Monthly Change

  • Silver has had back to back monthly gains for the first time in at least 2 years.Silver was 4.5% higher this month.
  • Platinum was higher by 7.4% for the month
  • Crude Oil higher by .75% for the month. haven’t had back to back monthly gains in Crude since April  and May  last year.
  • Rbob down 4.8% for the month,and has closed lower for 7 out 8 months.
  • Copper +2.94%(lme)  for the month. The best monthly gain in almost a year(3-15)
  • Aluminum had the 3rd consecutive monthly gain,it closed higher by 3.55%

What we can take form this is that metals look to have found a bottom and may be trying to take part of a reflation trade.Precious metals  going bid because of the negative rates syndrome worldwide,Gold cant go below Zero.

Quiet start

After some excitement earlier this morning on the surprise 50 Bps. cut In China reserve requirement,markets showing very little incentive to trade.Month end adjustments hopefully will add some volatility when respective markets do close.Euro is heavy , Eur/jpy -200 pips  usually not good for Risk on trades, but Stocks still hold gains here in the US.I am hoping for a pick up in action as the European and  London Closes will be  upon us.  Spooz  have found support on Fridays pit low  of 1942.30 ish  but only have 6 point range since 8:30 cash open.Pit range in the 30 years is a somewhat respectable 20 ticks.

Chicago PMI was released this morning and did miss expectations by a healthy 2 standard deviations.This number has lost its significance and markets pay little attention to it.All eyes turning to the ISM and payrolls release later this week.

Oil, Both Brent and wti are bid.The relative strength favors Brent as the Spread between the two products continues to trade further into negative territory. A cut In OPEC production and an Increase in Cushing supplies enough to explain the move.

I believe  we see a post Europe close bounce in Spooz

Gold up greater than 10%  for the Month


Oil and Cftc

News outlets will take CFTC data  and report it in different ways.For example  Futures only, Futures and options,managed money and hedge Fund categories.Sometimes it is hard to get a true feel of What Speculators have on. But not this week . For both Brent and WTI we can say that Everyone and their brother is getting Long.WTI looks like net 44k new longs Put on,Reuters reporting That Brent net longs increased by 35k last week and Stand the most bullish since 2011.. Gasoil went from Net short to net long.I will play Contrarian Investor here and Say boat tilting too much in one direction,A correction is coming.

Gold longs near a 1 year high,Silver continued to add net longs.


A couple of items of note.:

Pipeline from Iraq to Turkey has been sabotaged,happens quite often and was  expected to be down for a few days.This has changed  as  talk now that it could be down a minimum of 2 weeks. This pipeline  which runs from the Kurdish region of Iraq to Turkish port of Ceyhan carries 600k barrels of Oil a day.the oil terminal at the port will likely be out of Oil this weekend.This Is a Big Deal!!

Not such a big deal A pipeline that carries oil in Nigeria  was sabotaged and transportation of 200k barrels a day will be affected.

Outside of OPEC rhetoric  this is actually evidence of less oil in the market.

5y5y forward inflation rate

This is one of the  markets and feds favorite predictor of Inflation in 10 years. Hard to believe in accuracy of such a metric,but anywho markets look to this as a guide post.It has had a steady move higher as PPI,CPI and  now PCE  have all shown inflation may be stabilizing and possibly moving higher.At a minimum  inflation expectations moving higher not lower.

USGG5Y5Y Index (U.S. 5yr 5yr For 2016-02-26 10-08-10

here is same metric but for Europe, lower trend has not stopped,yet.

FWISEU55 Index (EUR Inflation Sw 2016-02-26 10-15-01

Gold and Dollar

Dollar continues to trade higher,3 week high vs euro,1 week high vs. Yen.Multi year high vs. pound,but that is due to Brexit fears. Gold  did break out to upside  of a technical pattern and if we continue to trade lower,below 1217  we may trigger  some stops from late to party Longs.Higher rate expectations=higher dollar


PCE CYOY Index (US Personal Cons 2016-02-26 09-03-52

Here is the Core PCE  Y/Y which registered the highest %  change since November 2012.It now stands  at 1.7%, Oh so close to feds 2%  target. Inflation worries are back,DOW,NDX, and Spx  moving down to lows.

Buy ‘Em up

Stocks  higher as the Risk on theme from overnight holds steady.A surprise higher revision  of Q4 GDP is latest good news to help stocks.Oil is higher as it  trades above 50d moving  Average for first time since November.Talk of Iran /Russian meeting to discuss Production freeze,Another drop in rig Counts and strong Move higher in products all benefit oil.Oh and Risk on trade also helps.

Whether it is good or bad news,after GDP release  rate hike expectations moved higher.For now it is a good thing  as it shows US economy with strength,eventually it will weigh on Stocks  as another rate  hike could be upon us.

Another round of Numbers at 9:00  but these are second tier in nature and shouldn’t matter. What will matter is fluctuation s in oil.

Rbob Crack Spread

We have seen at least 10 refiners cut back on production due to low margins.Yesterday we saw first draw down in gasoline stocks since November.Today the front month crack spread(how much refiners make turning  oil into gasoline)  touch highest levels since late August.Mission accomplished  as profits moving higher for the refinery business.gasoline has moved front and center as the driving force behind oil price,for now.HUCL1 Index (Bloomberg Nymex Gas 2016-02-25 14-07-05.