SPX daily Candle Chart looks a bit troubling for the bulls but we need to see how today plays out to feel confident in calling A short term top.Chicago PMI missed expectations and touched a 22 month low as prices ,new orders and Employment all fell vs last month.Consumer confidence beat consensus and came in near upper end of range of expectations as optimism regarding labor market rebounded from last month.per Bloomberg “Buying plans for Cars,homes and major appliances cooled”
Soybeans going to Zero it appears as both July and November beans touch new contract lows today
PMI missed consensus but fell within the range of expectations, Spoos dropped
about 6 handles on the release and copper down .5% Shghai closed +.5% Chinese markets closed for remainder
of Week. Due to holiday
GDP beat consensus .4% f/c .3% markets paid little attention to release, what caught
the markets attention was Italian GDP released at 5:00 A.M. which showed a positive
number thus signaling Italy is out of a
recession and giving a boost to ”risk”. Stoxx 50 rallied some .5% and the Mib rallied
.6% post release.
or alphabet reported disappointing earnings stock at one point down almost 8%. Other side solid earnings from McDonalds, Visa,
and Merck will cause the SPX to outperform Nasdaq.
CPI, just release beat expectations handily 2.1 vs 1.7%, add this to Italian GDP
beat and the talk of Stimulus from ECB may go quiet. Bunds -60 ticks Euro +30
ticks or so. Dollar index -.3% looking at 3rd consecutive down day
Crude and Brent both +1.4% as Saudi Arabia hinted
at keeping supply cuts in place till end of the year. Venezuela’s opposition leader
Guaido calls for military Uprising in a video with soldiers.
Other markets show Gold +.5% copper +.9%,
Silver +.6%. Spoos little changed NASDAQ recoup losses down only 10 handles.
Month End today and European holiday tomorrow could cause some action Around
the European /London closes. FOMC meeting tomorrow likely to have a dampening impact
on today’s trade
Here are the bloomberg Story comments regarding the curve
Weak inflation and the end of the hiking cycle spells steepener: “With 2s/10s up against this year’s steeps, we are biased for a breakout and the commencement of the cyclical resteepening of this section of the curve”
* Bank of America (Bruno Braizinha, Mark Cabana and others, April 26 note) ** “2s10s curve could steepen to 40bps with a recovery of data in Q2 and a steady Fed;” expect 10-40bps range for now ** Team favors 10s30s steepeners; long 30-yr TIPS
Barclays (Rajiv Setia,
Anshul Pradhan, Amrut Nashikkar, in
** Expects 2s10s slope to remain positive “as a dovish Fed in
the face of modestly above-trend economy should lead to some
build-up of term premium;” remaining neutral on duration, but
“we see scope for a modest move higher in yields across the
Bonds On the offer this morning,whereas shorter maturities relatively stable, A few reasons for today’s activity. A handful of block trades in the 5 year ,A heavy IG slate with 30 year maturities, Stocks are trying to maintain a bid as SPX scored a new all time high today, a bit of a rally in oil and thus curve steepening theme .Today’s 7:30 PCE missed expectations but not a surprise as Fridays quarterly PCE was weak,so it is not worried about Inflation ,Month end activity? maybe.But what we know for certain is that the Curve is steepening,look at grid below .Bloomberg article talking about how some Firms are changing their call from a flatter curve to a steeper curve “Supporters of a steepening trade are gathering on the street” Reuters telling us that”bear steepening flows dominate today” So more about the curve then anything else on a quiet day before an event filled holiday Week.
All of Europe will be On public Holiday on May 1st,”labor
228 S&P 500
companies have reported for 1Q 2019. 78% beating EPS estimates on +6.92%
growth, 61% topping sales ests. on +3.95% growth. (Mizuho)
Elections in Spain saw
the Socialist or pro-European party win resulting a dip in Spanish yields of
about 2 bps.
US-China Trade talks still face significant
Putin Said “OPEC+ States including Saudi Arabia are
complying with terms of their deal to limit oil output and haven’t signaled a
readiness to exit” (Bloomberg)
Above average rainfall expected over next 6-10 days if
so you may see some short covering happen in the Corn complex corn +.9%
of Event risk this week payrolls, Fed meeting, ISM, Employment cost Index,
China PMI, PCE Core today. In addition, some chatter that Investment Grade Supply
(IG) will pick up this week after last week’s supply fell short of estimates.
sideways so far today Dax -.25%,Spoos Unchanged, Bunds Steady ,Dollar up a bit, Gold down .3% oil down .3% but has been
rallying a bit this morning but still closed lower prior 3 days. A lot of Event
risk later this week but non-today. Choppy trade today expected
Take a look at the histograms below which shows the daily % price change for both Brent and Cl. Crude Light having one of the biggest down days this year as the longs run for the exits. Break of important levels continue to fire off stops,$61.99-$61.87 next target.