Coffee With Greta: Hawkish Powell
DJIA Futures: +125 (+0.4%)
SPX Futures: +17 (+0.4%)
NASDAQ Futures: +47 (+0.3%)
Good morning friends!
Futures are higher as Treasury yields pull back and traders shake-off hawkish comments from the Fed Chair.
Let’s get right to it!
Powell Recap
Federal Reserve Chairman Jerome Powell sounded more hawkish than expected at an IMF panel on Thursday.
During his speech Powell said, “The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time; we are not confident that we have achieved such a stance.”
But he also did not commit to any future moves saying, “If it becomes appropriate to tighten policy further, we will not hesitate to do so. We will continue to move carefully, however, allowing us to address both the risk of being misled by a few good months of data, and the risk of overtightening.”
The Fed previously outlined plans for one more rate hike before the end of the year, but after the surge in Treasury yields the market believes that won’t happen.
CME Group’s FedWatch Tool shows 90.7% of traders anticipating no rate hike at the December 13 meeting.
Yields Cool
Treasury yields are down this morning after spiking on Thursday.
The 10-year yield is down 6 basis points at 4.56% with the 2-year yield down 5 basis points at 4.99%.
Yields jumped on Thursday after demand for the 30-year bond auction was at the lowest level in two years.
The 10-year yield spiked as much as 13 basis points.
The Fed chair’s hawkish comments also fueled that spike as investors try to assess the future of monetary policy.
Unity Software Slides On Revenue Miss
Unity Software (U) shares are dropping 12.6% ahead of the open after missing Q3 revenue expectations and not providing guidance.
Here’s how the video game engine’s results compared to analysts’ estimates:
- Loss per share: $0.32 vs $0.49 expected
- Revenue: $544.2 million vs $554 million expected
Revenue was up 69% year over year, mainly thanks to Unity’s $2.9 billion acquisition of mobile advertising company ironSource.
Unity’s Create Solutions segment, which includes game-development tools, reported $189 million in revenue vs $204.7 million expected.
The Grow Solutions segment, which includes game publishing and advertising, reported $355.3 million in revenue, up nearly 166% from a year ago and higher than $345.3 million expected.
In a letter to shareholders Unity said, “Our results in the third quarter were mixed. While revenue came in within guidance, we believe we can do better.”
The company declined to provide guidance, citing uncertainty around when it plans to introduce new fees and a new strategy that might include layoffs and other cost-cutting measures.
In Case You Missed It
- Tesla (TSLA) shares tumbled 5.5% on Thursday after HSBC Global analysts initiated coverage on the stock with a “reduce” rating and a $146 price target. The stock closed at $209.98 per share. HSBC analysts called CEO Elon Musk both an asset and a risk to the company. They said he is a “charismatic CEO with a cult-like following” who “feeds into the innovator narrative. But they also said, “Significant delays or developments that show lack of technological and/or regulatory feasibility for a commercial launch of these projects pose a significant risk for Tesla.”