Daily Morning Report

Wednesday, August 21–Jim Wyckoff’s Morning Markets Report

Global stock markets were mostly up in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins.

Trader and investor sentiment remains positive at mid-week. President Trump and his administration are on the offensive this week, saying the U.S. is not headed for economic recession. There are rumors swirling around Washington, D.C., that the Trump administration is considering cutting taxes again. Trump confirmed he is considering tax cuts as a way of keeping the U.S. economy strong.

The European marketplace took in stride the resignation late Tuesday of Italian Prime Minister Giuseppe Conte.

The U.S. economic data point of the week so far will be Wednesday afternoon’s release of the minutes from the last meeting of the Federal Reserve’s Open Market Committee (FOMC), which took place July 30-31. Market watchers want to see if the minutes contain any clues on the timing and number of future interest rate cuts.

The key “outside markets” today see Nymex crude oil prices firmer and trading around $56.75 a barrel. The U.S. dollar index is slightly higher.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, existing home sales and the weekly DOE liquid energy stocks report.

–Jim

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Tuesday, August 20–Jim Wyckoff’s Morning Markets Report

Global stock markets were steady to firmer in overnight trading. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins.

Trader and investor attitudes remain generally upbeat Tuesday. However, is this just a reprieve before the keener uncertainty and anxiety returns to the world marketplace? Slowing world economic growth, geopolitics that sees some hotspots and worrisomely low global inflation are all still lingering, heading into what can be turbulent trading months of September and October. My bet is that the world markets still have some rough waters and higher volatility just ahead.

President Trump continues his assault on the Federal Reserve, on Monday saying the central bank has shown a “horrendous lack of vision.” Later this week the annual Jackson Hole, Wyoming Federal Reserve confab that sees central bankers of the world attending will be extra closely monitored by the marketplace. Fed Chairman Powell speaks to the gathering Friday.

The German government today set a zero percent coupon on its new issue of 2050-dated bonds (bunds). Just a few years ago veteran market watchers would have shuddered to think that an investor would be interested in a 30-year bond that pays no interest.

The key “outside markets” today see Nymex crude oil prices near steady and trading around $56.25 a barrel. The U.S. dollar index is slightly higher.

U.S. economic data due for release Tuesday is light and includes the weekly Johnson Redbook and Goldman Sachs retail sales reports. The pace picks up Wednesday with the release of the minutes of the last FOMC meeting.

–Jim

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The gold market is under some selling pressure early this week, as risk appetite has up-ticked the past couple trading sessions, amid talk of easy money coming from the world’s major central banks. Still, the gold market is in a solid price uptrend on the daily chart and prices are not far below the recent six-year high. Bulls remain in firm overall near-term technical control. That means that path of least resistance for prices remains sideways to higher. Stay tuned!–Jim

Monday, August 19–Jim Wyckoff’s Morning Markets Report

Global stock markets were higher in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Trader and investor attitudes are much more upbeat to start the trading week. There were no major geopolitical developments over the weekend, and it appears the civil unrest in Hong Kong did not escalate, as many had feared.

Upbeat comments about the U.S. economy from President Trump and his economic officials, namely saying there is no recession on the horizon, is also boosting investor confidence.

News over the weekend that China plans to further stimulate its economy with interest rate reforms has combined with news late last week that the European Central Bank plans further monetary policy stimulus in September has brightened the world marketplace.

Safe-haven assets gold and U.S. Treasuries are under selling pressure to start the week. The U.S. Treasury market yield curve is no longer inverted after briefly becoming so last week.

In other overnight news, the Euro zone July consumer price index was reported down 0.5% from June and up 1.0%, year-on-year. It was yet another report coming from a major world economy that shows very low inflation, to the point of likely being problematic.

The key “outside markets” today see Nymex crude oil prices higher and trading around $55.50 a barrel. The U.S. dollar index is modestly higher.

Later this week the annual Jackson Hole, Wyoming Federal Reserve confab that sees central banks of the world attending will be closely monitored by the marketplace.

There is no major U.S. economic data due for release Monday.

–Jim

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Friday, August 16–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Risk appetite is more upbeat to start the last trading day of the week.

The U.S. stock market got a boost in afternoon trading Thursday when reports hit the wires that European Central Bank rate-setting official Olli Rehn said the ECB will be rolling out new economic stimulus measures in September. The U.S. fed funds futures market now shows a 100% chance the Federal Reserve will lower its key interest rate in September. Asian and European stock markets also saw gains Friday due in part to the ECB news.

On the U.S.-China trade war front, President Trump late Thursday said he will be talking to his counterpart, President Xi, “soon.” Trump also made comments that could be construed as both negative and positive regarding progress on resolving the dispute.

The key “outside markets” today see Nymex crude oil prices higher and trading around $55.50 a barrel. The U.S. dollar index is modestly higher.

U.S. economic data due for release Friday includes new residential construction and the University of Michigan consumer sentiment survey.

–Jim

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U.S. Treasury and world government bond yields continue to fall, mostly due to worries about world economies stagnating amid the world’s two largest economies fighting a trade war. The three-month U.S. Treasury bill and two-year note yields are trading above that of the 10-year note, to produce a partially inverted yield curve, which in the past has signaled U.S. economic recession forthcoming. The yield on the U.S. 10-year note dropped to a three-year low of 1.545% on Thursday. The U.S. 30-year Treasury bond yield dropped below 2% for the first time ever early Thursday, hitting 1.966% in Asian trading, before later pushing back just above 2%. The bull market run in U.S. Treasury prices, which move in the opposite direction of yields, is likely to continue for at least the near term. That means more contract highs set in U.S. T-Bond and T-Note futures. Stay tuned!–Jim