After markets held up relatively well yesterday, the geopolitical tension seemed a bit much for markets to handle this morning. Pelosi landed in Taiwan safe and sound though, much to the distaste of the Chinese government. She is the highest ranked US official to visit since 1997, and was “warmly” welcomed by military drills. The added tension from these events led to some indecisiveness from traders, who were already contending with plenty of earnings pre-market, along with JOLTS data. Caterpillar (CAT, -5.85%) this morning missed on revenues, noting dented demand across Asia. Surprisingly, Uber (UBER, +18.91%) reported revenues that beat, as ridership apparently defies inflation (it’s not a luxury, it’s a need!). JOLTS came in below estimates for the first time since January, and while the datapoint is still near highs, with weekly jobless claims rising the number is pointing to a slowing labor market. However, the Fed’s Daly, Evans, and Mester today noted that that the Fed’s work is far from over on curbing the high inflation rate. Evans even said 50 or 75bps was reasonable for the September hike, with the current probability pointing to 60% chance of a 50bp hike. Markets rolled over after investors realized that they couldn’t yet look through to next year’s(ish) cuts.
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