Rich Asplund
6 min read
In This Article:
The S&P 500 Index ($SPX) (SPY) today is up +0.16%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.09%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.34%. September E-mini S&P futures (ESU25) are up +0.10%, and September E-mini Nasdaq futures (NQU25) are up +0.34%.
Stock indexes today are mostly higher, with the S&P 500 posting a 4-month high and the Nasdaq 100 posting a new all-time high. Reduced geopolitical risks in the Middle East have boosted market sentiment and prompted a risk-on for asset markets as the ceasefire between Israel and Iran appears to be holding. President Trump said today that the Mideast war is “over” and the US will hold a meeting with Iran next week. Stocks fell back from their best levels after the US May new home sales fell more than expected to a 7-month low.
US MBA mortgage applications rose +1.1% in the week ended June 20, with the purchase mortgage sub-index down -0.4% and the refinancing mortgage sub-index up +3.0%. The average 30-year fixed rate mortgage rose +4 bp to 6.88% from 6.84% in the prior week.
US May new home sales fell -13.7% m/m to a 7-month low of 623,000, weaker than expectations of -6.7% m/m to 693,000.
Late Tuesday evening, Kansas City Fed President Schmid stated that the current “wait and see” monetary policy posture is appropriate, as the Fed should wait to see how tariffs and other policies impact the economy before adjusting interest rates.
The markets this week will watch to see if the ceasefire holds between Israel and Iran. Also, any new tariff news or trade deals will be scrutinized. On Thursday, Q1 GDP is expected to be unrevised at -0.2% (q/q annualized). Also, weekly initial unemployment claims are expected to fall by -2,000 to 243,000. Friday brings May personal spending (expected +0.1% m/m) and May personal income (expected +0.3% m/m). Also on Friday, the May core PCE price index, the Fed’s preferred price gauge, is expected to rise by +0.1% m/m and +2.6% y/y. Finally, Friday’s June University of Michigan US consumer sentiment index is expected to be revised lower by -0.2 points to 60.3.
The markets are discounting the chances at 21% for a -25 bp rate cut at the July 29-30 FOMC meeting.
Overseas stock markets today are mixed. The Euro Stoxx 50 is down -0.53%. China’s Shanghai Composite rallied to a 6-1/4 month high and closed up +1.04%. Japan’s Nikkei Stock 225 closed up +0.39%.
Interest Rates
September 10-year T-notes (ZNU25) today are down -7 ticks. The 10-year T-note yield is up +3.3 bp to 4.328%. Sep T-notes fell from a 1-1/2 month high today and are moving lower, and the 10-year T-note yield rebounded from a 1-1/2 month low of 4.275%. T-notes are under pressure today on negative carryover from weakness in European government bonds. Also, hawkish comments from Kansas City Fed President Schmid undercut T-notes when he said the Fed should wait to see how tariffs and other policies impact the economy before adjusting interest rates. Supply pressures are negative for T-notes ahead of the Treasury’s $28 billion auction of 2-year floating rate notes and the $70 billion auction of 5-year T-notes later today.
