Asian equities could trade slightly positive after FOMC hawkish voters Waller and Bullard both announced they were still backing 75bps in July for now despite the hot June CPI report. Those comments switched implied market pricing on Fed Funds futures of 100bps to 30% from 70% earlier yesterday. Global stocks were also supported by the Fed’s pushback on the 100-bps hike and moved off lows led by the tech Nasdaq, while the Treasury curve was off lows.
Traders are keeping a close eye on the energy sector as it tumbled amid China’s COVID lockdowns fears and lower economic growth. WTI and Brent see lows of USD 90.56/bbl and 94.50/bbl, levels not seen since February, before the Ukraine invasion. The macro schedule is busy today, with US Retail Sales potentially being the pivotal data point, particularly after Fed’s Waller expressed he would require seeing the print before deciding whether to increase his July hike base to 100bps from 75bps. With that, it is worth monitoring any Fed speak comments on today’s data ahead policy blackout starting at midnight. Meanwhile, major US earnings later in the day are expected to bring some volatility. Chinese growth and activity data will focus on today’s session amid recession fears.
