US EARLY MORNING: Index futures are flat; US retail sales and Fedspeak ahead

SNAPSHOT: US equity futures are around the unchanged mark, continuing the lacklustre action seen this week. The E-Mini S&P 500 future is still trading above the 4,000 mark, with traders noting that the index is not deviating too far from its 200dma around 4,016 (note: that 200dma is for the front month future, not the rolling contract, which is currently around 3,980). Treasury yields are lower by 1-5bps, with much of the outperformance in the 10yr part of the curve; the Treasury will auction 20s later today. The Dollar Index is lower but above the 102.00 mark, although the Buck is strengthening solidly vs the Japanese yen, with USDJPY rising above 131.50 at one point overnight as the BoJ kept policy settings unchanged (our recap can be accessed here). There is a chunk of Fedspeak due today by way of 2023 voters Harker and Logan, and non-voters Bostic and the influential Bullard. Fed officials will go into the pre-meeting blackout window at the end of this week ahead of the February 1st confab, but implied money market pricing is ultimately little changed after last week’s data, assigning a greater probability of a 25bps rate hike rather than a larger 50bps move. Traders’ focus continues to be on the slowing growth dynamics, given the peak inflation narrative has been largely discounted, and rates are seen peaking at between 4.75-5.00%, which is more dovish than the Fed would like. Today’s retail December sales data will give a glimpse of how Americans spent over the holiday season, but many analysts have said they are more interested in how trends play out from January, where many expect consumers to retrench in the face of economic uncertainties and possible recession later this year. Elsewhere, traders continue to focus on incoming US corporate earnings updates; Fundstrat notes that, of the 6% of S&P 500 companies that have reported thus far, overall earnings results were beating analyst estimates by a median 6%, with 74% of those reporting topping estimates. For the top-line, Fundstrat noted that overall results were beating analyst estimates by a median 2%, while 68% of those who have reported are topping estimates. Our full day ahead calendar can be accessed here.










18 Jan 2023 - 09:20- Research Sheet- Source: Newsquawk

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