Day Traders Diary

9/13/17

The major U.S. indices eked out record-high closes once again on Wednesday following a relatively uneventful range-bound session. Market-moving catalysts remain in short supply again this morning, leaving the S&P 500 futures just a tick below fair value. However, the August CPI reading has the potential to mix things up when it crosses the wires at 8:30 ET.

Despite historically-low interest rates and a tightening of the labor market, inflation continues to remain below the Fed's year-over-year target of 2.0%, forcing the U.S. central bank to reconsider its forecast for three rate hikes in 2017. While the Fed uses the PCE Price Index as its primary measure of inflation, today's CPI reading will still most certainly have an impact on the market's rate-hike expectations.

The Briefing.com consensus expects that the CPI reading will show a month-over-month increase of 0.3% and that the core CPI reading, which excludes the volatile categories of food and energy, will show a month-over-month increase of 0.2%. In addition, investors will receive the weekly Initial Claims Report (Briefing.com consensus 310,000) also at 8:30 ET.

U.S. Treasuries are trading lower once again this morning, pushing yields higher for the fourth day in a row; the benchmark 10-yr yield is currently up one basis point at 2.21%. Meanwhile, the U.S. dollar has dropped 1.0% against the British pound to 1.3335 after the Bank of England said monetary policy could need to be tightened by a somewhat greater extent than current market expectations if inflation continues to hold at its current pace. 

Also of note, the BoE decided to maintain its key rate and asset purchase program at their respective 0.25% and GBP435 billion, as expected.

In U.S. corporate news:

• Tenet Healthcare (THC 17.99, +1.75): +10.8% following a Wednesday evening report that the company is exploring a possible sale.

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region ended Thursday on a mostly lower note, but the losses were limited. Japan's Nikkei -0.3%, Hong Kong's Hang Seng -0.4%, China's Shanghai Composite -0.4%, India's Sensex +0.2%.
  • In economic data:
    • China's August Retail Sales +10.1% year-over-year (expected 10.5%; last 10.4%), August Industrial Production +6.0% year-over-year (consensus 6.6%; last 6.4%), and August Fixed Asset Investment +7.8% year-over-year (consensus 8.2%; last 8.3%)
    • Australia's August Employment Change 54,200 (expected 15,000; previous 29,200) and Full Employment Change 40,100 (last -19,800). August Unemployment Rate held at 5.6%, as expected. August Participation Rate 65.3% (expected 65.1%; last 65.1%) and MI Inflation Expectations 3.8% (last 4.2%)
    • India's August WPI Inflation 3.24% year-over-year (expected 3.00%; last 1.88%)
    • Singapore's Q2 Unemployment Rate 2.2% (last 2.2%)
  • In news:
    • China's Ministry of Commerce expressed concern over U.S. President Trump's block of Lattice Semiconductor's sale to a Chinese-backed investment fund due to national security concerns.
    • Reports in the Japanese press indicate China may have stopped textile trade with North Korea before the announcement of recent UN sanctions.

• Major European indices trade on a mixed note. France's CAC unch, Germany's DAX -0.2%, UK's FTSE -0.4%, Spain's IBEX -0.7%.
  • In economic data:
    • Italy's August CPI 0.3%, as expected (last 0.3%); +1.2% year-over-year, as expected (last 1.2%)
    • France's August CPI 0.5%, as expected (last 0.5%)
  • In news:
    • El Mundo reported that a Spanish judge could order electric companies to shut down power delivery to polling stations on October 1. Catalan officials remain determined to go through with the scheduled referendum.
    • The Bank of England voted to maintain its key rate and asset purchase program at their respective 0.25% and GBP435 billion.
    • The Swiss National Bank also stood pat, holding its SARON rate at -0.75%, as expected.