E-mini S&P (September)
Yesterday’s close: Settled at 2997.50, up 15.50
Fundamentals: U.S benchmarks are trading at or near record levels ahead of CPI data, a critical read on inflation at 7:30 am CT. Price action roared higher yesterday morning upon the release of Fed Chair Powell’s prepared testimony before the House Financial Services Committee. As we noted here yesterday morning, for the first time in about a month, odds for the Fed to leave rates unchanged at their July 30-31 meeting began poking their ‘ugly’ head in the tune of nearly 5%. Powell’s prepared remarks were seen as dovish confirming the committee is ready to act in order to sustain U.S growth later this month. This immediately priced-out the odds for unchanged and reinvigorated the probability of 50 basis points which now sits at 28.7% ahead of CPI. The Federal Reserve is in the driver’s seat and with Powell testifying before the Senate Banking Committee at 9:00 am CT it would seem the only thing that could derail this bullish breakout in U.S equity markets is a stronger than expected read on CPI. We watch the Core number most closely; it is expected to come in at +0.2% MoM and +2.0% YoY. Furthermore, we want to keep an eye on the headline number that does not exclude food and energy, it is not expected to increase at all; with traders and investors looking for the latest edge, every component will be dissected.
Fed Chair Powell and inflation are not alone on today’s calendar. Weekly Jobless Claims are due at 7:30 am CT, it has come in higher than expectations four of the last five weeks. NY Fed President Williams will be watched closely as he speaks at 10:10 am CT, Atlanta Fed President Bostic speaks at 11:15, Richmond Fed President Barkin at 11:30, Fed Governor Quarles at 12:30 and Minneapolis Fed President Kashkari later at 4:00 pm CT. We also have a 30-year Bond Auction at noon CT.
Technicals: Price action is in breakout territory this morning and though it was at this level yesterday it did not secure such on a closing basis. For the S&P major three-star resistance comes in at 3000-3003 and a close above here paints a path of least resistance to our upside target of ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.
Crude Oil (August)
Yesterday’s close: Settled at 60.43, up 2.60
Fundamentals: Crude Oil is trading at the highest level since its bloodbath on May 23rd. Yesterday’s EIA data was actually more bullish than the high bar set by API Tuesday after the bell. The official report showed a drawdown of 9.499 mb. Estimated production did increase by 100,000 bpd but it is still 100,000 below the record high. This coupled with Fed Chair Powell’s green light to risk-assets provided that formidable tailwind higher we discussed here yesterday, sending Crude into technical breakout territory.
The OPEC released their Monthly Report this morning and revised lower non-OPEC supply growth. They noted expectations that global GDP remains steady at 3.2% and left their global Oil demand growth forecast unchanged at 1.14 mbpd with expectations that it reaches 99.87 mbpd. Crude Oil ticked down after the release but has overall been stable.
Tensions involving Iran continue to remain in the spotlight. Iran reportedly attempted to seize or blockade a British tanker. Of course, Iran has denied these reports. This coupled with a potential storm brewing the Gulf of Mexico are likely to keep a bid under Crude heading into the weekend.
Technicals: Price action is in a full technical breakout above 60.20-60.32 and the path of least resistance points to... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.
Yesterday’s close: Settled at 1412.5, up 12.00
Fundamentals: Gold ripped more than 2.5% from yesterday’s low to a high of 1429.4 overnight after Fed Chair Powell signaled the Federal Reserve is ready to cut rates later this month. His testimony reinvigorated the probability of a 50-basis point cut to near 30%. Powell testifies before the Senate Banking Committee today at 9:00 am CT. The big news this morning was CPI data which came in stronger than expected with the Core read at 2.1% versus 2.0% YoY and +0.3% versus +0.2% MoM. This was the strongest Core MoM read since January 2018 and will offset some of Fed Chair Powell’s work. One area of concern for Gold is the steepening yield curve yesterday with the 30-year Bond losing ground yesterday but the short end of the curve the 2’s and 5’s actually finished green. We do believe that Treasury yields can broadly tick up a bit without cratering the landscape for Gold as long as the Dollar does not accelerate higher. We look to a slew of Fed speakers into the evening with NY Fed President Williams at 10:10 am CT, Atlanta Fed President Bostic speaks at 11:15, Richmond Fed President Barkin at 11:30, Fed Governor Quarles at 12:30 and Minneapolis Fed President Kashkari later at 4:00 pm CT. We also have a 30-year Bond Auction at noon CT.
Technicals: The good news is Gold decisively closed out above major three-star resistance at 1408 yesterday. The bad news is that it has, for now, failed at our next major three-star resistance at ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.
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