Daily Morning Report

The U.S. Treasury bond and note futures markets have seen some sideways trading recently but the bulls still have the overall near-term technical advantage. Remember, too, that U.S. Treasuries are a safe-haven asset. My bias is that in the coming weeks T-Bond and T-Note futures prices will continue to appreciate amid still-crippled global economies that are not likely to heal soon.–Stay tuned! Jim

Wednesday, April 15–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed to lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The U.S. stock indexes are seeing downside corrections following recent good gains that have pulled them out of bear market territory (retracing over 50% of their recent declines). Lower crude oil prices that today see Nymex crude oil prices around $19.50 a barrel and hitting an 18.5-year low overnight are helping to pressure the stock markets today. The International Energy Agency (IEA) said in a report today that no “feasible” amount of crude oil production cuts can offset the demand destruction caused by Covid-19.

It can be argued that the recent gains in stock indexes are due in part to a battered raw commodity sector, led by crude oil’s descent, that has seen investor money flow out of hard assets and back into paper assets—equities and bonds. Gold is the outlier in the beleaguered raw commodity sector, as the yellow metal’s price this week rose to a 7.5-year high on safe-haven demand.

The International Monetary Fund on Tuesday warned the Covid-19 pandemic will slow global economic growth to the slowest since the Great Depression of the 1930s. The IMF forecast -6.6% economic contraction for advanced economies. The IMF forecast GDP growth returning to 5.8% in 2021. The agency estimates global the Covid-19 pandemic will peak in the second quarter and fade away in the second half of 2020. However, if the pandemic continues through the third quarter then such could knock another 3% off global economic growth. A second coronavirus outbreak in 2021 could lop another 5% off the global GDP growth for 2021.

The U.S. dollar index is higher this morning on a corrective rebound from recent selling pressure. The 10-year U.S. Treasury note yield is trading around 0.73% this morning.

U.S. economic reports due for release Wednesday includes the weekly MBA mortgage applications survey, the Empire State manufacturing survey, retail sales, industrial production and capacity utilization, the NAHB housing index, manufacturing and trade inventories, the weekly DOE liquid energy stocks report, Treasury international capital data and the Federal Reserve’s beige book.

–Jim
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Tuesday, April 14–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins. More and more it appears North America and Europe have “turned the corner” on the Covid-19 pandemic. New York Governor Cuomo said Monday his state has seen the worst of the pandemic. Other hotspots in the U.S. have also showed signs of simmering down. Leading U.S. health officials are now saying the world’s largest economy can very likely begin to reopen in stages beginning in May.

Major corporate earnings reports are now starting to be released, which will show the early impact of the Covid-19 pandemic, and be a sobering reminder of the tough economic times at present.

In overnight news, China, the world’s second-largest economy, saw its March exports down 6.6%, year-on-year, which was less than expected. Imports were down 0.9% in the period, also way less than expected. China watchers deemed this data as upbeat, showing the Chinese economy is recovering from the pandemic.

The important markets today see Nymex crude oil prices trading lower, around $22.00 a barrel. Oil market bulls are sorely disappointed the weekend OPEC and other major oil producers agreement to restrict oil output did not boost crude oil futures prices. However, there is no consensus on how much oil production will be reduced. Some market watchers think 10 million barrels a day and the more optimistic bulls think 20 million. There is more agreement among analysts that worldwide oil demand has dropped by at least 20 million barrels a day.

Meantime, the U.S. dollar index is weaker again this morning. The 10-year U.S. Treasury note yield is trading around 0.75% this morning. Gold prices overnight hit a 7.5-year high of $1,785.00 an ounce.

U.S. economic reports due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and import and export prices. A few Federal Reserve officials are slated to give speeches today.

–Jim
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Over the weekend, the OPEC oil cartel, Russia, the U.S. and other oil-producing nations agreed to a collective oil production cut of around 13%, which amounts to 9.7 million barrels per day. The oil futures markets had pretty much already factored into their prices the cut. The crude oil bears remain in firm near-term technical control as prices languish at the lower levels. It will take a move in Nymex crude prices above $30 a barrel to revive the bulls and to suggest a near-term price uptrend can be sustained.

Monday, April 13–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed to weaker in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The U.S. stock indexes have seen near-term price uptrends develop, which suggest at least near-term lows are in place. While the Covid-19 pandemic continues to kill thousands worldwide, the rate of the spread of the illness is slowing in the U.S. and Europe. The major debate among North Americans and Europeans is, if the curve of infections continues to flatten when will governments begin to start up their heavily damaged economies. May 1 has been mentioned frequently as a “rolling start” date for the U.S. economy. Still, at present that timeframe seems to be a best-case scenario.

Reports said the U.S. Treasury on Saturday began distributing stimulus funds to American taxpayers.

Over the weekend, the OPEC oil cartel, Russia, the U.S. and other oil-producing nations agreed to a collective oil production cut of around 13%, which amounts to 9.7 million barrels per day. The oil futures markets had pretty much already factored into their prices the cut and were only modestly up Monday. Nymex crude oil prices were trading around $23.00 a barrel.

Other important markets see the U.S. dollar index weaker this morning. The 10-year U.S. Treasury note yield is trading around 0.73% Thursday morning.

There are no major U.S. economic reports out Monday.

–Jim
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The gold market this week hit a 7.5-year high and the bulls are in full technical command, suggesting still more upside in the near term. The safe-haven metal bulls appeared to have found their sweet spot this week, as the Covid-19 situation has moved from panic to stabilization, which is encouraging buyers to step back into many markets, including the metals. However, the matter is still dire and the eventual outcome still uncertain enough to prompt safe-haven demand for gold. It could also be that metals traders are looking over the horizon and anticipating problematic price inflation, what with all the money being pumped into the financial system by the major central banks of the world. Economics 101 professors have been teaching for decades that when central banks pump lots of money into the financial system, the specter of increasing inflation is very likely. Stay tuned! Jim