March 31, 2023
World equity indices cash and US index futures
A broadly upbeat Asian session led to South Korean company Kospi (+0.97%), keeping the index within striking distance of year highs. The Japanese Nikkei (+0.93%), which supports the Asian Tiger, finds itself back in the upper quarter of its one-year sideways trading range. However, the Hang Seng (+0.45%) closed on session lows and Shanghai (0.36%) fought gains while closing near session highs. Positive sentiment in Europe continued as the DAX (0.53%) and FTSE (0.25%) both accelerated quickly after the open, resulting in divergent, higher opening calls across the board.
Confidence, right or wrong, continues to build as the mini-Dow now recaptures all SVB crisis losses and allows the mini-Russell to catch up. Accounting for opening calls, YTD has the mini-Dow +0.44%, S&P +5.75%, Nasdaq +18.50% and Russell 0.07%. Weekly gains are about 2%, excluding Nasdaq up 1.40%; Holding prices past early calls can encourage supporting bids to rise. However, as I dampen expectations, I worry that the Nasdaq could still be slightly ahead while a lagging Russell (above) needs to move higher. VIX settling below 20 for another session is positive for the overall tone. It’s another day when failing to hold overnight gains (technical vs new banking concerns) I’d worry more about the reason than the action itself.
Fixed Income Futures
The complex is roughly flat this morning and is trading back somewhat strongly overnight as post-crisis readjustment plays out. However, yesterday’s bids may again provide a float for TY prices (above) to hold current levels, causing bids riding this support to move higher. Perhaps more greatness than I expected arrives here; However, remember that we do not act on feelings or narratives, but on price. So be it. Maybe the markets won’t test lower levels, so I’ll never know what will happen when the price gets there; but if support continues I will have my answer.
cash currencies
The general tone across the complex mixed with USD weakness. Short-term uptrends have taken both EURUSD (above) and GBPUSD (123.80) to levels where further gains will need strong hands to ramp up; I will be keeping a close eye on momentum as any slowdown could indicate failure. Commodity currencies AUD and NZD continue range bound trading while UDSCAD (135.00) finds uptrend support to counter short term weakness supported by oil fundamentals. USDJPY (133.10) challenge in the 133-134 range is a real test of the larger downtrend.
metals
Overnight Silver continued to outperform Gold, an impressive demonstration of its resilience to overhead congestion. Yesterday’s review of recent gold/silver ratio action was intriguing and suggested that the price is not at the end of its current tightening trend. Finally, HG Copper’s (above) consistency remains supportive, however its slightly disappointing aggressive bids have not yet arrived to trigger another leg up; still just above last week’s high ($4.14) that could change. But who will step forward to take the prize there?
energy
Overnight Crude Oil gains ($75.30) are another step towards recovery after yesterday’s needed pause. Restoring momentum may be difficult, but not impossible, and a deeper challenge appears to be afoot. Fall spreads remain supportive, suggesting fundamental players are being strengthened. Products are higher, with distillate clawing back recent losses to RBOB (above); Curves for both are highs that are downright supportive. Natural gas is up nearly 5% this morning at $2.20, a welcome sight for bottom pickers; there was almost no downward momentum due to price weakness, which may not be an “all clear” sign, but one that needs to be respected and could eventually be enough to trigger a short market that needs to be covered.
Agriculture
The complex presented mixed opening calls; short-term rallies are now at a crossroads, nudging the downtrend’s medium-term resistance; both corn (above) and soybeans are in the same boat with USDJPY. Wheat’s lag and underperformance, predicted in hindsight by the lack of response, are curve spreads.
crypto futures
Both BTC ($28,750) and ETH ($1,855) uptrends continue to challenge fresh highs, but enforcement will eventually be needed lest confidence begin to wane.
Good luck today!
John
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