Geopolitics and Inflation | Morning Express 9/12/2022

Posted: Sept. 12, 2022, 8:30 a.m.

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- Developments over the weekend point to Russian forces retreating from the Kharkiv region, with Ukrainian forces advancing. The war may be hitting an inflection point, but what does that mean? Is this the beginning of the end, or will things take a turn for the worse?

- For now, the news has aided the risk-on tailwinds that began last Wednesday with equity benchmarks and commodities gaining ground overnight while the U.S. Dollar slid sharply.

- U.S. CPI is in the crosshairs, due tomorrow at 7:30 am CT. Expectations are for disinflation, headline CPI to fall -0.1% MoM, but remain at 8.1% YoY.

- Are inflation expectations now too low? Is the market unprepared for a small MoM uptick?

- Today, the U.S. Treasury will auction $41 billion 3-year Notes and $32 billion 10-year Notes.

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

S&P, yesterday’s close: Settled at 4067.25, up 61.75 on Friday and 142.75 on the week

NQ, yesterday’s close: Settled at 12,592.50, up 270.75 on Friday and 488.25 on the week

- It is roll week in the indices, and we traditionally roll on Tuesday’s.

- U.S. equity benchmarks remained bid through Friday and the S&P settled above major three-star resistance at 4059.50-4065 with no retreat.

- We are Neutral in Bias

- The bulls are in the driver’s seat while holding out above major three-star support at 4059.50-4065.

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NQ (September)

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Crude Oil (October)

Yesterday’s close: Settled at 86.79, up 3.25 on Friday and down 0.08 on the week

- Russia retreating and seen on their backfoot may mark an escalation of conflict and has invited geopolitical premiums.

- Iran Nuclear Deal in doubt, France, Britain, and Germany

- Price action cleared a significant level of resistance at 86.16-86.28 on settlement Friday to near unchanged on the week.

- Bulls have the edge on the session while holding out above our Pivot and point of balance.

- Still, rare major four-star resistance comes in at 89.43-90.39.

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Gold (December) / Silver (December)

Gold, yesterday’s close:  Settled at 1728.6, up 8.4 on Friday and 6.0 on the week

Silver, yesterday’s closeSettled at 18.767, up 0.325 on Friday and 0.886 on the week

- Silver is surging on the session and trading back through the 50-day moving average on short covering.

- The risk of a re-escalation in the Russia-Ukraine war now that Russia is seen on its backfoot reinvites geopolitical premiums.

- Gold is sticking its head above major three-star resistance at 1737.5-1740.

- U.S. CPI in the balance tomorrow and today’s strength has Neutralized our near-term negative outlook.

- Floor of support in each Gold and Silver on the week at 1720.2-1722.6 and 18.76-18.83.

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Silver (December)

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