Quarterly stocks and prospective planting did not produce fireworks we all were expecting. Soybean numbers leaned bearish but that is what market was expecting,Soybeans struggling to find a bid though. For corn New crop numbers leaned bullish,for old crop / Inline to bearish.Wheat Numbers were in line but a range breakout on daily charts is what is driving the action. KC wheat higher,Minneapolis lower.
Biggest crop report of the year today at 11:00.Do you think the soybean market is anticipating a bearish number?Daily chart of mat beans below
Dudley comments moving the dollar and providing short end with a bid as he says
DUDLEY: NO GREAT URGENCY TO CHANGE MON POL RIGHT NOW
DUDLEY: COULD SEE PAUSE IN HIKES WHEN STARTING BAL SHEET RUNOF
DUDLEY: BAL SHEET NORMALIZATION COULD TIGHTEN FINANCIAL CONDS
DUDLEY: SOMETIME BETWEEN NOW,2018 COULD START BAL SHEET RUNOFF
DUDLEY: DON’T WANT TO DISRUPT MARKETS WITH BAL SHEET MOVE
DUDLEY/BBGTV: INFRASTRUCTURE, EDU SPENDING CAN LIFT
Month end/Quarter end today. Yesterday German CPI missed expectations and Today EZ CPI Missed as well. Headline y/y 1.5 vs.1.8 f/c. Core y/y .7 vs. .8 f/c. Small miss but with expectations of a higher then consensus number this was a disappointment For Euro bulls and those that were hawkish on ECB policy. Euro is steady today after dropping the last 3.Pretty tight range of ~30 pips in the spot. Dollar also a touch higher but it too stuck in a tight range. Bunds and Schatz rallied Post EZ Cpi release but similar to currencies maintain a narrow range. French CPI was in line w/ consensus and German retail sales were mixed.
NKY closed lower .8% down 1% for Q1, China +.38% today as her Manufacturing PMI was a touch better then consensus. European Stock Indices are steady to lower. For the Quarter both Dax and Stoxx 50 will have gains greater than 5.5%.Watch the 10:00-11:00 time period as volatility could take a bump higher for the European/London Monthly closes. Overnight spoos -5 handles with a 9 handle range. NASDAQ -6 handles. Gold siting unchanged and guess what? Stuck in a narrow $5 range. Markets waiting for quarter end Flows to dictate action.
President trump will meet with China’s president next week and already the salvos have been fired. Yesterday The White house hinted at finding other measures to punish currency manipulators .This morning trump tweeted out ““The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits and job losses. American companies must be prepared to look at other alternatives. I imagine china will not take this rhetoric lightly. Also EX NSA chief Flynn asked for Immunity in order to testify. More politics to focus on. Annoying. Yesterday Afternoon the Feds Dudley (Yellen spokesman) said Inflation and growth risks shifting to upside. He is being interviewed on Bloomberg TV later today, 8:00 and attention must be paid. June rate hike probabilities 56% vs 53% yesterday.
Oil in a tight range as well. Brent on pace for best weekly gain of the year. Copper trading lower as all strikes that had bullish impact have been resolved. Copper trading lower by 2 handles. Biggest crop report of the year today at 11:00 as quarterly stock and planting intentions for upcoming crop year are reported.
Theme overnight is one of narrow ranges and low volume as a macro catalyst lacking. Order flow regarding Quarter end could be the factor to drive prices.
2 tidbits from Betfair(via mizuho)
• (1): The probability of Trump leaving before the end of the 1st term is above 50% – bit.ly/2oFlfbl
• (2): The probability of Trump leaving in 2017 ❗is close to 25%
A few wild swings in Copper( 1 minute chart below) Early morning Strength was due to Chile reporting Copper production at a 6 Year low due to the 40+ day strike at worlds largest copper mine.Once copper traded above yesterdays highs the Bulls became a little more interested,that interest was amplified due to the time of the day,10:00-11:00.A cluster of daily highs,3, were centered around 270.00 and once they was broken stops triggered and the press to upside continued.
late this Morning 2 bearish news items hit the wire.The First of minor importance was that a strike in Peru had ended.the second and more important was that The Indonesian Government was planning on lifting a Ban on Copper Exports.This ban has been in place for 3 months as the Government has tried to extract more Taxes from the Worlds second largest copper mine.Government folded,Thus the big selloff in copper. Freeport McMoran owns both of these mines,Stock +4 % today.
Oil still trading above $50 as the European session comes to a close.Market most likely to trade sideways until we approach the close and then the game of will it or won’t it settle Above $50 begins.Higher Oil higher and stocks weighing on Bonds .Take a look at this graph of intraday E-mini spoo s.
The vertical Line is 10:30 the unofficial Close of Europe.Look at the action in Spoos post 10:30 ,A steady decline.This is a common occurrence movement one way or another. This tells me that Europe was driving the action today,and once that action is gone Spoos start to drift or move to her own Beat.A great indication of What was important to markets in the A.M. and it sets up some nice volatility around 10:30 everyday.
Oil maintaining its bid after Kuwait headlines but not strong enough to get a foothold above $50.prices were rejected immediately once that level was broken.Headline below
Trump headlines saying Administration is looking at other ways to Punish Currency manipulators has caused a violent move lower in the dollar.These actions are not taken in a bubble,Any move by trump will cause a counter Move by other countries(china).
We also had our daily reminder from A Fed bank president that rates are moving higher.Today courtesy of Cleveland Fed President Mester.
Trump on the attack today via twitter :
FREEDOM CAUCUS TO ‘HURT’ AGENDA IF NOT ‘ON TEAM’,MUST FIGHT THEM’
Yesterday Wires Reported “ECB sources” saying the Central bank was concerned about the hawkish interpretation of its last policy meeting. Sources want on to say that it is highly unlikely any policy change announcement will be made anytime soon. German CPI overnight was Weaker than expected and thus very well could portend lower EZ CPI to be released tomorrow. EURO continuing yesterday’s drop and sits lower by 30 Pips. European 10 year Bonds show Lower yields but the shorter term maturities, 2 years showing higher yields. Flatter yield curves. Treasuries following bunds because very little else going on. Yen also trading a little lower by 14 ticks and Dollar steady. NKY closed lower by .8% remember their Yearend is tomorrow. European Stock markets are steady, choppy, Weaker EURO and Renewed confidence of QE not be cut prematurely provide a reason to buy. Yesterday’s Stream OF Fed speakers all stayed on point hinting that 2 maybe 3 more rate hikes are appropriate for this Economy. This rhetoric may keep Short end treasuries steady to lower.
Crude oil sideways so far today. Gold a little lower and Copper down a touch. Politics are the driving force of these markets and overnight we had no “new” news .Growing in importance is the possible Government shutdown at the End of the Month. Reporting on this possibility is starting to pick up and should start to have some impact on the trade. Congress goes on a 2 week Easter break so very little time to try and get a budget that everyone agrees upon. Most likely scenario they pass a Continuing resolution where spending stays at current levels and they deal with this in 6 months. Kick the can down the road politics.
• 7:30 GDP second revision not a big deal
• Feds Mester 8:45,10:00 Kaplan.10:15 Williams,2:30 Dudley
• 10:00 trump and treasury Secretary Munchin meet
Take a look at this Chart.This is US Oil Exports measured on a weekly basis.The wonders of Fracking turning the US into an Energy Exporter and Energy Independent.The Level of Exports is at highest levels since early 1970’s.I haven’t read much about it But I wonder if trump administration is working on ways to increase oil exports even further.