Equity futures are on the rise this morning after stock markets changed tone from last week and rallied globally overnight.

The holiday-shortened week ahead is pretty slow in terms on fresh data. Economists at BBVA said none of the upcoming indicators are significant market movers but that if negative surprises occurred in each they would point to a slowdown in growth.

“Even though the manufacturing sector is leading the economic recovery, the services sector is leading the labor market recovery. As a result, slower growth in the non-manufacturing sector could mean fewer new jobs,” they wrote.

Ninety minutes before the opening bell, Dow futures are up 111 points to 9,707 and S&P 500 futures are up 13.50 points to 1027.50.

It's been a choppy morning but benchmark interest rates are holding onto their flight to safety allocations still. The 2-year Treasury note yield is less than one basis point higher at 0.625% and the 10-year Treasury note is 1.1 basis points lower at 2.966%.

The August delivery Fannie Mae 4.0 MBS coupon is +0-02 at 101-00. The August delivery Fannie Mae 4.5 MBS coupon is +0-01 at 103-11. The secondary market current coupon is 1.2 basis points lower at 3.817%.

Light crude oil is up 1.40 percent to $73.15 per barrel, and Gold is down 0.38 percent at $1,202.35

Key Events This Week:

Tuesday:

10:00 ― The ISM Non-Manufacturing Index hit a four-year high of 55.4 in March and has maintained that level for three consecutive months. In May, the index suggested that 16 of the 18 industries surveyed were growing, while employment passed the 50-mark which indicates growth for the first time in 28 months. This month, economists expect growth to moderate but for conditions to remain healthy at 55.0. It’s not clear how important the index will be, however, as the official employment numbers were already released on Friday.

“Employment markets were mixed in June, but we expect a marginal improvement in the employment index in the ISM non-manufacturing survey, driven mainly by positive reports on tourism activity,” said economists at IHS Global Insight. “Business activity is expected to throttle back slightly, but freight volumes still appear to be climbing. Financial market conditions deteriorated sharply ― and that definitely contributed to less forward momentum.”

Treasury Auctions:

11:30 ― 3-Month Bills
11:30 ― 6-Month Bills

Wednesday:

3:30 ― Narayan Kocherlakota, president of the Minneapolis Federal Reserve, speaks on taxing risk at the Society for Economic Dynamic meeting in Montreal.

7:15 ― Jeffrey Lacker, president of the Richmond Federal Reserve, speaks to Hampton Roads business leaders in Norfolk, Virginia.

Thursday:

8:30 ― New Jobless Claims averaged 467k per week in June, the worst monthly figure since February and far above the 450k threshold which is indicative of labor growth. Expectations remain dim for the period ending July 3 as economists polled by Reuters expected to see 460k fresh claims for unemployment benefits.

“If the labor market does not show significant improvement in the months immediately ahead, then monetary policymakers will be on hold much longer than what we currently envision and downside risks to our forecast would rise commensurately,” said economists at Deutsche Bank.

“Job gains are expected to accelerate in the second half of this year because fundamentally we have the ingredients necessary for a rebound in hiring, profits are elevated relative to the working population, temporary hiring continues to boom, and firms will begin deploying record cash hoards to replace rapidly depreciating capital.”

3:00 ― Consumer Credit continues to decline on an annual basis (3.2% y/y) but on the monthly basis the pace is slowing, which indicates that the worst is behind us, according to economists at BBVA. They note that credit outstanding fell by $8.8 billion from January to April, versus a $39.4 billion drop in the same period last year. More recently, outstanding credit fell by $5.4 billion in March and then rebounded by $1 billion in April. In May, economists polled by Reuters anticipate a decline of $1.9 billion.

"Several months of consumer credit figures were revised down last month, significantly altering the trend in the series," said economists at Nomura Global Economics. "After the revisions, consumer credit is clearly declining at a steady pace, rather than starting to level off. The decline is now heavily concentrated in the 'revolving' portion of consumer credit, which is mostly credit card debt. We suspect that this mostly reflects weakness in credit demand, rather than tight supply. Given that many consumers remain heavily indebted, we expect consumer credit to continue to decline."

Treasury Auctions:

1:00 ― 10-Year TIPS (inflation-protected securities)

Friday:

10:00 ― Wholesale Inventories rose by 0.4% in April, marking the fourth straight month of growth but at a pace slightly less than consensus expectations. In May, inventories should once again rise 0.4%, with sales also climbing 0.4%. The gains indicate that business confidence is improving enough for merchants to restock their  inventories in expectation of future sales.

“The inventory to sales ratio will remain low, which is a sign that the restocking process is not yet near the end,” said economists at BBVA. “As a result, inventories are expected to have another significant positive impact on economic growth in the second quarter. In addition, they remain an important driver of industrial production.”

Economists at Nomura only expect a 0.2% gain in inventories. which they note compares with a +0.6% average gain from the past few months.

“The ISM manufacturing report indicated that stockpiling slowed recently, which we believe will begin to show in inventory statistics,” they wrote. “However, we believe the contribution from inventories to GDP growth is still likely to be substantial in Q2.”