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Morning Briefing: July 19, 2023

Market Overview

Equity futures are mixed as earnings news continues to pour in. A consolidation seems imminent following the recent rally in the market, with the Dow Jones Industrial Average clocking gains for seven consecutive sessions. The recent bond market rally continues to pick up steam, fueled by the UK’s inflation report, which indicates a slower pace in interest rate hikes by central banks.

International Economic News

The UK reported cooler than expected inflation figures for June, easing concerns about a rampant increase in prices. Total CPI rose by 7.9% year-over-year, lower than the expected 8.2%, while core CPI rose 6.9% year-over-year, below the anticipated 7.1%. These figures have resulted in a surge in UK stocks, with the FTSE 100 Index surging almost 2%. This softer-than-expected inflation report is seen as a sign that a wave of monetary tightening could be coming to an end.

Meanwhile, in the US, the weekly MBA Mortgage Applications Index rose 1.1% after a 0.9% increase last week, with refinancing applications up 7.0% and purchase applications down 1.0%. Today’s economic data includes June Housing Starts and Building Permits due at 8:30 a.m. ET, followed by Weekly EIA Crude Oil Inventories at 10:30 a.m. ET.

Treasury Note Yield

The 2-yr Treasury note yield is down four basis points to 4.73%, and the 10-yr note yield is down four basis points to 3.76%. The yield retreat across the curve appears to be a reaction to the recent cool-off in inflation.

Corporate News

On the corporate front, there is a flurry of earnings updates to digest:

  1. Carvana (CVNA 46.87, +7.02, +17.7%): The company beat Q2 revenue expectations and announced an agreement with noteholders to reduce total debt, extend maturities, and lower near-term cash interest expense, causing its stock to surge.
  2. Goldman Sachs (GS 335.59, -1.68, -0.5%): The banking giant reported a miss on earnings per share by $0.08, though it beat revenue estimates. The firm has also announced a 10% dividend increase.
  3. Johnson & Johnson (JNJ 157.16, -1.90, -1.2%): The healthcare giant has filed litigation against the U.S. Dept. of HHS and the Centers for Medicare and Medicaid Services challenging the drug pricing provisions of the Inflation Reduction Act (IRA).

Other key earnings updates include Cisco (CSCO), Interactive Brokers (IBKR), Western Alliance Bancorp (WAL), Elevance Health (ELV), M&T Bank (MTB), U.S. Bancorp (USB), Brunswick (BC), Halliburton (HAL), Baker Hughes (BKR), and AT&T (T).

European Stocks

European stocks were broadly higher, with a significant boost in the UK’s homebuilder stocks. In other individual stock moves, Kering SA soared after announcing the departure of the head of the Gucci brand, while Aston Martin Lagonda Global Holdings Plc rallied after an upgrade by Goldman Sachs. However, Swedish truck and bus maker Volvo Group saw a decline despite a Q2 earnings beat.

Asian Markets

In Asia, shares in Hong Kong and mainland China were the weakest performers amid growing concerns over China’s economic slump. Economists are now shifting their focus to potential measures from the Politburo meeting later this month.


The pound weakened below $1.30 following the UK inflation report, while the yen weakened for a second day following Bank of Japan Governor Kazuo Ueda’s comment about maintaining monetary easing unless there is a shift in the bank’s price goal view.

Upcoming Economic Events

Key upcoming economic events include Eurozone CPI today, China loan prime rates and US initial jobless claims, existing home sales, Conf. Board leading index on Thursday, followed by Japan CPI on Friday.




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