Nymex crude oil futures prices continue to trend higher, including this week briefly pushing above the key $60.00-a-barrel level. The oil market bulls have the firm near-term technical advantage to suggest prices continuing to trend sideways to higher in the near term. This is also good news for other raw commodity markets, given crude oil’s status as the leader of the raw commodity market sector. Stay tuned!
Daily Morning Report
Falling World Government Bond Yields Send Warning to Marketplace
Wednesday, March 27–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock indexes were mostly down overnight. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins. There is some elevated risk aversion in the world marketplace at mid-week, mainly due to worries about slowing global economic growth.
In overnight news, the German government auctioned its 10-year note (bund) for an average yield of -0.05% versus a yield of 0.12% for bunds auctioned on Feb. 27, and the first negative yield since 2016. A feature in the marketplace recently has been falling government bond yields in the major industrialized countries. U.S. Treasury yields briefly inverted last week when the short-term 3-month note yield moved above the 10-year note yield. Today, U.S. T-Bond and T-Note futures prices hit contract highs.
There was more weak economic data coming out of China today, as its industrial profits for the first two months of this year dropped by 14%–the biggest drop since 2011. Lower factory gate prices and lower sales were blamed. U.S. tariffs on China’s imports into the U.S. are also likely to blame. The U.S. and China continue high-level trade negotiations beginning Thursday.
The key outside markets today see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are weaker and trading around $59.50 a barrel.
U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the international trade report and the weekly DOE liquid energy stocks report.
–Jim
Marketplace Quieter Early this Week, Ahead of Key Events Late-Week
Tuesday, March 26–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock indexes were mixed overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trading is more subdued early this week, amid a lack of major news to move markets and ahead of key events later this week that include high-level trade talks between the U.S. and China, and gross domestic product data coming from several countries.
A feature in the marketplace recently has been falling government bond yields in the major industrialized countries. U.S. Treasury yields briefly inverted late last week when the short-term 3-month note yield moved above the 10-year note yield. In Germany, government bond yields are now just into negative territory. Worries about economic growth in the major countries, combined with very low inflation, are prompting the falling bond yields (rising prices).
The key outside markets today see the U.S. dollar index slightly weaker on a corrective pullback from solid gains late last week. Meantime, Nymex crude oil prices are higher and trading around $59.50 a barrel.
U.S. economic reports due for release Tuesday include the weekly Goldman Sachs and Johnson Redbook retail sales reports, new residential construction, the S&P/Case-Shiller home price indexes, the consumer confidence index, the monthly house price index, and the Richmond Fed business survey.
–Jim
U.S. Treasury Market Bulls Gain Technical Power
U.S. Treasury Bond prices surged to a contract high last Friday, on concerns about slowing global economic growth, and as the U.S. Treasury yield curve briefly inverted (3-month note yield above the 10-year note yield). The U.S. bond and note market bulls have good technical strength to suggest prices will continue to trend sideways to higher in the near term. Stay tuned!
Global Economic Growth Concerns Weigh Down Stock Markets
Monday, March 25–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European shares were mostly weaker overnight on heightened concerns regarding slowing global economic growth. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.
In overnight news, the closely watched German Ifo business sentiment index improved in March, with a reading of 99.6 versus 98.7 in February. However, the manufacturing component of the report was weaker in March than in February.
The marketplace is not paying much attention to the weekend news that U.S. special prosecutor Robert Mueller’s investigation of President Trump apparently did not turn up anything criminal.
The key outside markets today see the U.S. dollar index weaker on a corrective pullback from solid gains late last week. Meantime, Nymex crude oil prices are near steady and trading around $59.00 a barrel.
U.S. economic reports due for release Monday includes the Chicago Fed national activity index and the Texas manufacturing outlook survey.
–Jim
Resurgent U.S. dollar Late This Week
Friday, March 22–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian shares were mostly firmer overnight and European stocks were mostly lower. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. Traders and investors worldwide are becoming more concerned about slowing global economic growth. The U.S. stock indexes hit five-month highs on Thursday and are seeing some normal profit-taking pressure today.
There was more downbeat economic data coming out of the European Union Friday. The Markit purchasing managers’ composite index (PMI) for the Euro zone came in at 51.3 in March from 51.9 in February. The February reading was lower than expected. The Eurozone manufacturing PMI in March was 47.6 versus 49.3 in February. Euro zone workhorse Germany saw its manufacturing PMI fall to 44.7 in March from 47.6 in February. A number above 50.0 suggests growth in the sector. A reading below 50.0 indicates contraction in the sector. The European Central Bank recently adopted an easier monetary policy to stimulate economic growth in the Euro zone.
In other overnight news, European Union leaders voted to allow the U.K. to postpone its Brexit that was set to occur next week. The U.K. Parliament is likely to vote on a new “soft” Brexit deal next week.
The key outside markets today see the U.S. dollar index higher on a strong rally after hitting a six-week low on Wednesday. The USDX initially sold off following the surprisingly dovish FOMC statement. Then, apparently, traders reckoned that even a slowing U.S. economy and stable U.S. interest rates still makes the U.S. dollar the most robust currency in the world. Meantime, Nymex crude oil prices are lower and trading around $59.50 a barrel. Oil prices hit a four-month high Thursday.
U.S. economic reports due for release Friday includes the flash services and manufacturing purchasing managers indexes, monthly wholesale trade, existing home sales, and the monthly Treasury budget statement.
–Jim