BAL 
$61.00  0.29%  
CANE 
$12.16  1.18%  
JO 
$54.00  1.22%  
NIB 
$36.29  1.65%  
IEF 
$91.57  0.80%  
^UGA-IV 
$72.25  1.42%  
UNG 
$14.09  5.41%  
USO 
$81.01  0.64%  
FXA 
$63.95  0.02%  
FXB 
$119.75  0.04%  
FXC 
$71.08  0.10%  
FXE 
$98.15  0.08%  
FXF 
$97.45  0.09%  
FXY 
$60.05  0.65%  
UUP 
$28.88  0.14%  
CORN 
$19.78  0.70%  
SOYB 
$24.70  0.84%  
WEAT 
$5.31  0.72%  
JJC 
$19.56  1.24%  
GLD 
$218.87  0.91%  

Market Movers, Big Day of Economic Reports Ahead

ecrep

Full Slate of Impactful Economic Reports Set to Be Released.

 

Economic ReportsUS Economy

  • Personal Income .6% expected .9%
  • Consumer Sentiment 67 expected 66.4
  • Consumer Spending Up 1.8% expected 1.3%
  • January PCE Up 4.7%
  • New Home Sales 670,000 Beating Expected 620,000

Commodities

  • USDA Export Sales Click for report
  • Cold Storage 2:00 (CST)
  • Cattle on Feed 2:00 (CST)

 

Where we stand now. What to look for.

While most of the news cycle will be taken over with the distraction of waiving Ukranian flags and looking back at the past year of the protracted war in Eastern Europe, Economic reports may not get the full attention they would normally,

The Federal Reserve and Central Banks feel their way around the stubbornness in underlying “core” prices, excluding energy and food. If the world economy gathers steam again in 2023. A far harsher interest rate policy may be required than initially thought. According to data released by the Commerce Department on Thursday, the core personal consumption expenditures (PCE) gauge that the Fed prefers increased at a rate of 4.3% compared to the previous estimate of 3.9% in the fourth quarter of last year.

Prices were revised as a result of costs for non-profit healthcare services, used and new automobiles, and other factors. A more recent monthly snapshot of core PCE from January will be released to the market today. But, it was still unclear whether quarterly changes had an impact on the long-term average prediction for a rate reduction to 4.3% from 4.4% in December. which remains higher than the Fed’s aim.

 

Monetary policy and currency.

The market is bracing for three more quarter-point rate hikes from the Fed to at least 5.25%-5.50%, with no cut fully priced from there by year end. However, many economists have predicted that it may be much more than that. In an interview recently JP Morgan Chief Jamie Dimon said he believes we will see rate hit 6.25-.6.5 by the end of the year.

Geopolitical hyperventilating over a year of the war in Ukraine continued to support the dollar’s upward trend. On Friday, the dollar also gained against the Japanese yen, as China’s offshore yuan hit its lowest level against the dollar this year. Kazuo Ueda, the incoming chief of the Bank of Japan, emphasized the importance of maintaining ultra-low interest rates to bolster Japan’s fragile economy. He cautioned against responding to cost-driven inflation with monetary tightening, despite Japan’s core consumer inflation reaching a 41-year high in January. Meanwhile, Munn of the Bank of England stated that further rate hikes are likely necessary.

 

Market Insights

  • *Fed’s Bullard:  My projection has rates rising to 5.375%
  • *Fed’s Mester: Inflation measures have improved, but remain excessively high
  • *US Initial Claims: 192K vs 197K exp (yesterday)
  • *Q4 GDP revised lower to 2.7% from 2.9% (yesterday)
  • *MBA Mortgage Applications -41.3% yy to a 28yr low

 

Bond Yields:  2s vs 10s are -81bps this morning. 2yrs are back to cycle highs while the 10yr (long end) struggles to get back above 4.00% – why?  Growth is SLOWING throughout the economy.  The one thing you hear CONSTANTLY throughout financial media is “the consumer is in good shape” and “the consumer has excess savings” etc.  What doesn’t add up for me with this argument is the fact that consumer credit card debt has EXPLODED to multi-decade highs.

 

Gold:  not quite immediate OS, but getting there.  On the other side, the USD is NOW sending me the immediate OB signal of 85 but an expanding range high.   Interesting set up headed into PCE this morning.  You will get a signal the moment I do in this space (Gold).

 

Stocks:  SP500 just sneaking into OS this morning with the range low at 3985 and NEGATIVE momentum.  Nasdaq 11947 (range low), but not quite OS.  Russell 2000 Neutral momentum, 1877 range low, and just 38 on the OB/OS – the russell still has room to fall from my estimation here.

 

  • *SP500 moves to negative momentum

  • *VIX higher range low

  • *Gold range low continues to drop out

Market Trend > 6 mo Range Low Range High Momentum OB/OS
SP500 Bearish 3985 4096 Negative 18
Nasdaq 100 Bearish 11,947 12,492 Neutral 23
Russell 2000 Bearish 1877 1941 Neutral 38
10yr Yield Bullish 3.65% 4.02% Positive 42
VIX Bullish 18.88 22.6 Positive 54
Oil Bearish 73.47 77.15 Negative 48
Gold Bullish 1797 1880 Negative 33

 

 

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.

 

 

 

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