BAL 
$61.00  0.29%  
CANE 
$11.62  0.43%  
JO 
$54.00  1.22%  
NIB 
$36.29  1.65%  
IEF 
$94.35  0.02%  
^UGA-IV 
$67.28  0.49%  
UNG 
$18.96  0.37%  
USO 
$78.65  0.96%  
FXA 
$65.82  0.23%  
FXB 
$121.76  0.12%  
FXC 
$71.48  0.04%  
FXE 
$98.77  0.11%  
FXF 
$99.43  0.33%  
FXY 
$57.99  0.38%  
UUP 
$29.10  0.24%  
CORN 
$19.34  1.07%  
SOYB 
$23.97  0.04%  
WEAT 
$5.32  1.12%  
JJC 
$19.56  1.24%  
GLD 
$214.78  1.55%  

Morning Breakdown

Market updateJohn Caruso

Senior Market Strategist

 

 

 

Market Risk:

 

*US Durable Goods (Monday) -4.5% yy – should see ATL GDP come down on this data

*BofA: The Fed might raise policy rates to 6%

 

Interest Rates:  Every day I ask myself “Is today the day we make an allocation to the bond market” – and everyday my signal continues to tell me to wait.   The 2yr often peaks somewhere in the neighborhood of where the Fed terminal rate ends up – and with the 2yr sitting at 4.79%, and the Fed now pricing in potentially 5.50% – you can clearly see why I have my reservations at the moment.   That is assuming the Fed gets to 5.50% of course – we’ll see.  The 2s v 10s spread is currently -86bps this morning….that’s a hefty inversion as we’ve noted multiple times.

 

Commodities: Last night I was looking at some of the Monthly charts of commodities, and honestly it looks like we could be at the beginning of an onslaught/wave of disinflation over the next 30-60 days.

 

Oil -3.34% mtd

Heating Oil -13% mtd

Silver -13.21% mtd

Platinum -7.8%

Copper -4.50% mtd

Corn -6% mtd

Wheat -5.52% mtd

Soybeans sub 15.00 now w/ momentum neutralizing

 

Markets such as Nat Gas and Oil have already crashed to cycle lows at -41% yy and -25% yy respectively.  I think you want to be looking at markets that have not corrected yet, and those could be the grain and maybe softs markets for opportunities – in all fairness I haven’t had the chance to really do a deep dive on soft.  I don’t have Gold in this category, because ultimately we view Gold as a currency – but of course is not impervious to a strong dollar and rising interest rates.

 

Gold:  similar to bonds – I ask myself everyday if I should lift my exposure here, and everyday the signal tells me to wait.  Ultimately, we expect Gold to perform very well over the back half of 2023 and  into 2024 – I will be a big buyer here once again, but the signal while BULLISH trend, is remains bearish trade with the range low continuing to fall out and NOT signaling immediate OS = wait.

 

*VIX in a rising regime; sell stocks from either VIX range low, or top of the range in stocks – preferably if both signals line up

*Oil signaling immediate OB here with bearish trend and negative momentum

*10yr yield keeps putting in a higher high and higher low in range analysis

 

Market

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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