Commodity Corner: Morning Comments

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






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC