Inflation & Powell's Dovish Remarks Ahead of Hearing | Morning Express

E-mini S&P (September) / NQ (Sept)

S&P, yesterday’s close: Settled at 4361.25, down 15.25

NQ, yesterday’s close: Settled at 14,865, down 4.25

Fundamentals: Inflation, the Fed, and government spending remain in focus today. June headline PPI data is due at 7:30 am CT and is expected to climb +0.6% MoM. Although this would be another steady pick-up in producer prices, +0.6% is cooler than rises in May and March. However, due to low base numbers last June, the YoY read is expected to set a fresh record at +6.8%, surpassing May’s +6.6%. Yesterday’s Core CPI for June YoY was +4.5%, the highest since October 1991. The dataset also boasted +0.9% MoM, a climb that comes on the heels of +0.7% in May and +0.9% in April. We said it here yesterday, three is a trend; inflation is officially hot. Will this force the Federal Reserve’s hand in tapering asset purchases sooner than later? Fed Chair Powell and Treasury Secretary Yellen are on Capitol Hill today to deliver their semi-annual Congressional testimony at 11:00 am CT. Prepared comments are usually released about 30 minutes before. Also in Washington, Senate Democrats on the Budget Committee agreed to a $3.5 trillion spending bill last night. The deal is watered down from an initial $6 trillion and would not need Republican support but does need all 50 Democratic Senators on board. President Biden is expected to be at the Capitol discussing the deal.

Bill Baruch joined Fox Business yesterday to discuss inflation, the Fed, and what it means for stocks.

Elsewhere, inflation from the U.K. and Spain both came in higher than expected this morning. Tonight, we look to a deluge of economic data from China, including Q2 GDP and Industrial Production. The Fed is not the only central bank in the headlines, the Reserve Bank of New Zealand said last night they would stop buying bonds later this month. Also, the Bank of Canada, who began tapering asset purchases in April, concludes a policy meeting at 9:00 am CT.

Technicals: Price action in the S&P and NQ are snapping back from yesterday’s blip of weakness. The NQ conceded gains of about 1% on the session after a poor 30-year Bond auction lifted yields. That fear has seemed to dissipate overnight with Bond prices bouncing back into this morning on the smaller spending bill getting pushed through Washington. In the S&P, today’s Pivot and point of balance aligns yesterday’s settlement with our momentum indicator this morning at 4361.25-4365; continued action above here will favor the bulls. Similarly, this is the Pivot for the NQ at 14,865-14,895. For each, there has been a budding floor at first key support at ... 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 (August)

Yesterday’s close: Settled at 75.25, up 1.15

Fundamentals: Crude Oil slipped from overnight highs on news that Saudi Arabia and the UAE reached a compromise on bringing production back online. OPEC+ had planned to bring back 400,000 bpd each month, beginning in August through December, but hit an impasse more than a week ago after the UAE refused to sign. The agreement had also planned to lock in old base production levels through the end of 2022. The UAE had invested heavily in expanding their capacity did not want to get locked in. The announcement of a compromise is a giant step forward and something we have pointed traders must keep an ear to the ground for. However, a date has not yet been set for an OPEC+ meeting in order to move forward with bringing back those 400,000 bpd beginning in August.

News on an Iran nuclear deal, or lack thereof, helped boost prices yesterday. The current President Rouhani would not look to secure a deal before leaving office. This delays progress until a transition to the newly elected President Raisi is complete, mid-August at the earliest.

EIA inventory data is in play today at 9:30 am CT. Analysts expect -4.359 mb of Crude, -1.786 mb of Gasoline, and +0.877 mb Distillates. Last night’s private API survey was largely in line with these expectations.

Technicals: Price action whipsawed from an early high to a low of 74.08. That 74.08 now brings a floor of support and the tape has rebounded to set a fresh session high. We have revised first key resistance to come in at ... 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 (August) / Silver (Sept)

Gold, yesterday’s close: Settled at 1809.9, up 4.0

Silver, yesterday’s close: Settled at 26.14, down 0.099

Fundamentals: The precious metals complex is trading sharply higher ahead of the opening bell. Fed Chair Powell’s dovish prepared remarks ahead of today’s semiannual Congressional testimony has boosted metals amid hot inflation data. Yesterday’s Core CPI YoY for June was at a 30-year high and this morning’s PPI YoY set a fresh record at +7.3%, taking out May’s +6.6%. Producer Prices also surged on a MoM bases by 1.0%. Still, the Fed Chair said the committee will continue discussing policy, but the economy is a ways from their goals. Powell will be fielding questions from Senators today and his comments should be watched closely. The U.S. Dollar is weaker, and Treasuries are higher on the session, both have underpinned the metals rally. Bonds found a floor late yesterday after Senate Democrats agreed on a watered-down $3.5 trillion spending bill, compared to the initial $6 trillion. Less spending signals the need for less supply.

Technicals: Today’s rally has begun to signal there may be legs to this rebound. Although the test into major three-star resistance at 1828-1835 is the first step in beginning to repair June’s damage, we must see a weekly close above here to secure such. As for Silver, it is trading above what has been an intraday ceiling at times at 26.50, but it has traded as high as 26.91 and into strong resistance at ... 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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