Little divergent action through out the commodity markets today. Today’s scheduled data was a bit of a “mixed bag.” Mortgage survey showed a jump which is considered a “one off” with the recent drop in interest rates. Retail sales where weaker than expected. EU and US political and financial environments continue to weigh on the financial markets.
Tag Archives: Bonds
Gold Under Pressure; Crude Showing Strength; Corn & Soybean Conditions Worsen
Mixed bag this morning. Gold under pressure and Crude and Copper showing some strength. With stocks up and US Dollar weaker give the impression that sentiment on the economy is becoming more stable. Corn and Soybean crop conditions continue to worsen which should provide some under-pin to the market.
Interest Rates: QE3 Rumors Continue; EU Numbers Point to Weakness
Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
The Treasury market forged a quasi downside breakout overnight but the market was able to reject that move and partially regain its footing into the US Thursday trade action. Once again overnight economic news from the Euro zone fostered fears of weakness, as Euro zone manufacturing technically returned to a contracting status with its decline back below 50.0. However, the focus of the trade is likely to shift fully toward the US economic report slate, with claims, Productivity, Construction spending and an ISM manufacturing Index released this morning. The market will also be presented with Federal Discount rate window borrowings, foreign central bank holdings, A Fed speech and a flurry of domestic auto sales figures and therefore the market is likely to come away from the next 48 hours, with a more definitive view toward the US economy. With today’s data also coming in just ahead of monthly payroll data on Friday morning, price action today might be partially restricted, as some traders wait for the government’s primary monthly measure on Friday morning. While the market has alternatively embraced expectations of additional easing from the US Fed at some point in the near future, the trend of the data over the last two weeks has clouded the expected timing of additional easing. In fact, with a divided Fed apparent from the last meeting minutes and recent dialogue reiterating that conflict, there are some “fence sitters” in voting positions at the Fed and therefore it could take a below expectation non farm payroll reading just to give the easing stance the upper hand again. With a quasi downside breakout in ongoing claims last week, putting that measure at the lowest level since September of 2008, the continuing claims reading this morning could preempt the monthly reading on Friday morning. However, some economists are discounting the downside breakout in ongoing claims and that could leave the initial claims as the key event of today’s action. On the other hand, Productivity readings could take on added importance, as some Fed members might want the added cushion of strong productivity trends, to go ahead and add further easing to the equation. It does seem as if QE3 is regaining some credence, but given the political and economic stigma attached to that form of support, it could still take clear cut recession fears to see a quick implementation of fresh easing from the Fed. In the end, seeing ISM manufacturing readings this morning fall back into a contractionary posture could be enough to convince traders that more easing is on the way.
Nothing Decisive from Jackson Hole; Positive Economic Tone To Start
Energy markets had a volatile period last week, but looking for a corrective period unless the economic outlook improves. Grains remain strong as demand concerns are overshadowed by new private survey showing corn crop below USDA estimates.
GDP Revised Lower; Surprise Shanghai Copper Stocks Decline
Markets will be looking at Bernanke’s speech this morning.
The ‘Risk Off’ Mentality Continues
Global equity markets continue to slide overnight. Concerns over the European banking industry persist. Fund held positions of long crude / short natural gas are rumored to be getting unwound. This may cause a short-covering bounce in natural gas. Corn and other agricultural markets continue to be pulled down by outside macro-economic influences as opposed to their bullish internal fundamentals.
Less High-Anxienty Today; Markets Digesting FOMC Notes
The US Fed has stated it will keep rates fixed until mid 2013. They also stated that they will implement a “rage of tools” if economic slowing persists. Lower interest rates may be sparking merger activity by providing attractive use of cash companies are holding. Metals could be switching from a flight-to-quality instrument to a more classic inflation vibe.
Markets Starting the Day off Positive. Not From Fundamental Changes
Market is seeing some recovery this morning, but not from any fundamental changes. Technical indicators are over done.
Economic slowing concerns, ECB, and US down-grade causing volatility
Economic slowing concerns, ECB, and US debt down-grade causing volatility in all markets today.
Interest Rates: Flight To Quality Lift Continues
by Dave Hightower on September 20, 2011
Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
Treasury prices remained strong throughout the trading session Monday, but it was clear that other flight to quality markets like gold and silver were being overlooked in the wake of the most recent wave of concern over the Euro zone. Renewed concern toward Italy was seen after a downgrade of that sovereign debt to just 5 levels above junk overnight and that keeps the Euro zone anxiety theme in a front and center position. Surprisingly, US Treasuries aren’t seeing additional upside action in the wake of the Italian ratings news, especially since Treasuries were given a psychological boost by statements overnight from a Chinese newspaper, which suggested that the Chinese government would continue to purchase US Treasuries. In another failed reaction, US Treasuries aren’t seeing any definitive overnight lift from a Harvard Business review survey of 1400 international business leaders who apparently feared the world is falling back into a recession. Perhaps Treasury prices became technically overbought from the sharp range up move to start the new trading week yesterday and perhaps the market has paused because of the lack of scheduled economic readings from the US yesterday. With the market seeing US housing starts and permits today and the beginning of a 2 day FOMC meeting, the Treasury trade might return to more of a US economic focus. Expectations for the Housing starts and permits call for slightly weaker or unchanged readings, with some economists holding out hope that ultra low interest rates might have cushioned the US housing market from what seems to be a deteriorating economy.
Overnight European numbers from Germany suggest that the rate of slowing in the German economy was decelerating. In other words, the rate at which things are getting worse in Germany is slowing! All things considered, the US and global economies are generally thought to slowing and US and European officials don’t seem to be doing everything possible to remove the uncertainty that is largely being fostered by their lack of leadership. While the focus of the markets seem to be heavily focused on the ebb and flow of the Euro zone debt situation, a very large measure of uncertainty is also arising from the lack of patriotism and statesmanship from US leaders. In other words, the political agendas in the US and the election of 2012 continue to take precedence over the economy. Perhaps the inability to get the second half of the necessary spending cuts in place, before the deadline, will be a good thing, as then mechanical cuts in spending will take place and the politicians can rightfully claim they didn’t vote to cut payments to their backers. In the short term, the market focus will remain on the Greek and Italian debt situations, with a temporary shift in focus toward the US housing situation this morning. With a two day FOMC meeting starting today, speculation on the operation twist program is likely to rise, but traders and analysts generally think that the program won’t have a noted impact on the economy. With a slight attempt to bounce in equities early this morning and the Treasury market potentially short term overbought into yesterday’s highs, a modest corrective track this morning is not that surprising.
Unless there is surprise forward movement on another payment to Greece, it might be difficult to remove the flight to quality vibe in US Treasuries, especially with the Chinese seemingly leaking news of their support for US instruments overnight.