Futures rebound (for now) following yesterday’s Fed-induced meltdown as the market is clearly questioning Warsh’s credibility and potential usage of non-standard tools to fight inflation, pushing the yield curve to twist steeper and sending 30Y yields to 2 decade highs (last at 5.22%). Pre-mkt, the yield curve is seeing further twist-steepening with 10s and 30s up 1 and 3bp with 2s down 1bp. USD deterioration continues following its worst day in 4 weeks. Commodities are so confused, they are not even responding to the latest MidEast escalation with Energy and Metals lower while Ags remain bid. As of 8:00am ET, S&P futures are 0.6% higher and Nasdaq futs gain 1.3% led by a 9% jump in Microsoft whose cloud unit grew at the fastest clip in four years and the company held the line on spending; while Meta slumps after disappointing revenue guidance failed to offset another capex projection increase. Semis are higher, Memory are lower, and Mag7 is mixed but net higher (MSFT +8.4%, META -8.3%). Cyclicals are leading Defensives with AI boosting both Industrials and Utilities. While the Global MegaCap earnings releases may not have revived their names, price action suggests a bottom is forming, a view espoused (daily) by JPM which sees the deleveraging as completed (narrator: it is far from completed). Bulls will want to see this pre-mkt behavior extend into the weekend to build confidence while Bears will bank on further bond vol and Semis de-risking to maintain the status quo. US economic data calendar includes June personal income/spending and PCE price index, weekly jobless claims and 2Q advance GDP (8:30am); no Fed speakers are scheduled.
In premarket trading, Mag 7 stocks are mostly higher with the exception of
