Markets Are Thinking Just One Cut by Year-End

The key this week is the FOMC meeting on Wednesday

Highlights

• The key this week is the FOMC meeting on Wednesday

• Earnings continue to beat expectations

• Retail sector is a major force behind the productivity burst

• Big downside revisions to payrolls are coming our way

While We Were Sleeping

The global equity market begins this week where it ended off last week, in rally mode. U.S. futures are squarely in the green, led by growth stocks. Europe has inched ahead by +0.2%. And Asia ripped right across the board: Taiwan (+1.9%), Korea (+1.2%), India (+1.1%), China’s Shanghai Composite (+0.8%), and Hong Kong (+0.5%). Japan was closed for a public holiday. Bonds have a bit of a bid themselves, with the 10-year yield down -2 to -3 basis points across the Atlantic (with most of the German state CPI data coming in tame against expectations in April, and Spain printed weaker-than-expected numbers that dragged the YoY core inflation rate down to +2.9% from +3.3% and undercut consensus views of +3.2%) and by the same in the U.S. with the 10-year T-note rate down to 4.63% from 4.67% as of Friday’s close.