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Inflation and Rates In Focus; What to Know | Morning Express

E-mini S&P (June) / NQ (June)


S&P, last week’s close: Settled at 4119.50, up 30.50 on Friday and 109.50 on the week


NQ, last week’s close: Settled at 13,829.50, up 81.75 on Friday and 513.50 on the week


Fundamentals: The S&P, NQ, and Dow are holding ground ahead of the opening bell and poised to extend their record run. Fed Chair Powell talked up the economy and the Fed’s accommodative backstop last night on CBS’s 60 Minutes. He highlighted exactly what we have been speaking about; after March’s Nonfarm Payroll report, the economy is still down 8 million jobs from the pandemic. As we wrote, assuming the next four months of reopening and summer hiring bring back 4 million jobs, the economy is still short 4 million and those jobs represent the people who have been hardest hit by the pandemic. In dovish fashion, last night’s story interviewed people who were already struggling to make ends meet in the economy even prior to Covid. Ultimately, we find the story supportive as this gives credence to the Fed’s patience with its unprecedented policy measures and rhetoric of symmetrical inflation targeting. Coincidentally, the story comes ahead of tomorrow’s pivotal CPI read and a deluge of Treasuries hitting the market.

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Today, the U.S. Treasury will auction $58 billion 3-year Notes and $38 billion 10-years. Tomorrow follows with $24 billion 30-year Bonds. The added supply, if not met equally by demand will suppress prices, allowing for rates to continue their rise. Tomorrow’s Core CPI read, if hotter than the expected 1.5%, would bring a tailwind to such a rise. At the same time, foreign buyers, the largest group behind the Fed, could step up to meet the Treasury demand given the spread between U.S. and German 10’s is at pre-pandemic levels and inflation could be ho-hum since the base data didn’t really fall until April; this would be a complete 180 from what talking heads and ‘FinTwit analysts’ are calling for. In the end, the latter makes sense.


Technicals: Both the S&P and NQ finished out a terrific week on strength and this points to added gains this week upon a constructive response to supports. First, the S&P closed out above major three-star resistance at 4113.75 and ultimately, while out above here, the path of least resistance is to ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.

Crude Oil (May)


Last week’s close: Settled at 59.32, down 0.28 on Friday and 2.13 on the week


Fundamentals: Crude Oil is gaining ground this morning, but rising Covid cases from India to the U.S. bring near-term concerns. However, underpinning the market are geopolitical concerns as well as the onset of spring and the loosening of restrictions in the U.K. bringing a light at the end of the tunnel. There were new attacks on Saudi Oil facilities over the weekend and Iran has blamed Israel for an attack on a nuclear site. Traders must keep an eye on both stories, as they could carry continued tailwinds. May options expire on Wednesday, a pivotal day for the market following tomorrow’s OPEC Monthly Report.


Technicals: Price action has been very constructive while out above major three-star support at 57.25-57.64. This morning’s surge has allowed the tape to trade decisively out above our momentum indicator for the first time since Tuesday morning. The indicator, aligned with Friday’s settlement will bring strong support at 59.32-59.50 through today. Furthermore, this surge has broken Crude Oil out above the resistance trend line dating back to March 15th. However, there is down trend resistance going back to late March, come in at 60.80. We view Crude very bullish upon a close above .... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.


Gold (June) / Silver (May)


Gold, last week’s close: Settled at 1744.8, down 13.4 on Friday and up 16.4 on the week


Silver, last week’s close: Settled at 25.325, down 0.26 on Friday and up 0.377 on the week


Fundamentals: Gold and Silver are slipping back once again after Friday’s disappointing session. It would seem that the near-term down trend is acting as an undertow and now allowing the complex to extend gains given the crucial data dump over the next 24 hours. This begins with today’s Treasury auction of $58 billion 3-year Notes and $38 billion 10-years, followed by tomorrow’s $24 billion of 30-year Bonds. Also, tomorrow’s CPI read will prove absolutely critical as many fear the Year over Year reads to being trending hot. However, this read is for March and the base data did not really fall until April. This could prove to bring a supportive surprise to precious metals.


Technicals: Gold and Silver each struggled at critical levels of technical resistance late last week. What matters now is whether they can hold constructively, and the bulls respond to support. For Gold, this is first key support at 1734.7 and more critically major three-star support at 1728 just below. Our momentum indicator comes in at 1741 and price action above here could attract added buying ahead of tomorrow’s data. Silver is holding a bit better this morning, but it must clear our momentum indicator at 25.23 in order to invite buyers and furthermore first key resistance at 25.35, a level it has struggled at through the night. We cannot see a close below ... Sign up for a Free Trial at Blue Line Futures to have our entire fundamental and technical outlook, actionable bias, and proprietary levels for the markets you trade emailed each morning.


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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

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