PPI, a leading indicator for CPI, came in well above estimates. Interest rate cut probabilities have been reduced, and industrial and precious metals are trading higher.
Transcript
Good afternoon traders. It’s Chris Chavis with blue line futures and it’s your daily, midday market minute. PPI came in hotter than expectations is inflation starting to heat up again. We’ll cover that and more before we get to it. If you’re watching this video, like and subscribe if you’re on our website, there’s also a link to direct you to YouTube, you can subscribe that way, we would love for you to follow us, we would love for you to help us build our following. So PPI this morning came in hotter than expectations. Looking at the core PPI numbers month over month we saw a five tenths increase versus one tenths increase expected. And that brings the year over the year number to 2% versus 1.6% expected. So that’s really ascending treasury yields higher here today, the 10 year yield trading at about 430 basis points, the highest level that we have seen since late November early December. Looking at the CME FedWatch tool, there has been a large shift in interest rate cut expectations or at least the probabilities have been reduced. Now a 30% chance of a cut and may and a 68 to 69% chance of a cut in June that’s down drastically from you know 80 plus percent even yesterday. So those odds have been reduced fed fund futures are now pricing in 75 basis points worth of cuts the same as the latest Feds summary of economic projections of 75 basis points worth of cuts for 2024. So all of that is definitely having an effect on you know risk assets, specifically equity indices. However, the s&p is sharply off of the lows here today. And it does look pretty encouraging so far as of this video, but we want to see some of the support levels held so that we can continue to see further momentum to the upside. Looking at some of the other data that we got this morning, Michigan one year inflation expectations came in at 3% versus 2.9% expected looking at five year inflation expectations 2.9% versus 2.8% expected so consumers still feeling a little bit you know a little bit worried about longer run and near term inflation expectations. Consumer Sentiment did come in slightly below estimates as well at 79.6 versus 80. Really not anything crazy as far as the Michigan data is concerned. Now, one thing I do want to highlight is even though we are seeing this hotter than expected PPI report, which is typically a leading indicator for consumer prices, the Russell is hanging in pretty well down about eight tenths of a percent slightly off of the lows, but nothing compared to the large move. We saw it when CPI came in hotter than expectation. So definitely interesting to see precious metals are actually outperforming here today with silver, really coming up on some significant overhead resistance and industrial metals to copper as well. Also in positive territory. I think one thing to note when looking inside of the PPI components is that we did see a little bit of a trough in construction spending, government and private construction spending. So that was definitely an interesting piece. I think that that is fueling some of the industrial metals. And of course Silver has the industrial component as well as the precious metal component, which is probably one reason why you’re seeing silver outperform gold. And copper is right up there with silver as well today. So some interesting takeaways for some of the industrial metals precious metals as a whole here today, when you would think to see silver and gold lower with higher treasury yields. So looking at some of the support and resistance levels that I want to highlight, three star support for the s&p We’re off of the lows is 5018 to 5019 and a quarter I want to maintain that level. Don’t want to close below there we could start to see a little bit more selling pressure if we do NASDAQ same thing three star support level 17 782 17 810 We’re just off of that low here today. And crude oil three start resistance overhead resistance 7909 to 7966. That is a significant level to pay attention to I said it was three star check that it’s actually four star level so very major. You want to watch that if we can break and close above there, we’re definitely off the test 80 bucks. Silver three star resistance is going to be set 2343 223 64 We’re right within this pocket right here right now. So if we can break above that definitely looks like we could be off to try and test 24 bucks. If you have any questions reach out to our trade desk we’re here for you. Remember futures trading involves substantial risk of loss and is not suitable for all investors. Hope you enjoyed the video. I’m Chris Chavis. If you’re passionate about trading and finance. Join us in Las Vegas for the money show a traders Expo. It is an incredible opportunity to connect and learn And don’t miss out check the details in the description below and we’ll see you there.