“The lack of a concrete timeline or any real details about plans to reopen the Chinese economy and move away from the still very strict and economically crippling restrictions weighed on the energy market into the afternoon,” wrote analysts at Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are lower while bond yields and the dollar are edging higher after Republicans likely took control of the House but disappointed versus expectations in the Senate races. The result is still seen as being some form of a split Congress, however, which is historically favorable for markets.
Economically, Chinese CPI fell to 2.1% vs. (E) 2.4% Y/Y and PPI was -1.3% vs. (E) -1.6% but the data did not move markets overnight as the focus in China is on reopening plans and not inflation pressures.
Looking into today’s session, there are no market-moving economic reports which will leave the focus on the midterm election results, and if Democrats do end up keeping the House (which is possible, but unlikely) expect a mild reversal of the WTD gains.
Outside of the election news, there are two Fed officials speaking today: Barkin (11:00 a.m. ET) and Kashkari (1:00 p.m. ET) and a 10-Yr Treasury Note auction at 1:00 p.m. ET. Any meaningful dovish commentary or a strong auction could support a near-term equity rally but moves should be limited ahead of tomorrow’s CPI report.
The Sevens Report Research analysts said oil’s new trading range spans “between support in the upper $70s and resistance in the low $90s, as traders assess the outlook for demand amid growing recession concerns but still-tight global supply dynamics.” Click here to read the full article.
Since Friday’s renewed hopes for peak-hawkishness, bad news is good news for markets,” wrote Sevens Report’s Tom Essaye. Click here to read the full article.
“The negative China headlines and soft U.S. economic data were demand-side negatives for oil. However, hopes for peak-hawkishness bolstered risk assets” analysts at Sevens Report Research wrote in a Tuesday newsletter. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly lower following disappointing inflation data and as Russia suspended grain shipments from Crimea.
EU HICP (their CPI) ran hotter than expected, rising 10.7% vs. (E) 10.2% y/y while Core HICP rose 5.0% vs. (E) 4.8%, again showing that inflation pressures are not easing.
Russia suspended grain shipments in response to rocket attacks on Crimea, sending wheat prices sharply higher which will add to inflation pressures.
Today there are no economic reports but there are some notable earnings, especially from the semi-conductor companies and some companies we’re watching include: ON ($1.31), NXPI ($3.62), CAR ($14.80).
“The trend is still lower for now but once we can actually say we have reached peak-hawkishness, the outlook for gold will very likely shift to neutral (if not bullish) from bearish,” said Tom Essaye, a former Merrill Lynch trader and the founder of the Sevens Report newsletter. Click here to read the full article.
“The Biden administration introduced an ‘SPR put’ to the oil market this week when they announced purchasing crude to replenish reserves when prices dip towards $70 a barrel,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.
“The backdrop of sticky high inflation resulting in increasingly more hawkish Fed policy expectations for the foreseeable future and the subsequent rise in recession fears will likely keep a lid on WTI in the low to mid $90s,” analysts at Sevens Report Research wrote in Monday’s newsletter. Click here to read the full article.
Inflation cooling is the “key to market stabilization,” Sevens Report analyst Tom Essaye wrote in a Monday note, pointing out that the Federal Reserve and other central banks will not ease their monetary policy until there’s “conclusive” proof of inflation receding. Click here to read the full article.
