Yesterday was much to do about nothing. For the day NVDA’s earnings were a non-event. As shares were largely unchanged. As widely noted, earnings exceeded expectations but potentially the results or the forward-looking statements did not match the lofty expectations.
Revised second quarter GDP largely met expectations, having minimal effect on the indices.. Today is the release of the monthly PCE statistics, or the preferred inflation measurement of the Federal Reserve.
Analysts are expecting the core PCE to rise at a 2.9% rate from a year ago, the fastest annual pace in five months. It is largely believed an inline or lower results will likely cement confidence in a September rate cut.
At the time of this writing, swap contracts continue to fully price in one rate cut in October and a second one by year end. The odds of a September rate cut is about 90%. Will these odds change after the release of today’s PCE data?
Last night the foreign markets were down. London was down 0.28%, Paris down 0.32% and Frankfurt down 0.36%. China was up 0.37%, Japan down 0.26% and Hang Seng up 0.32%.
Dow and NASDAQ futures are down 0.25% and 0.5%, as the PCE met expectations.
And then there is the drama at the Fed. How will this unfold? Is a dangerous precedent being set as a hallmark of the central banking system is that the Federal Reserves is believed to be above the whims of elected officials who will attempt to manipulate monetary policy in their favor? The 10-year is off 10/32 to yield 4.22%.
Kent Engelke
Chief Economic Strategist Managing Director
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