Morning 6-10

A few things:

  •  5s30 yield curve flatter for third consecutive day, likely taking a few chips of table before Fed meeting. Possibly fed Rhetoric, outlook, QE Program will not be as conducive for a continuation of the steepner trade as some imagine.
  • NDX traded above 10K yesterday, Apple and Amzn touch new all-time highs
  • OECD projecting global economy to drop 6%
  • Bloomberg reporting a multiyear high in the Gold/BBG Commodity spot index
  • Mortgage application continue to surge, Up some 13% Y/Y and 9.3% W/W green shoots
  • Dollar continues to trade lower, down 4% since May 25th, March lows of 94.65 in sight as DXY dipped below 96 handles earlier today. Dollar demand at todays 84-day USD swap only saw $.48 Mn compared to $75.8bn in March (IFR) plenty of dollars available it seems
  • CPI today a surprise would be a stronger number

In a note Tuesday, Goldman Sachs warned the rally across commodities has gotten ahead of the fundamentals, with the exception of metals, and that therefore, it is hesitant to recommend a long position this early in the cycle(Pro farmer)

China’s CPi and PPi both missed expectations the latter showed largest negative print in 4 years, Not good for commodity demand.

FED:

FOMC unlikely to officially announce some type of official Yield curve control, most people believe the Fed is already conducting some type of Quasi yield curve control already. Fed likely to announce some type of  Constant QE program  “X” amount per month, Possibly announce some type of   Forward Guidance either calendar based or metric based, pledging to keep rates lows .Also pay attention if Fed announce some type of extension of  Duration for treasury purchases, unlikely though. Not a surprise fed to lean Uber dovish.

Markets:

 Treasury Yields lower again for third consecutive day,30 year yields down 20bps over this span. Bunds steady, Gold Following Bonds higher as they rally for 3rd consecutive day. European stocks have outperformed global peers since mid-may (BBG)  but today sideways to lower, Spoos Little changed to higher but Nasdaq +.8%.Copper continues her nice run higher trading +1.6% today at 4 month highs  .Oil -1.6% API numbers leaned a bit bearish yesterday.

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