US EARLY MORNING: Index futures slip on hawkish Powell; big week ahead for macro data, including US jobs and ISM, Eurozone inflation, China PMIs

SNAPSHOT: US equity futures have begun the week on the defensive after Fed Chair Powell continued to talk a hawkish game at Jackson Hole last week (and ECB officials did too), and ahead of a huge week for macro data, where key data points includes the jobs report on Friday (which will provide a great deal of influence on the September 21st FOMC) and the manufacturing ISM survey on Thursday (additionally, Eurozone flash inflation data and China NBS surveys are both due Wednesday). YM -0.5%, ES -0.6%, RTY -0.7%, NQ -0.9%. Treasury yields are wider by 5-8bps, with the bulk of underperformance in the belly; this is leaving major curve spreads mixed, with the longer-dated spreads narrowing, while the shorter-dated spreads are widening only modestly. The Dollar Index can not muster any meaningful bid amid higher yields, however, trading up around one-tenth of a percent, but remains above the 109.00 figure. Crude futures have added around a buck this morning after weekend news that Iran is reviewing US responses, which would mean any Iranian response could come on Friday at the earliest.

SPX TECHS VIA BOFA: Bank of America’s technicians have again been flagging risks that the S&P 500 could drop to the low 3,900, arguing that the ‘Jackson Hole’ failure at 4,195-4,219 (a downside gap from August) suggested an August head-and-shoulders technical pattern top, implying downside risk to the low 3,900s. BofA is also keeping an eye on the 100-dma and 50-dma at 4,073 and 3,996 respectively, and has flagged up the potential of tactical retracements at 4,062 (38.2% fib of the June-August rally), 3,981 (50%) and then 3,900 (61.8%). By style, BofA says that Growth may struggle from a technical perspective; "Communication Services remains vulnerable on new relative lows as a bear flag pattern points lower, Discretionary stalls below declining 40-week MAs on both an absolute and relative price basis. Technology remains vulnerable with a failure near its declining 40-week MA and a potential right shoulder of a head and shoulders top relative to the SPX." The view is more mixed in defensive sectors, BofA says, where Consumer Staples have a double top vs SPX, but hold weekly MA support vs the SPX as an absolute price breakout remains intact; Health Care is struggling as it corrects vs the SPX and stalls at absolute price resistance; Real Estate appears bearish as the sector fails near its absolute price 40-week MA and breaks support relative to the SPX; Utilities look bullish with a dip in an uptrend as the sector holds tactical support vs the SPX. Cyclicals, meanwhile, are firming up, with Energy reasserting a bullish absolute and relative price trends; Financials hold a 14-year big breakout point and rising 200-week MA as the sector forms a potential bear trap relative to the SPX; Materials have mixed technicals as the relative chart holds big support and the absolute chart struggles with resistance.

DAY AHEAD: The docket for the Day Ahead is barren, with attention largely on the more A-list events of the week, including China NBS PMI surveys on Wednesday, Eurozone flash inflation on Wednesday, US ISM manufacturing survey on Thursday, and the key US jobs report on Friday. Our full Day Ahead is here; our full week ahead preview is here. NOTE: UK players are away for Bank Holiday on Monday, will return Tuesday. 

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29 Aug 2022 - 09:15- Data- Source: Newsquawk

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