Daily markets: 100 bps rate hike? July’s PPI could tip the scales

The big picture today

Asia-Pacific stock indices ended today’s session mixed, with Australia’s ASX All Ordinaries gaining 0.60%, Japan’s Nikkei 0.62% and Taiwan’s TAIEX 0.79% while China’s Shanghai Composite fell 0.08%, India’s Sensex 0.18%, Hong Kong’s Hang Seng 0.22% and South Korea. KOSPI 0.27%. As with the US markets yesterday, it looks like higher and higher inflation is a global inevitability as these markets had a mild reaction to the 9.1% US CPI print. By midday, major European equity indices are down across the board and US futures are pointing to a rough open later this morning with the yield curve remaining inverted. Heading into today’s market open, the 10-year Treasury yield is around 2.97 while the 2-year Treasury yield is around 3.20%.

Following yesterday’s CPI report, expectations from the CME FedWatch Tool jumped for a 100 basis point rate hike at the Fed’s next monetary policy meeting. Today, all eyes are on what the June PPI tells us about inflation. Recent reports from the ISM and S&P Global point to continued inflationary pressures in June for manufacturing and services companies, but while some of these pressures remain elevated, some have also begun to moderate compared to recent months. If the data releases are hotter than expected, chances are the likelihood of a 100 basis point rate hike in the coming weeks will increase even more. The consensus expectation for the overall PPI is 10.7% YoY, down one tick from May’s reading of 10.8%. In terms of core PPI, it is expected to decline slightly to 6.6% on an annual basis, from 6.8% in May.

Data download

International economy

June CPI figures for Ireland (9.1%), Sweden (8.7%) were warmer than expected while Finland (7.8%) exceeded expectations of 0, 20% as high energy costs continue to put pressure on not only crude oil prices, but everything downstream from plastics manufacturing to transportation and shipping costs. The European Commission has raised its inflation forecast for the euro zone to 7.6% this year, from 6.1% in May, and now forecasts it at 4% in 2023, from 2.7% previously. In June, inflation reached a record 8.6% in the euro zone.

China is expected to release its second-quarter GDP later overnight with expectations calling for growth of 1.7%, significantly lower than the 4.8% figure in the previous quarter. This is not unexpected given the strict Zero Covid policy the country has been following since February.

Domestical economy

As we discussed above, today’s must-see US economic data point will be the June PPI report, but as it comes out, we’ll also get the latest weekly data on initial claims and continued unemployment. After the market close, the latest weekly data from the Energy Information Administration on gasoline and petroleum inventories.


Markets seemed relatively unimpressed with (had mostly priced in) yesterday’s record 9.1% CPI print, as evidenced by the Dow’s 0.67% drop, 0.45% drop of the S&P 500 and the declines of 0.15% and 0.12% of the Nasdaq-100 and Russel 2000, respectively. Industrial (-1.20%) and healthcare (-0.94%) stocks were the hardest hit. The only surprise was Twitter (TWTR) rallying 7.90% on news of a countersuit filed against Elon Musk for his attempt to walk away from his agreed acquisition of the company.

Here’s how the major market indicators stack up since the start of the year:

  • Dow Jones Industrial Average: -15.32%
  • S&P 500: -20.23%
  • Nasdaq compound: -28.11%
  • Russell 2000: -24.05%
  • Bitcoin (USD-BTC): -57.58%
  • Ether (ETH-USD): -70.44%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, Cintas (CTAS), ConAgra (CAG), Ericsson (ERIC), JPMorgan Chase (JPM)and Morgan Stanley (MS) should publish their latest quarterly results.

Taiwan Semiconductor (TSM) reported stronger-than-expected June quarter results and guided the current quarter well above consensus forecasts. In numbers, TSM reported earnings of NT$9.14 per share, NT$0.62 better than consensus of NT$8.52, as revenue grew 43.5% year-over-year to 534 NT$.14 billion vs. consensus of NT$524.34 billion. According to reported end markets, TSM’s HPC, revenue grew 8.4% from the prior quarter, smartphone revenue fell 1.8%, IoT grew single-digit , just like automotive and its other segments. For the current quarter, TSM is forecasting revenue of $19.8 billion to $20.6 billion versus consensus of $18.5 billion.

In a filing with the SEC, Twitter (TWTR) shared an email from CEO Parag Agrawal to the Twitter team stating that the company and its board “plan to hold the buyer fully responsible for fulfilling its contractual obligations”. The email also shared that “along with this litigation, the current environment – ​​macroeconomic, geopolitical, societal – presents additional complexities and challenges.”

Pit Tower (PIT) shared that the cash occupancy rate of its senior housing operating portfolio improved by 130 basis points during the second quarter of 2022, with approximately 50 basis points of this increase over the two last weeks of June.

Royalty Pharma (RPRX) agreed to purchase a royalty in the treatment of lung disease and asthma Trelegy Ellipta from Theravance Biopharma (TBPH) and Innoviva (INVA) for $1.3 billion in cash up front and up to $300 million in milestone payments.

United Insurance (UIHC) announced that its board of directors had initiated a review of strategic and capital-raising alternatives, including a possible sale, merger, disposal of units and sale of excess stock or bonds.

Flywire (FLYW) announced that it has completed the acquisition of Cohort Go, an international education payments provider, to accelerate its existing education business.

The European Commission has cleared under the EU Merger Regulation the acquisition of joint control of Nielsen Holdings (NLSN) by Elliott Investment Management LP. The committee also approved the acquisition of joint control of Citrix Systems (CTXS) and TIBCO Software by Vista Equity Partners and Elliott Investment Management.

Herringbone (CVX) CEO Michael Wirth said the price drop could be fleeting as the oil market remains tight. Wirth said some of oil’s recent weakness is due to near-term demand destruction from high prices, but he pointed to factors that could lead to a longer-term resurgence in demand.


COVID-19 test distributor Virax Biolans Group (Nasdaq) is targeting its actions starting later today. Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

American Outdoor Brands (AUGUST) is expected to release its quarterly results after the shares halt trading today. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

friday july 15

  • China: house prices, industrial production, retail sales – June
  • China: China Thomson Reuters IPSOS PCSI – July
  • China: 2Q 2022 GDP
  • United Kingdom: car registrations – June
  • Germany: car registrations – June
  • Italy: Consumer Price Index – June
  • United States: Retail sales – June
  • United States: Empire Manufacturing Index – July
  • United States: industrial production and capacity utilization – June
  • United States: Business inventories – May
  • United States: Michigan Consumer Sentiment Index – July

Thought of the day

“You become what you surround yourself with. The energies are contagious. ~ Anonymous.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
Back to top button