Morning 6-30

Compared to last 3 mornings Overnight markets showing a sense of calm. Month end/ Quarter end may bring some action around market closes but for now peaceful easing feeling. Bunds higher, Stocks higher, Dollar higher as it is a reversal of what we have seen after since Draghi Comments. Yield curves steeper.5/30 curve will close this week with a steeper /higher prices for first time in 5 weeks and only the second time in 7.Eurozone inflation was released and it did beat consensus. This trade of”firm inflation” has been played, thus very little reaction in market place. If the Numbers were a big miss I would believe reaction would have been noticeable. Stock markets in Asia/Australia reacted to yesterday’s weakness out of US and closed lower overnight. All European bourses are trading higher with the Dax your laggard only higher by +.25%. Spoos+6 handles NASDAQ +21. will this strength stay? Depends on whether or not the Month End Gyrations are complete. This week has been about Global Repricing of hawkish central Banks due to comments, speeches from BOC, BOE and ECB. The least hawkish Central bank this week is the Fed. Rate hike probabilities for December have been stuck in low 40% all week. Currently stand at 43%.This update from Morgan Stanley “We now see H1 GDP growth running at 2.3% annualized, up from 1.9% Tuesday, after an unexpected upward revision to Q1 to 1.4% from 1.2% that had positive underlying details that boosted our Q2 estimate further to 3.2% from 3.0%,
Oil has confounded the experts again. Oil headed for 7 the consecutive higher close in the face of Higher Libyan output which is close to 1 million barrels a day. Almost triple what it was 3 months ago. I will repeat when market trends it will ignore evidence counter to that trend. Gasoline and heating Oil are a touch higher. The move higher in oil over the last week also weighed on the long end bonds as Dreams of Higher inflation due to run up fit the narrative that markets are believing in. Copper not talked about much but she has been trading higher, set for 6th consecutive higher close. Reflation trade has some legs?
One of the bigger crop reports of the year will be released @ 11:00. Quarterly Ending stocks and planting intentions are the only 2 metric released so it eliminates a lot of the noise that is usually a part of the monthly reports. Wheat will be in focus especially the Spring Wheat variety as it is higher by 35% this month. Quick overview more soy and less corn to planted.
• Don’t sleep on today’s PCE Core inflation numbers A surprise higher number could have a big reaction on prices
• Trump tweeted out just repeal Obamacare now and worry about replace later
• Iraq Declares ISIS reign over after Stronghold Mosque seized

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