See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“I Didn’t Set Out to Beat the World; I Just Set Out to Do My Absolute Best.” – Al Oerter

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

The opening ceremonies of the 2024 Summer Olympics will kick off in less than four hours, and markets are already in a celebratory mode. Futures are sharply higher across the board with the Russell 2000 leading the way with indicated gains of over 1.5%, the Nasdaq looks to open higher by just over 1%, and even the S&P 500 stands to open with a gain of 0.75%.

There’s no specific catalyst to point to for the gains, but strangely enough, futures did get a bounce when news came out that former President Barack Obama and his wife Michelle are supporting Kamala Harris’ run for President (people didn’t think they would throw their support behind Trump did they?).  The positive tone heading into the last day of the trading week is welcome, but we still have some important economic data to get through, and barring a monster rally beyond current levels, it’s looking like US equities will close out the week lower for the second week in a row.

Outside of equities, crude oil is modestly lower as WTI trades below $78 per barrel and natural gas is only 1% from a ‘one-handle’.  Gold and bitcoin are higher, though, and treasuries are looking at modest gains with the 10-year yield down 2 bps and the 2-year yield down one basis point.

This morning’s economic data was mostly in line with forecasts. Personal Income was weaker than expected at 0.2% versus 0.4% expected, but Personal Spending was right in line with estimates.  PCE data was right in line with expectations on both a headline and core basis. Not surprisingly, there has been little reaction in equity futures.

The table below is from last Friday’s Bespoke Report and shows the historical performance of the S&P 500 during every summer Olympics in the post-WWII period. Below that we included a bar chart showing performance during each two weeks of competition.  Overall, the S&P 500 has averaged a gain of 1.13% with positive returns just over half the time. That average, however, is skewed by the 9.4% gain in the Summer of 1984 when the US dominated. On a median basis, the S&P 500 has gained a more modest 0.47%. We’d also note that performance since those 1984 games has also been strong with gains eight out of ten times.

See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“Democracy is beautiful in theory; in practice it is a fallacy.” – Benito Mussolini

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

The mid-July seasonal headwinds have come in right on schedule this year. Earlier this month, we noted that the three-month period from mid-July through mid-October has historically been the weakest three-month period of the year, and since its closing high on 7/16, the S&P 500 is down over 4% in a little over a week!  We usually stress the inadvisability of investing based solely on seasonal trends, but as the last week has illustrated, these trends are important to be aware of.

This morning, futures are lower again as international markets have been under pressure overnight and this morning. Japan was down over 3%, and major European benchmarks are down over 1%.  Crude oil and gold are also firmly lower with declines of well over 1% while copper is on pace for its ninth down day in a row. The only asset trading higher is treasuries where yields are firmly lower.

It’s a big day for economic data this morning as we just got the first read of Q2 GDP, Personal Consumption, and PCE. In addition to those reports, weekly jobless claims, and Durable Goods were also released. GDP and jobless claims came in better than expected, and while headline Durable Goods Orders were much weaker than expected, taking out Transportation, the report was better than consensus forecasts. Additionally, the GDP Deflator rose less than expected, so overall, this was a good batch of data. The only other report on the calendar for today is the KC Fed Manufacturing report at 11 AM Eastern.

As equities have come under pressure in the last several days, yields have declined with the two-year yield trading down to its lowest level since February 1st and the 10-year yield in a well-defined short-term downtrend since its yield peaked at 4.70% in late April. This morning, the yield is down to 4.22%, or nearly 50 bps below that peak.

As shown in the chart above, 2-year yields have been falling at a faster pace than the 10-year yield as the market prices in rate cuts in the months ahead.  As a result of that faster decline at the short end of the curve, the spread between the two has narrowed quickly. The 10-year vs 2-year yield curve is now inverted by less than 15 basis points (bps), the flattest it has been in more than two years.

At the very short-end of the curve, we’ve also seen some large moves in the last two weeks. The chart below shows the 3-month US Treasury yield plotted with the mid-point of the Fed Funds target rate. As of this morning, the 3-month yield is now further below the mid-point of the Fed target rate than it has been at any point since the Federal Reserve’s last rate hike of the cycle last July.