powell’s latest remarks.

Equities / Overnight

This morning, an anemic start with domestic futures oscillating either side of flat. Overseas, the vast majority of equity markets are lower on the day (FTSE +0.01%, DAX -1.30%, HSI -1.88%, SSE -1.40%). Poor sentiment from the overnight US session leaked into Europe, despite better than expected inflation data from Germany.

Bonds

In the USTs, a small bull flattening to start, led by a modest rally in the long end (UST 2Y flat, 5Y -3.3bp, 10Y -3.5bp, 30Y -2.3bp). Unsurprising post Fed commentary, front-end rates will continue to lag in the hiking environment.

Commodities

A busier couple of days for the crude community, we have EIA data this afternoon and OPEC meetings over the next two days.  Ahead of the newsflow, front-end energy futures are experiencing a little morning pop (WTI +1.38%, Brent +1.43%).

Economic Calendar

An active day for the Federal Reserve, with Powell, Bullard, and Cleveland Fed President Mester all engaged in speaking events.

The main focus for this week will be on Thursday’s inflation and consumer data, with PCE, jobless claims, PMI, and consumer spending set to report in the morning.