The Inflation Bogeyman Lives

Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Thursday, Sept. 7.

State of Play

Stocks dropped again yesterday as bond yields moved higher on inflation concerns. Services PMIs came in ahead of forecasts and companies reported paying higher prices, which weighed on risk sentiment. As of 0615 it doesn’t look like this has changed:

• Stock index futures are pointing to a lower open led by the Nasdaq which is down 0.5%. S&P 500 futures are down 0.2%;

• Commodities are down a bit, with copper off ~1% and WTI crude oil down 0.5% to trade around $87/barrel;

• Bonds are actually seeing a few bids, encouragingly: The 2-year yield is down 3 basis points to 4.99%. The 10-year is down 2bps to 4.27%.

Drawing of ‘munaciello’ archetype said to be feared as the bogeyman in Neapolitan culture. Artist unknown. Source: Wikimedia. Inflation graffiti added by author