Daily Morning Report

Tuesday, September 17–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mixed to mostly down overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Risk aversion is still keen in the marketplace Tuesday, following the weekend terrorist drone attacks on Saudi Arabian oil installations. The U.S. says the attacks were launched by Iran. The attack was the biggest hit to global crude oil production in modern history. Now, the world awaits the response from the U.S. It seems unlikely President Trump will let Iran get way with the attack without serious U.S. military impunity. U.S. officials are headed to Saudi Arabia to confer with the Kingdom.

Gold prices were weaker overnight after a moderate rally on Monday on safe-haven demand.

The other big markets event taking place this week is the meeting of the Federal Reserve’s Open Market Committee (FOMC) that begins Tuesday morning and ends Wednesday afternoon with a statement. It’s widely believed the FOMC will lower U.S. interest rates by 0.25%. President Trump has been brow-beating the Fed recently to get on the stick and lower interest rates, to make the U.S. more competitive with other nations on trade. The spike up in oil prices this week may throw a monkey wrench into central banks’ monetary policies, which had heretofore been leaning very easy. Sharply higher oil prices immediately raise the specter of rising inflation, which could hamstring central banks’ monetary policy easing in efforts to jumpstart or sustain their economic growth.

The marketplace was somewhat disappointed China’s central bank did not move more aggressively to ease its monetary policy Tuesday, following some weak economic data the country released this week. However, China’s central bank could soon follow any U.S. rate cut with one of its own.

Nymex crude oil prices are weaker and trading around $62.00 a barrel. The other key outside market today sees the U.S. dollar index slightly up.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, industrial production and capacity utilization, and the NAHB housing market index.

–Jim

Continue Reading

Monday, September 16–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mixed to mostly down overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Risk aversion is very keen in the marketplace to start the trading week, following the weekend terrorist drone attacks on Saudi Arabian oil installations that have quickly taken nearly 6 million barrels a day of oil production off the market. That amounts to about 5% of world crude oil production. The U.S. has blamed Iranian-backed terrorists and Iran, itself. President Trump said the U.S. is “locked and loaded” to respond to the situation.

Safe-haven assets like gold, silver, the U.S. dollar, U.S. Treasuries and the Japanese yen are all in rally mode Monday.

Nymex crude oil prices are sharply higher and trading up around $4.50 a barrel near $59.50. October Nymex crude oil futures hit a high of $63.34 overnight. Brent crude oil jumped to a high of $71.95 a barrel, up nearly 20%, at one point in early trading Monday, but prices have backed well down from that level. President Trump has authorized the release of oil from the U.S. strategic petroleum reserve, which totals more than 600 million barrels. This is the biggest geopolitical flashpoint to impact the world marketplace in quite some time.

Sharply higher oil prices may throw a monkey wrench into central banks’ monetary policies, which had heretofore been leaning very easy. Sharply higher oil prices immediately raise the specter of rising inflation, which could hamstring central banks’ monetary policy easing in efforts to jumpstart global economic growth. The Federal Reserve’s FOMC meets this week and is expected to slightly lower U.S. interest rates.

There was also violence in Hong Kong over the weekend as the civil unrest there has escalated. However, the drone strikes in Saudi Arabia have overshadowed this news.

There was also weak industrial output data coming out of China Monday, continuing a string of downbeat economic numbers coming out of the world’s second-largest economy.

U.S. economic data due for release Monday is light and includes the Empire State manufacturing survey.

–Jim

Continue Reading

The U.S. Treasury bond and notes futures markets have sold off markedly this week, which has seen near-term price uptrends negated. Both markets were also headed toward bearish weekly low closes on Friday. The near-term technical postures for the T-Bonds and T-Notes futures have weakened the past two weeks, which suggests still a bit more price pressure in the near term. However, it’s my bias that U.S. Treasury futures prices will coming roaring back, based upon global market fundamentals that still fully favor the U.S. Treasury market bulls. Stay tuned!–Jim

Friday, September 13–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly up overnight. Markets in China, South Korea and Taiwan were closed for a holiday Friday. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trader and investor risk appetite remains upbeat late this week, due in part to reports Thursday President Trump may be interested in an interim trade deal with China. Both the U.S. and China this week have sounded more conciliatory in their ongoing trade war.

The markets are still digesting Thursday’s monetary policy meeting of the European Central Bank saw the bank significantly ease its monetary policy. The ECB lowered interest rates by 0.1%, to minus 0.5%, and also announced a new “quantitative easing” bond-buying program, which is the largest in over three years. The Federal Reserve’s FOMC meets next week and is expected to cut U.S. interest rates by 0.25%. Reports today said Japan may be looking to further stimulate its moribund economy.

The key “outside markets” today see Nymex crude oil prices near steady and trading around $55.15 a barrel. The U.S. dollar index is lower in early U.S. trading today.

U.S. economic data due for release Friday includes retail sales, import and export prices, manufacturing and trade inventories, and the University of Michigan consumer sentiment survey.

–Jim

Continue Reading

Thursday, September 12–Jim Wyckoff’s Morning Markets Report

Asian stock markets were mostly up overnight, while European stock indexes were mostly weaker. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Trader and investor risk appetite remains generally elevated late this week.

The trade tensions between the world’s two largest economies—the U.S. and China—have ratcheted down a notch this week. The U.S. has announced the slight delay of implementation of some tariffs on China that were set to take effect October 1. This follows the move by China this week to exempt some U.S. products from their own tariffs. Both sides are set to hold talks in October. Reports today said China is looking to narrow the scope of the negotiations to trade only—leaving out other matters that have been sticking points, such as national security.

Focus today is on the soon-to-conclude monetary policy meeting of the European Central Bank, at which time the ECB is expected to announce only a very slight interest rate cut, pushing rates further into negative territory. The Federal Reserve meets next week and is expected to cut U.S. interest rates by 0.25%. President Trump on Wednesday called the Federal Reserve “boneheads” for not lower interest rates faster and farther.

The U.S. economic highlight of the day Thursday is the consumer price index report for August, expected to come in at up 0.1% from July and up 1.8%, year-on-year.

The key “outside markets” today see Nymex crude oil prices lower and trading around $55.50 a barrel. Thursday sees a meeting of the OPEC oil cartel. The U.S. dollar index is weaker in early U.S. trading today.

Other U.S. economic data due for release Thursday includes the weekly jobless claims report, real earnings and the monthly Treasury budget statement.

–Jim

Continue Reading

The Nymex crude oil futures market is trending higher and has this week hit a five-week high. Bulls have gained upside momentum recently to now suggest a challenge of psychological resistance at $60.00 and even above that level. Stay tuned!–Jim