April 14, 2023
World equity indices cash and US index futures
Positive western swings continued into the Asian session, particularly towards the Nikkei (1.20%), which is again challenging the top 25% of a nearly year-long sideways range. Shanghai (0.60%) finally broke its recent highs and posted its best YTD close, while both Hang Seng (0.46%) and Kospi (0.38%) surged higher, with the latter also making a new YTD high recorded. In Europe, the FTSE (0.36%) opened under pressure but quickly reversed, while the DAX (0.26%) climbed higher in steady trading. Early demand for North America is steady with the mini-Nasdaq underperforming.
CME June 2023 Mini Nasdaq
Thursday saw a consistently positive session; Immediately after the opening (and after a cool PPI report), bids began pouring in with urgency, followed by a steady stream of interest in the session. It was an impressive rebound from Wednesday’s lackluster trading. As noted yesterday, prices are still being supported by accelerating momentum, with the mini-Nasdaq being the one exception. The tech index remains the weekly underperformer (-0.4%) as a pause/correction might just be the healthiest path for its longer-term prospects.
Fixed Income Futures
CBOT June 2023 10 Year Note
The complex continues its directionless short-term rotation and settles into a period of consolidation. Upside momentum has slowed to near stalled speed but how long this pause will last is unclear but the levels to watch are clear; Highs and lows of the last few weeks are crucial. Reduced buying interest remains and is likely to support pullbacks triggered by a shift in the longer-term economic outlook. Still, I suspect such bids could be a little fickle if fundamentals suddenly heat up.
cash currencies
GBPUSD cash
The complex is showing net USD strength across the board, although action is light. Both EURUSD and GBPUSD are trading near their best YTD levels, however, there is a slight deceleration in the trend that I will monitor. AUDUSD and NZDUSD are weak after two straight sessions of impressive gains, but a lack of follow-through is a bit disappointing. USD/JPY trading at 132.65 puts it almost in the middle of a weekly up/down range while USDCAD stalled slightly below 134.00 yesterday and is now testing 133.00 support.
precious metals
COMEX June 2023 Gold
Both gold and silver rose on Thursday, helped by a weaker USD. Gold pauses this morning as silver catches up with fearful bids again. The acceleration of the upside momentum continues at a breakneck pace and when it will come to a halt is unclear. Keep in mind that while gold is testing all-time highs, silver remains far from similar levels and is therefore perceived (rightly or not) as the option with more upside potential; this narrows the gold/silver spread to 78.30, the tightest since early January. Higher HG copper prices are targeting a fourth straight session of gains and are currently trading at their best levels since early March; a slight acceleration of the positive price momentum provides a tailwind. Looking ahead, the price is set for a challenge of the February highs, although a failure and action back into this week’s range will dampen sentiment.
energy
NYMEX May 2023 RBOB
After some weakness on Thursday, the entire complex is trading unchanged on both sides. Crude Oil and RBOB prices continue to trade/maintained at their best levels since Fall 2022. Bids are expected to be cut lower to support any correction (Crude Oil higher on its sharp gap as RBOB enters US summer peak demand). Crude Oil spreads are a little softer this morning while the RBOB is steady outside of a weak spot. As the distillate coverage shifts to the back pages, I still keep an eye on the slightly backward-facing structure to find forward-facing clues of rising pressure. Eventually, natural gas breaks through $2.00, a slow erosion that’s more about a snowball exit by bottom pickers than fundamental developments; I mean it’s April.
Agriculture
CBOT May 2023 Wheat
Thursday’s softer session was disappointing across the board. The weakness continued overnight in both wheat and soybeans, although corn appears to open with modest gains. Corn and soybean prices are roughly in the middle of their two-week range, while wheat is testing the lower end. Summer spread action remains supportive.
crypto futures
CME April 2023 Micro Ether
Both BTC ($30,950) and ETH ($2,130) continue to make new highs for their multi-month trends; the bidding interest is there and keeps flowing.
Good luck today!
John
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