Daily Morning Report

Tuesday, June 11–Jim Wyckoff’s Morning Markets Report

European and Asian stock indexes were mostly higher again overnight, led by solid gains in China shares. The Chinese government moved to further stimulate its economy by announcing major infrastructure projects. The move by China’s government is an effort to offset the negative economic effects of the ongoing trade war with the U.S. The U.S. stock indexes are also pointed toward firmer openings when the New York day session begins. The U.S. indexes have posted strong gains the past week and have bullish technical momentum on their side to suggest a test of the contract/record highs, or above.

The U.S. economic data point of the day is the producer price index report for May, which is expected to come in at up 0.1% from April. Very low inflation levels not only in the U.S. but most of the world are an element that could allow the Federal Reserve to lower U.S. interest rates as soon as this summer.

The key “outside markets” today see Nymex crude oil prices higher and trading just below $54.00 a barrel. The U.S. dollar index is near steady today, but is in a near-term price downtrend and there are chart clues the USDX has put in a near-term top.

U.S. economic data due for release Tuesday includes the NFIB small business index, the Goldman Sachs and Johnson Redbook retail sales reports, the producer price index, the IDB/TIPP economic optimism index, and the USDA monthly supply and demand report for grains.

–Jim

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Monday, June 10–Jim Wyckoff’s Morning Markets Report

European and Asian stock indexes were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The U.S. indexes have posted strong gains the past week and have bullish technical momentum on their side, to now suggest a test of the contract/record highs.

Trader and investor attitudes are more upbeat to start the trading week after the U.S. and Mexico late Friday reached a deal on immigration that avoided the U.S. slapping trade tariffs on its southern neighbor. However, progress on the U.S.-China trade war front remains elusive amid no signs the world’s two largest economies are coming closer to any agreement on trade matters. Discussions are ongoing, however.

In overnight news, China’s import and export data for May was downbeat. China’s imports in May were down 8.5%, year-on-year, after being up 4.0% in April. The China-U.S. trade war is mostly to blame for slowing imports. China’s exports were up 1.1% in May, year-on-year, after being down 2.7% in April.

The key “outside markets” today see Nymex crude oil prices firmer and trading just above $54.00 a barrel. The U.S. dollar index is solidly higher today on a corrective rebound from last week’s downside pressure.

U.S. economic data due for release Monday is light and includes the employment trends index.

–Jim

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The grain markets have seen choppier price action this week. U.S. Corn Belt weather patterns have turned drier for the next few days, which will allow farmers to really pick up the pace of planting corn and soybeans, before some more wet weather for the region returns by later next week. Even as the weather turns drier, the record or near-record slow planting pace for U.S. corn and soybeans is likely to reduce production totals this fall. And traders do not want to go home too exposed on the short side of the grain markets on Friday because summertime weather forecasts can and do change quickly. It’s very unlikely the weather market in the grain futures has already played out. Stay tuned!–Jim

Friday, June 7–Jim Wyckoff’s Morning Markets Report

European and Asian stock indexes were mostly firmer overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The U.S. indexes have posted solid gains this week and have regained bullish technical momentum after hitting three-month lows on Monday.

Traders are anxiously awaiting Friday morning’s employment situation report for May from the Labor Department—arguably the most important U.S. data point of the month. The non-farm jobs component of that report is forecast at up 180,000. Wednesday’s ADP national employment report for May showed only 27,000 jobs added in the month. That anemic number has many looking for a weaker number in Friday’s jobs report. A downbeat jobs report today would probably significantly raise the odds of the Federal Reserve cutting U.S. interest rates sooner rather than later—and possibly this month. Look for more active trading in many markets in the immediate aftermath of the jobs report today.

In overnight news, the German central bank said German economic growth this year will only be 0.6% compared to 1.5% seen in 2018. Germany is the workhorse of the Euro zone economy. The European Central Bank on Thursday leaned more dovish and suggested it could further ease its monetary policy soon.

The key “outside markets” today see the U.S. dollar index trading slightly up in early U.S. action. The greenback bulls have faded recently and the near-term price uptrend for the USDX has been negated to suggest a market top is in place. Meantime, Nymex crude oil prices are firmer and trading around $53.00 a barrel after dropping to a nearly five-month low on Wednesday.

Other U.S. economic data due for release Friday includes monthly wholesale trade and consumer credit.

–Jim

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Thursday, June 6–Jim Wyckoff’s Morning Markets Report

European stock indexes were mostly firmer overnight, while Asian shares were mostly weaker. U.S. stock indexes are pointed toward higher openings when the New York day session begins. The U.S. indexes are posting solid gains this week after hitting three-month lows on Monday.

There are hopes in the marketplace that the U.S. trade tariff threats against Mexico, set to go into effect soon, can be withdrawn as Mexican and U.S. officials are presently meeting to discuss more Mexican participation in curbing illegal immigrants from crossing the Mexican border into the U.S. Also, some Republican members of Congress are pushing back on President Trump’s use of trade tariffs to achieve his non-trade goals.

World government bond markets continue to see their yields drop amid very low inflation and worries about slowing global economic growth and the resulting easier monetary policies from the major central banks. The German 10-year bond yield dropped to minus 0.232% today.

In overnight news, the Euro zone reported its first-quarter GDP at up 0.4% from the fourth quarter and up 1.3%, year-on-year. Those numbers were right in line with market expectations but still very tepid.

The key “outside markets” today see the U.S. dollar index trading lower in early U.S. action. The greenback bulls have faded recently and the near-term price uptrend for the USDX has been negated to suggest a market top is in place. Meantime, Nymex crude oil prices are near steady and trading around $51.50 a barrel after dropping to a nearly five-month low on Wednesday.

Traders are awaiting Friday morning’s employment situation report for May from the Labor Department—arguably the most important U.S. data point of the month. The non-farm jobs component of that report is forecast at up 180,000. Wednesday’s ADP national employment report for May showed only 27,000 jobs added in the month. That anemic number has many looking for a weaker number in Friday’s jobs report.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the international trade report, revised productivity and costs, and the monthly chain store sales index.

–Jim

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The gold market has surged over $40 an ounce from levels seen late last week, mostly on ideas of easier monetary policies from the world’s central banks and notions of slowing global economic growth. Technically, the bulls have the near-term technical advantage and have momentum to suggest more upside in the near term. Stay tuned!–Jim