Trading was muted yesterday ahead of earnings from two tech mega caps—MSFT and GOOG– and the Fed meeting.
Treasuries came under pressure after a gauge of consumer confidence advanced in July to a two year high. Consumer Confidence exceeded the median estimate, bolstered by a strong job market and easing inflation.
Speaking of jobs, the share of respondents reporting that jobs were hard to get fell to one of the lowest readings on record. The difference between the current “plentiful” and “hard to get” measures—a metric watched closely by the Fed—was the largest since February.
At 2:00 PM the FOMC will make a post meeting announcement and statement. It is widely anticipated the overnight rate will increase to a target range of 5.25% to 5.50%. The last time the overnight rate exceeded 5.5% was January 2001.
The hawkish of the statement may be pivotal to determining the potential direction of both stocks and bonds.
After the close both MSFT and GOOG posted results. GOOG results exceeded expectations sending shares about 7% higher in after hours and premarket trading. MSFT earnings were “tepid” but the company “promises to lead the new AI platform shift.” Shares are about 4% lower in premarket trading.
Trading today may be tenuous until the 2:00 P.M. announcement.
Last night the foreign markets were down. London was down 0.60%, Paris down 1.82% and Frankfurt down 0.74%. China was down 0.26%, Japan down 0.04% and Hang Seng down 0.36%. Futures are down about 0.30% ahead of the Fed meeting. There is perhaps a new narrative that may be rising; the mega caps are reaching into the “transmogrify” atmosphere, perhaps reaching the proverbial Minsky moment. The 10-year is off 1/32 to yield 3.89%.
