Good morning,

 

DXU9  98.205  -0.188                       GCZ9  1546.7  -13.7                                                                     ESU9  2964.75  +26.25                     CLV9  56.30  +0.04

 

The US and China have a tentative agreement to resume trade talks in October.  Equities have extended yesterday’s march higher, and fixed income markets are adjusting lower, as the Fed has always given concerns about the longevity of the trade talks being a hindrance to economic growth, thus creating a need for a more aggressive easing policy.  Gold has a slight correction down, but is continues to hang within striking distance of the highs, as nothing has really changed yet.  Oil prices, rallying yesterday with the equity markets, came under some light pressure yesterday afternoon, as the API reports crude inventories rose by 400k barrels, last week, while gasoline stocks declined by 877k barrels.  Oil prices found support however, as Hurricane Dorian is headed towards Georgia and South Carolina.  While not directly in the line of the oil producing areas, the threat calls for some weather and risk premium to remain in the price. 

 

Corn futures traded at new lows for the year yesterday, as Brazil appears to be making traction in the corn export arena.  The stronger dollar and the late harvest of an expected large crop creates opportunities for other countries to step in and gain market share.  Funds added to existing short positions on the push down, as futures open interest rose by almost 5k.  Soybean futures traded higher yesterday and are up a touch today, as renewed trade hopes allow for a corrective bounce to the market.  Wheat futures continue to correct higher as well, having spent most of last week pushing down towards the lows on demand concerns.  The market will spend the next few trading sessions preparing for the WASDE report from the USDA, coming next Thursday. 

 

Orange juice futures traded higher yesterday, following to consecutive down sessions that saw prices decline almost $8.  The decline in prices came from risk premium being removed, as Hurricane Dorian pushed further up the coast line, and missed a major portion of the orange growing area.  Cotton futures caught a bid yesterday, as the push up the coast created a need for some additional weather risk premium for cotton prices.  This is continuing this morning as well in cotton.  Coffee futures have been tied to movements in the Brazilian real of late.  Prices are higher this morning, as today’s stronger real eases back how aggressive the Brazilian producers price in the export arena.

 

Oil prices are sticking close to the upper end of the recent trading range, ahead of reports from the DOE on last week’s production and inventories.  It was reported that OPEC exports rose by 177k barrels/day in August, aiding any concerns about available supplies as the production quotas remain with OPEC+. 

 

Copper prices have jumped higher today, with the renewed trade deal prospects.  Copper continues, for the most part, to track the equity markets, as the health of the global economy should determine demand for industrial metals.  As mentioned earlier in the week, gold should ultimately maintain a bid, as numerous global uncertainties remain on the horizon.  In addition, with global fixed income assets having very low yields (or even negative in some cases), gold seems like a fine place to park some money and let the chips fall where they may.

 

Today’s ADP Employment Index came in +195k, vs +142k last month and an expected +148k.  This may cause some analysts to revise upward a touch their calls for tomorrow’s NFP number.  The current forecast is for NFP to be +160k, vs +164k last month.  The Unemployment Rate is expected to remain at 3.7%.   The employment data, along with next week’s latest read on inflation, are the last significant pieces of data ahead of the next Fed meeting on September 17-18.  The fixed income markets have been swaying to and fro, trying to determine how aggressive the Fed may be with additional easing of monetary policy.               

 

Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                       890.25                   889.25                   917.00

CZ9                      411.00                   411.75                   405.00

WZ9                     499.50                   498.50                   513.50

KWZ9                  439.75                   453.25                   488.75

MWZ9                 533.00                   545.75                   568.50

SMZ9                   307.5                     311.3                     316.8

BOZ9                   28.73                     28.58                     29.41

CLV9                    56.37                     57.92                     56.93

GCZ9                    1470.5                   1395.8                   1355.0

LHV9                    69.825                   76.765                   74.490

LCV9                    105.140                 107.310                 111.605

KCZ9                    104.05                   102.40                   107.50

CCZ9                    2374                       2392                       2352

CTZ9                    61.87                     65.96                     70.46

SBV9                    11.87                     12.21                     12.68

JOX9                    103.90                   106.05                   118.05

HGZ9                   264.60                   270.70                   276.15

 

Thanks,

Mike

 

 

Michael Clifford

 

141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC                                              

312-604-6404