Daily Morning Report

Thursday, October 4–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower overnight, pressured by rising world government bond yields and continued strong-greenback pressure on the secondary currency markets. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Chinese markets are still closed this week for a public holiday but will reopen Friday.

A feature in the marketplace late this week is rising U.S. Treasury yields that saw the benchmark 10-year note yield rise to a seven-year high above 3.20% today. Strong U.S. economic data recently is driving U.S. bond and note prices lower. Other world government bond markets are also seeing their yields rise, in sympathy to the U.S. This is yet another clue that creeping price inflation could become problematic down the road. That’s a bullish scenario for hard assets like raw commodities, and bearish for paper assets like stocks and bonds.

Traders are looking ahead to the U.S. Labor Department’s Employment Situation Report for September on Friday morning—arguably the most important U.S. data point of the month. The key non-farm payrolls number is expected to come in up 180,000. Wednesday’s U.S. ADP national employment report for September showed a gain of 230,000 jobs, which hints that Friday’s employment report will come in stronger than expected.

The key outside markets today find the U.S. dollar index firmer and hitting a six-week high overnight, amid rising U.S. government bond yields that are attracting more foreign investors. Meantime, November Nymex crude oil prices are near steady after hitting a four-year high Tuesday. Prices are trading just above $76.00 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, and manufacturers’ shipments and inventories.

Continue Reading

Wednesday, October 3–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Chinese markets are closed until Friday for a public holiday.

Worldwide attention, especially in Europe, is on the new anti-establishment Italian government’s plans to deal with Italy’s financial and economic problems. Reports overnight said Italy is backing down from its hardline stance with the European Union over the matter. The Euro currency today stabilized on the news, after being under selling pressure earlier this week.

In other overnight news, U.S. Federal Reserve Bank of Chicago President Charles Evans said in a speech in London the U.S. economy is humming right along and that the Fed will likely have to put the brakes on the economic growth by continuing to gradually raise interest rates. He added such Fed policy moves are historically normal during stronger economic expansion periods.

Continue Reading

The U.S. dollar index is a basket of six major world currencies stacked up against the greenback. The USDX has surged to a six-week high this week, on safe-haven demand amid worries about Italy’s financial and economic condition, and on the bullish impact on the U.S. economy from the U.S.-Mexico-Canada trade agreement. Now, it appears the USDX will soon challenge the summertime high. Stay tuned!

Tuesday, October 2–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly weaker overnight on some risk aversion that has crept back into the marketplace. U.S. stock indexes are pointed toward lower openings when the New York day session begins, on some profit taking from recent gains that pushed prices to record highs. Chinese markets are closed until Friday for a public holiday.

Worldwide attention, especially in Europe, is on the new anti-establishment Italian government’s plans to deal with Italy’s financial and economic problems. The Euro currency slumped and gold prices rallied overnight after a government official said Italy would be better off with its own currency. The European Union has to approve Italy’s budget plan that many are saying won’t pass muster with the EU. This matter appears to be escalating and could continue to pressure the Euro currency and provide more support to the safe-haven U.S. dollar and gold.

The marketplace is also refocusing on the U.S.-China trade war. Some market watchers now reckon that with the U.S. zipping up a trade pact with Mexico and Canada, it will be that much tougher on China’s economy, as some major companies’ executives will be re-examining their supply chains that heretofore have gone through China.

In other overnight news, the Euro zone got a hot inflation report. The producer price index was reported up 4.2% in August, year-on-year. The PPI was forecast at up 3.9%.

The key outside markets today find the U.S. dollar index higher as the greenback bulls have fresh power and momentum. Meantime, November Nymex crude oil prices hit a four-year high overnight are near steady and trading just above $75.00 a barrel.

Continue Reading

Monday, October 1–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Reports of a U.S.-Canada trade deal over the weekend have boosted U.S. equities. Chinese markets are closed until Friday for a public holiday.

Reports from China on Sunday said the U.S.-China trade war is taking a toll on China’s manufacturing sector, which has reduced its overall production. The Caixin manufacturing purchasing managers index (PMI) fell to 50.0 in September from 51.0 in August—ending 15 straight months of expansion.
This is leading to speculation China’s monetary officials could act to stimulate the economy, including devaluing its currency, the yuan, on the world foreign exchange market.

In other overnight news, the Euro zone jobless rate was reported at 8.1% in August versus 8.2% in July.

Focus in Europe is still on the new anti-establishment Italian government’s economic plan to address its fiscal and financial problems. The Euro currency has been pressured by this matter, which could be the next flash point in the currency and financial markets.

The key outside markets today find the U.S. dollar index slightly lower. Meantime, November Nymex crude oil prices are slightly higher and trading around $73.50 a barrel. Nymex crude prices are at contract and eight-month highs. Brent crude oil futures are at a four-year high.

Continue Reading

As the month and the quarter wind down, the Euro currency bears have rapidly gained technical strength. See on the daily bar chart for the December futures contract that prices have negated an uptrend line, to now suggest some more selling pressure and a test of the August low, and maybe even below. Stay tuned!