The AUD is the strongest and the EUR is the weakest as the NA session begins. The USD is mixed to higher with one day to go ahead of the FOMC rate decision tomorrow. The expectations are for a 90% chance for a hike tomorrow to 5.5%. In September, the market is pricing in an 80% chance that the Fed will remain on hold. The market is also pricing in a peak fed funds rate of 5.48%. The ECB will also meet this week on Thursday with the expectations of a 25 basis points hike.

Overnight, the Ifo Business Climate Index for Germany in July 2023 came in at 87.3, lower than the expected 88.0 and also lower than the prior figure of 88.6 (revised from 88.5).

Other components of the report include:

• Expectations were at 83.5, slightly above the forecast of 83.4, but below the revised prior figure of 83.8.
• The current conditions measure stood at 91.3, significantly lower than the expected 93.0 and the prior figure of 93.7.

This is the lowest reading since November of the previous year, indicating a worsening of business conditions in Germany as Q3 begins. Coupled with the PMI data for the week, the report paints a concerning picture of the German economy ahead of the summer.

Earnings are also a focus this week. This morning a number of companies beat expectations including Dow stocks 3M and Dow. Verizon – another Dow 30 stock – missed on revenues:

• BEAT Nextera Energy Inc (NEE) Q2 2023: EPS 1.38, beating the expectation of 0.82. Revenue was $7.35 billion, significantly exceeding the predicted $6.23 billion. They also reaffirmed their long-term financial guidance.

• MISS: Coming Inc (GLW) Q2 2023: Core EPS 0.45, slightly below the expectation of 0.46. Core revenue was $3.5 billion, meeting the expected $3.48 billion.

• MISS: Verizon Communications Inc (VZ) Q2 2023: Adjusted EPS was 1.21, beating the expectation of 1.16. However, revenue fell short at $32.6 billion against the anticipated $33.28 billion.

• BEAT: Sherwin-Williams Co (SHW) Q2 2023: Adjusted EPS of 3.29 exceeded expectations of 2.69. Revenue was also higher at $6.24 billion against the predicted $6.03 billion.

• BEAT: Moody’s Corp (MCO) Q2 2023: EPS was 2.30, surpassing the expected 2.24, with revenue of $1.5 billion against the anticipated $1.45 billion.

• MISS: Archer-Daniets-Midland Co (ADM) Q2 2023: Reported EPS 1.89 exceeded the expected 1.60. Revenue, however, was slightly lower at $25.19 billion against the expected $25.9 billion.

• BEAT: Biogen Inc (BIIB) Q2 2023: EPS was 4.02, beating the expected 3.77. Revenue also exceeded expectations at $2.46 billion against the predicted $2.37 billion.

• BEAT: Raytheon Technologies (RTX) Q2 2023: Adjusted EPS was 1.29, higher than the expected 1.18, and revenue of $18.315 billion beat the expected $17.68 billion.

• BEAT: PulteGroup (PHM) Q2 2023: Reported EPS was 3.21, much higher than the expected 2.51. Revenue also exceeded expectations at $4.19 billion against the predicted $3.99 billion.

• BEAT: 3M Co (MMM) Q2 2023: EPS was 2.17, significantly higher than the expected 1.72. Revenue was $8.30 billion, exceeding the predicted $7.87 billion.

• BEAT: General Motors Co (GM) Q2 2023: Adjusted EPS was 1.91, higher than the expected 1.85. Revenue was $44.75 billion, surpassing the expected $42.64 billion.

• BEAT: General Electric Co (GE) Q2 2023: EPS was 0.68, significantly beating the expected 0.46. Revenue was $15.92 billion, exceeding the anticipated $15.0 billion.

• BEAT: Dow Inc (DOW) Q2 2023: EPS was 0.75, slightly higher than the expected 0.70. Revenue was $11.42 billion, surpassing the expected $11.27 billion.

After the close, Microsoft and Alphabet will release. Below is a list of the major releases after the close:

• Microsoft.
• Alphabet
• Snap
• Visa
• Teladoc
• Texas Instruments

A snapshot of the markets as the NA session gets underway shows:

• Crude oil is trading little change at $78.78. Yesterday the price closed above its 200-day moving average for the 1st time in over a year. That moving average comes in at $77.10
• Spot gold is trading up $6.09 or 0.32% $1960.88
• Silver is trading up $0.33 or 1.36% at $24.66
• Bitcoin is trading at $29,104. At this time yesterday the price was trading at $29,300

In the premarket for US stocks, the major indices are trading higher. The Dow Industrial Average is up marginally after closing higher for the 11th consecutive day yesterday

• Dow Industrial Average is trading up 11 points after rising 183.55 points yesterday
• S&P index is trading up 4.1 points after a gain of 18.30 points yesterday
• NASDAQ index is trading up 55 points after rising 26.06 points yesterday.

In the European equity markets, the major indices are modestly changed on the day

• German DAX, up 0.05%
• France’s CAC, up 0.09%
• UK’s FTSE 100, up 2.0%
• Spain’s Ibex, down -0.37%
• Italy’s FTSE MIB, +0.19% (delayed).

In the Asian Pacific market today, markets closed mixed:

• Japan’s Nikkei 225, -0.06%

• China’s Shanghai Composite, +2.13%

• Hong Kong’s Hang Seng, +4.10%

• Australia’s S&P/ASX 200, +0.46%

In the US debt market, yields are higher in early US trading

• 2-year yield, 4.864% +2.5 basis points
• 5-year yield 4.62% +3.5 basis points
• 10-year yield 3.890% +3.3 basis points
• 30-year yield 3.945% +2.6 basis points

In the European debt market, benchmark 10-year yields are higher:

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