Daily Morning Report

Wednesday, June 19–Jim Wyckoff’s Morning Markets Report

European stock indexes were mostly weaker overnight, while Asian shares were mostly up. Asian investors were encouraged by a tweet from President Trump on Tuesday that said he and Chinese President Xi had a good telephone conversation and they will meet at next week’s G-20 conference in Japan. The U.S. stock indexes are pointed toward steady to slightly lower openings when the New York day session begins, following strong gains Tuesday that put the bulls back in good shape to challenge or even surpass this year’s record highs.

Focus of the marketplace at mid-weekl is squarely on the Federal Open Market Committee (FOMC) meeting that began Tuesday morning ends this afternoon with a statement. The majority of Fed watchers believe the Fed will not raise interest rates at this meeting, but FOMC members may lean toward a more dovish stance on monetary policy, to set the table for a rate hike in the coming few months. However, a few do think the Fed will move to lower U.S. interest rates today. Look for more active trading in many markets in the immediate aftermath of the 2:00 p.m. EDT FOMC statement.

The Bank of England and Bank of Japan also hold their regular monetary policy meetings this week.

Geopolitics is still not far from the front burner of the marketplace. The U.S.-Iran tensions have been ratcheted up a notch as the U.S. is sending 1,000 more troops to the Persian Gulf region to bolster is task force that is already patrolling waters. Iran’s government on Monday said it is producing more enriched uranium that could be used in a nuclear weapon. This situation could very quickly escalate and is not just going to fade away.

The key “outside markets” today see Nymex crude oil prices near steady and trading just below $54.00 a barrel. Meantime, the U.S. dollar index is a bit weaker on a corrective pullback from recent good gains.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the FOMC statement.

–Jim

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Tuesday, June 18–Jim Wyckoff’s Morning Markets Report

European and Asian stock indexes were mostly firmer overnight. The U.S. stock indexes are also pointed toward slightly higher openings when the New York day session begins.

Traders and investors worldwide are on central bank alert this week. European Central Bank President Mario Draghi gave a dovish speech on monetary policy today by saying the ECB could cut interest rates and/or expand its bond-buying program (quantitative easing). Draghi’s comments came as dour trade data was released from the Euro zone today.

The Federal Open Market Committee (FOMC) meeting begins this morning and ends Wednesday afternoon with a statement. Most believe the Fed will not raise interest rates at this meeting, but FOMC members may lean toward a more dovish stance on monetary policy, to set the table for a rate hike in the coming few months. The Bank of Japan also holds its regular monetary policy meeting this week.

Meantime, the yield on the benchmark German government 10-year bond fell to a record low of -0.299% today. World government bond yields are declining amid very low inflationary pressures in major economies and on slowing world economic growth.

Geopolitics is still near the front burner of the marketplace this week. The U.S.-Iran tensions have been ratcheted up a notch as the U.S. is sending 1,000 more troops to the Persian Gulf region to bolster is task force that is already patrolling waters. Iran’s government on Monday said it is producing more enriched uranium that could be used in a nuclear weapon.

The price of Bitcoin has surpassed $9,000 this week and hit a 13-month high. Facebook is launching its own crypto currency, which gives the cryptos more legitimacy.

The key “outside markets” today see Nymex crude oil prices weaker and trading around $51.50 a barrel. Meantime, the U.S. dollar index is firmer in early U.S. trading.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and new residential construction.

–Jim

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The U.S. Treasury bond futures market has seen prices pause at higher levels, in an overall uptrend. This pause is not bearish and suggests the bulls are storing up energy for their next upside assault. Bulls still have the solid overall near-term technical advantage and more price gains are likely in the near term. Stay tuned!–Jim

Monday, June 17–Jim Wyckoff’s Morning Markets Report

European stock indexes were mostly firmer overnight, while Asian shares were mixed. The U.S. stock indexes are also pointed toward slightly higher openings when the New York day session begins.

Markets are quieter early this week as traders and investors worldwide are awaiting the Federal Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement. FOMC members will discuss U.S. monetary policy. Most believe the Fed will not raise interest rates at this meeting, but members may lean toward a more dovish stance on monetary policy, to set the table for a rate hike in the coming few months.

There were no major news developments on the geopolitical front over the weekend, including no escalation of the U.S.-Iran tensions following last week’s attacks on big ships in the Gulf of Oman that the U.S. blamed on Iran. Still, this matter is not likely to just fade away.

The key “outside markets” today see Nymex crude oil prices weaker and trading around $52.00 a barrel. Meantime, the U.S. dollar index is slightly down in early U.S. trading.

U.S. economic data due for release Monday includes the Empire State manufacturing survey and the NAHB housing market index.

–Jim

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Friday, June 14–Jim Wyckoff’s Morning Markets Report

European and Asian stock indexes were mostly lower overnight, on keener risk aversion among traders and investors. The U.S. stock indexes are also pointed toward modestly lower openings when the New York day session begins.

The marketplace is on edge following the U.S. blaming Iran for two more ships in the Persian Gulf area (this time in the Gulf of Oman) being attacked by either smaller gunboats, mines or possibly even a torpedo. The U.S. military has a video showing what is apparently a small Iranian gunboat next to one of the big ships that was attacked. U.S. Secretary of State Mike Pompeo said Iran’s attacks are a “clear and present threat to international peace and security.” U.S. Navy ships are reportedly protecting some oil tankers in the region. This situation could escalate rapidly if Iran and the U.S. have a direct military confrontation.

Markets were also spooked by news Friday that China’s industrial production was at its slowest growth pace in 17 years in May, at up 5%, year-on-year, and below market expectations of 5.5% growth. The world’s number-two economy has been showing signs of weakening for months, amid a major trade war with the U.S.

Gold prices pushed to a 14-month high today on safe-haven demand, while U.S. Treasuries are also seeing their yields drop significantly.

In other overnight news, the Russian central bank cut its main interest rate to 7.5%, in the latest move by the world’s central banks to ease their monetary policies amid slowing global economic growth and very low inflationary pressures.

The key “outside markets” today see Nymex crude oil prices weaker and trading around $52.00 a barrel. Worldwide supply and demand fundamentals for crude oil favor the bears. Meantime, the U.S. dollar index is slightly up in early U.S. trading.

U.S. economic data due for release Friday includes retail sales, industrial production and capacity utilization, manufacturing and trade inventories and the University of Michigan consumer sentiment survey.

–Jim

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The soybean futures market saw solid gains at mid-week to jumpstart a price uptrend on the daily bar chart. The bean bulls now have momentum to challenge chart resistance at the early-June highs. A push above the early-June highs in soybeans would give the bulls much more technical power to suggest a solid leg up in prices in the near term. Importantly, as the summer is unfolding in the grain markets and the weather has been bullish for the grains, the corn market has been the upside leader and will very likely continue to lead the grain futures markets. Stay tuned!–Jim