Good morning,
DXZ9 98.155 +0.166 GCZ9 1459.0 -7.4 ESZ9 3085.00 -1.00 CLZ9 56.40 -0.75
Well the markets were certainly believers of the trade talk coming out of China and the US, talking about rolling back tariffs when the first phase of the trade deal is completed. Thinking a deal is coming, possibly soon, called for equities to extend the highs for the year. It also allowed oil, which was under some pressure from large US supplies and OPEC talking about not putting in place larger production cuts next year, to bounce back up towards the weekly highs. Oil prices are getting hit today, as there is talk that there is not enough global demand to meet the current level of output. With OPEC talking about keeping current production quota levels in place, the market is concerned about a supply glut.
Aside from the equity push, gold was the story yesterday, as the “risk on” attitude garnered from a presumed trade deal caused a massive exit from safe haven positioning in gold. On the initial flush from the overnight trade, gold held up against the 100 day moving average. Once prices penetrated through that level, it was a great race to the exit door. Prices propelled down another $20+, finding support in the vicinity of the low on the last big meltdown in gold, over a month ago. Gold prices are mounting another push down today, trading in the mid 1450’s. In a liquidating market, prices can get pushed further than what normally might be the case. Aside from the trade deal, which I would point out ISN’T finalized yet, the same amount of uncertainty the markets were facing a few days ago remains. One could argue that there is some value in the current levels, but if it’s a race to get out, you don’t want to be trying to catch the grand piano being tossed out of the penthouse apartment.
The grain markets, and most commodities traded better yesterday on the trade news as well. General consensus is that a US/China trade deal will be very good for the global economy, and most commodities will benefit from the improved economic growth prospects. Grains also had a bid in front of today’s WASDE report, where projections for production and inventories are expected to be lowered. The unseasonably cold weather sweeping across the Midwest and Plains also supported grain prices. Diminishing supply concerns and short positioning by the funds also drove prices of commodities yesterday.
Headlines on trade and the weather front with this cold front should be the dominant themes for the trade today. Of course, any surprises in the WASDE data can sway the grains and cotton markets.
Technical Moving Averages:
Product 50 day 100 day 200 day
SF0 919.75 913.75 920.25
CZ9 379.50 398.75 400.50
WZ9 495.50 500.75 501.25
KWZ9 411.50 429.50 456.25
MWZ9 526.75 532.50 551.50
SMZ9 301.8 305.8 311.6
BOZ9 29.92 29.33 29.51
CLZ9 55.39 55.77 57.41
GCZ9 1506.6 1482.8 1403.5
LHZ9 66.865 68.010 71.530
LCZ9 110.365 110.325 113.705
KCZ9 99.20 101.95 103.35
CCZ9 2419 2408 2378
CTZ9 62.05 62.27 67.42
SBH0 12.34 12.67 13.21
JOF0 102.40 104.65 112.30
HGZ9 262.20 263.95 273.85
Thanks,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404