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!
Daily Morning Report
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
Gold Bulls Working On Price Uptrend Again
Gold prices pushed to a three-week high Thursday, in the wake of a surprisingly dovish FOMC meeting of the Federal Reserve this week. Gold bulls have gained upside momentum this week and are working on a price uptrend. Look for gold and silver prices to continue to work sideways to higher in the near term. Stay tuned!
Markets Ponder Effects Of More Dovish U.S. Federal Reserve
Thursday, March 21–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stocks were mixed overnight. U.S. stock indexes are also pointed toward mixed openings when the New York day session begins.
The world marketplace is still digesting Wednesday afternoon’s Federal Open Market Committee (FOMC) meeting conclusion and Fed Chairman Powell’s press conference. Surprisingly, the Fed took another strong step in the direction of easier U.S. monetary policy. The FOMC statement said the Fed would keep U.S. interest rates unchanged and plans no more rate hikes this year. The statement also said the U.S. labor market remains strong but U.S. economic growth has slowed a bit, as evidenced by slower household spending and lower business investment.
U.S. stocks initially were supported on the dovish Fed stance, but then sold off on worries about slowing global economic growth. Gold prices are solidly higher today and hit a three-week high overnight, boosted on the dovish Fed news Wednesday afternoon. Palladium prices hit another record high overnight and are trading above $1,575.00 an ounce.
The world markets are again trying to figure out if the U.S. and China are close to a substantive trade deal. Early-week reports said the U.S. and China were moving closer to a formal trade agreement. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are traveling to China next week for high-level discussions. However, on Wednesday President Trump said U.S. tariffs on China won’t be lifted right away even if a trade deal is reached soon.
The key outside markets today see the U.S. dollar index higher an upside correction after solid losses and hitting a six-week low Wednesday. The greenback bulls have faded recently. Meantime, Nymex crude oil prices are modestly lower and trading just below $60.00 a barrel. Oil prices hit a four-month high overnight.
U.S. economic reports due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, and leading economic indicators.
–Jim
Markets Quieter at Midweek as FOMC Meeting Conclusion Awaited
Wednesday, March 20–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stocks were mostly higher overnight. Risk appetite in the world marketplace remains upbeat, as there are no major geopolitical matters moving the world markets. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins.
Trader and investor focus is on the FOMC meeting of the Federal Reserve, which began Tuesday morning and ends Wednesday afternoon with a statement. The FOMC is not expected to change its monetary policy at this meeting. The Fed has become more dovish the past few months. As usual, the marketplace will glean the FOMC statement and Fed Chairman Jerome Powell’s wording for clues on the future path and timing of monetary policy changes.
News reports are saying the U.S. and China are moving closer to a formal trade agreement after the two largest economies in the world fought a trade war for months. Reports said U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are traveling to China next week for high-level discussions to try to get a deal wrapped up. Some are now speculating that a deal will be reached, but it won’t include important demands the U.S. had made, such as theft of intellectual property.
The key outside markets today see the U.S. dollar index slightly firmer on an upside correction after hitting a three-week low Tuesday. The greenback bulls have faded recently. Meantime, Nymex crude oil prices are modestly lower and trading just below $59.50 a barrel. Oil prices hit a four-month high Tuesday.
U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the FOMC statement and Powell press conference.
–Jim