Good morning,
DXH0 98.105 +0.641 GCJ0 1586.0 -4.3 ESH0 2595.00 +126.00 (locked limit up) CLJ0 33.50 +2.00
Corrective bounce? Risk on? Enough is enough!? Take your pick what you may call the overnight price action, as US equity futures are locked limit up (which is the 5% threshold, upon the re-open there are no further upwards restraints (unlike the downside)). The overly aggressive repo announcement from the Fed was the key ingredient to bring some life back to the ailing markets. The market still expects the Fed to deliver at least 50 bps of additional easing at the FOMC meeting next week. Most in the market think the Fed will not be done there, with some thinking an additional 25 to 50 bp cut is also in the cards at some point (one shop is calling for a 100 bp cut on Wednesday). Most other assets are also in corrective mode, attempting to recover from the bloodbath that hit most markets.
The exception, as would be expected, are the haven markets. Fixed income is coming off, and gold is lower, following a beating yesterday. Yesterday’s lower prices in these assets caught many in the market off guard, as equities were locked limit at a few different levels throughout the course of the session. A common thought to the change from the inverse relationship of equities and havens was that the havens were being sold to satisfy increased margin calls. Certainly makes sense. As most feel this pandemic is far from over, and the economic implications will most likely be felt throughout the remainder of the year, price volatility across all markets should remain high, which will keep underlying support in havens such as US Treasuries, gold and the US dollar.
The oil market remains on guard for some type of agreement on production levels, primarily between Saudi Arabia and Russia. It does appear like both sides are attempting to hold their ground, but as oil prices keep trying to creep higher, it can be interpreted that there is some underlying hope that some type of a resolution can be found.
So, again, the story remains the virus, and at this point, what fiscal steps are taken by most countries to repair the economic damage already done and as a precautionary measure to what may develop. Keep an eye open for any oil developments, but it seems like this may still be out on the horizon, if it exists at all.
It is Friday the 13th, so be careful out there! The CME exchange floor is closed after today’s trade, so while the markets remain open, there could be some liquidity issues as some traders transition to a potentially different way of doing business.
Have a good weekend.
Technical Moving Averages:
Product 50 day 100 day 200 day
SK0 912.75 927.50 929.00
CK0 385.50 389.00 406.00
WK0 550.25 540.75 529.00
KWK0 476.75 463.00 466.00
MWK0 544.75 543.00 552.75
SMK0 301.5 305.4 310.9
BOK0 31.50 31.89 30.81
CLJ0 51.73 54.39 54.39
GCJ0 1592.7 1542.1 1506.3
LHJ0 68.260 72.920 76.400
LCJ0 118.915 122.210 119.405
KCK0 111.80 115.55 112.05
CCK0 2719 2635 2527
CTK0 68.08 67.63 65.92
SBK0 14.12 13.54 13.25
JOK0 99.35 102.00 107.10
HGK0 265.25 268.55 266.90
HOJ0 167.88 179.46 182.93
XBJ0 166.81 174.38 173.46
NGJ0 1.930 2.096 2.231
Thanks,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404