Here are a few things to keep an eye on that could move markets. First, we begin the week with global industries higher, bouncing back from last week’s sell-off. The move comes in reaction to President Biden’s comments over the weekend that he's going to consider removing the federal gas tax. This could drive the price of a gallon of gas down by as much as $0.18 a gallon.
President Biden also said that a recession is not inevitable. Treasury Secretary Janet Yellen also talked about ways to increase global supply to drive prices down. Last week, the WTI crude futures traded down to $106, well off the March high we saw up around $130 a barrel. The selling in crude is also a delayed reaction to the Fed’s aggressive stance last week towards combating inflation, raising rates by 75 bps.
Yields continued their move higher last week, which also raised investors’ economic growth concerns about what’s to come in in the second half of the year. The short end started the move to new highs, with the FVX to just shy of 3.6%, the TNX up to 3.48%, and the longer-dated TYX moving to 3.47%. This week we have some housing data due out; it will be key to watch to see if higher rates continue to have a negative impact on the housing market. So far, the data has suggested it has.
We saw New Home Sales fall by 16%, and most recently the Housing Starts and Building Permits disappointed as well. This week, we also have Consumer Sentiment, Weekly Jobless Claims, and a handful of fed speakers, with Jerome Powell in the spotlight. Powell will deliver his semi-annual testimony to Congress at the Senate tomorrow and the House Thursday.
In terms of companies reporting quarterly results, watch Lennar LEN, KB Home KBH, La-Z-Boy LZB, FedEx FDX, CarMax KMX, and Darden DRI.
Lastly, keep an eye on bitcoin this morning after a volatile weekend for cryptocurrencies. Last week, futures traded below 20K. The move lower is a reflection of investors’ unease regarding risky assets during times of uncertainty around inflationary pressures.
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