Iran Worries

The upcoming Speech by Israel PM regarding new Information on Iran  violating Sanctions  and comments from Local iran media saying deal is dead has provided a bid for oil and reason to sell risk.Brent +.4% and NDX -.75%,Bonds +13 ticks and Bunds +22.US yield curve 2s10s flatter ,as short end  unchanged on day.Fed meeting on Wednesday will keep short end contained unless something really drastic would occur.The key to these new revelations is what Trump will say or do,market believes that he will use it  to cancel Iran deal

 

Morning 4-30

Japan Closed today, Thursday and Friday. China Closed today and tomorrow .May 1 labor Day, is a national Holiday in many countries France, Germany Singapore to name a Few so markets will be closed FOMC decision on Wednesday, Payrolls on Friday, USA trade delegation in China Thursday and Friday for Trade negotiations, Apple Earnings on Tuesday. Treasury refunding announcement on Wednesday. Exemption period for Steel and Aluminum tariffs ends today and many Countries are applying for an Extension. Most likely, this period likely to be extended as the flood of requests for exemptions has overwhelmed the staff at commerce dept. (BB)
Dollar higher today as the outperformance of US economy compared to rest of world drives currency higher. Friday high and 200 d MA is 91.870-.The collapse in the GBP continues down .4% today. Euro down .4% as well as German Inflation numbers are benign, the area to watch in Euro is 1.2010, yen -.3% as the sideways to lower action continues. The last 3 days have seen with almost identical highs and Lows.US stocks higher as T-Mobile is trying to acquire Sprint for $26.5 b also marathon Petroleum to but rival Andeavor for $20B. Spoos +8 (.3%) handles Nasdaq + 31(+.4%).Mizuho story this morning via Bloomberg discussing the record high net shorts in Us 10’s.This morning treasuries a touch heavy as they are lower across all maturities, Bunds down a Bit as are Gilts. Dax and Stoxx 50 contained in a tight range but prices are higher as a Minor Risk on Theme prevails.
Commodities show Oil down 1%,gasoline -1.26%,Silver -1.1% Gold -.8%,Copper +.3% Aluminum Steady and Zinc +1.5%.Stronger dollar maybe impacting gold and Silver, base metals firm due to likely scenario that most European products will be granted an exemption from US tariffs and Decent China manufacturing PMI numbers. Holiday markets or Holiday as if markets are low in Volume and most time erratic and choppy.
• PCE core y/y will be monitored today to see if it does touch 2%,Bloomberg consensus is 1.9%
• North Korean leader has invited press from US and South Korea to Nuclear testing facility to prove that it is closed.

grains

plenty of head scratching this morning regarding the move higher in soybeans post 8:30 open. Soybeans +60 ticks,meal +140 ticks cal spreads in both products continue to strengthen.A few ideas for move higher First, stats Canada released their planting forecasts and it shows less Soy to be planted then forecast.The move higher in Soy meal most likely comes from the damage to an Argentine Export facility that will curtail worldwide supply.lastly US trade delegation heads to China next week to iron out differences causing a sigh of relief for those who worried about tariffs.Of  the Three the Soymeal story is the One I place responsibility on for pushing soy complex higher. A surprise move higher during a week with plenty of surprises in other markets.

morning 4-27

From Morgan Stanley
USD rally to continue… “Robust US data, aided by expansionary fiscal policy, contrast with growing concerns about further acceleration in the rest of the world. A plateauing in Eurozone growth was acknowledged by the ECB, while headwinds to Chinese growth prompted a surprise cut in the RRR. These conditions, coupled with risk sentiment staying supported, which may continue the steepening of the US yield curve, should keep the USD rallying. For the USD bear trend to fall back into place we need to see either the rest of the world looking stronger and more synchronized or the US slowing down.”
Overnight Euro broke below another minor support area and eyes now set on the important 1.2010 Area. A break of this level could accelerate the unwinding of the near record Longs in the Currency.UK GDP released over night Missed expectations. .1 vs f/c .3 on Q/Q, this fits right into the MS comment above that rest of world slowing down, GBP -1 %. In fact it has closed lower 7 of last 9 days dropping a whopping 6 big handles .Dollar index is +1.7% this week and approaching the 200 D MA of 91.992.The last few days the currency complex has been driven by position adjustment and not anything macro or Central bank related. Today the Economic calendar has first look at Q1 GDP and Q1 employment cost index the latter but might be more important than the former.
Gilts and Bunds have erased this week’s losses after 2-day rally, US 10s drifting higher as yields moving away from the 3% level and futures prices not far removed from this week’s highs. Stocks Mixed Spoos and Dow little changed to lower, NASDAQ a bit higher but Dax +.7%. .Amazon earnings yesterdays were just fantastic Stock +$100 8%.6 months ago with amazon performing as she is Nasdaq would +1% at a minimum instead of the .25%.This is another sign of the stock market having already priced in the much better than expected earnings. Crude oil Steady Bloomberg running a story discussing how cash oil traders are starting to shy away from doing business with Iran as concerns mount that Nuclear deal will be torn up. Base metals trading lower with aluminum -1.4 % and both Nickel and Copper -2%.Russia’s Rusal still in the news as the Oligarch who owns said he will not follow US wishes and Divest.
North Korean leader Kim Jung Un and South Korean leader Moon Jae embraced after signing a Historic deal to official end the conflict between the 2 countries. This also marked the first time a North Korean leader set foot on South Korean soil since the armistice was signed in 1953 (Via Bloomberg).A historic moment indeed
BOJ left policy unchanged as expected but tweaked language on when the bank expects the inflation to hit 2% target. BOJs Kiroda went out of way to say this is not a new policy shift. Yen thought it was as dripped aggressively when statement hit wires. Yen little changed now

 

euro

A Daily  chart of Spot Euro  showing it Trading below the first  area of concern for the speculators( red line) who are long.The blue horizontal line  at 1.2089 is the old breakout level and likely the second area of Concern for the longs.I pondered earlier as to why dollar was higher along with bonds and stocks.The answer may well be that Dollar is being pushed higher  by unwind of Euro shorts and for now Cares little of what is going on with Bonds or stocks.

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