Good morning,

 

DXU9  98.555  -0.073 (pre ECB);  98.845 +0.217 (post ECB)      

GCZ9  1510.6  +7.4 (pre);  1531.2 +28.0 (post)            

ESU9  3007.50  +5.50          CLV9  54.73  -1.02

 

The US and China put a temporary delay on the latest set of tariffs to be implemented, as a good will gesture ahead of the next round of trade talks coming in a few weeks.  This gave equity markets a bid, pushing e-mini’s back over the 3000 mark.  Oil continues to rotate back down, following yesterday’s reversal.  Gold once again has a bid, and is inching back up, having rejected prices below $1500 for the moment.  The ECB is expected to lower interest rates, and the notion of lower monetary policy provides a bid for gold.  Grain prices are up ahead of today’s WASDE report from the USDA, where production and inventory numbers could be adjusted lower.  The dollar is lower today, supporting soft commodity prices.  Copper has a solid bid, again following equities. 

 

**the ECB leaves the benchmark rate unchanged, at 0%;  lowers the deposit rate by 10 basis points to -0.5%;  and extends the quantitative easing program, purchasing up to 20B a month, beginning in November**

 

Oil has been the most dynamic trade of late, ripping back and forth across a $7 to 8 range.  Prices were firm early yesterday, as the latest round of weekly production and inventory data again showed another decline in stocks.  The trade above $58 was losing momentum, when the report of President Trump considering an easing of the sanctions on Iran hit the tapes.  Oil prices then came off quickly, with the thought of additional global supply possibly becoming available.  Also putting some pressure on prices was the announcement out of the OPEC+ meetings that any talk of further production wouldn’t come until the December meeting.

 

Gold prices, which were trading higher from the overnight trade, saw a decent pop on the ECB news.  The now is a clear rejection of prices below $1500 on the charts, and an extension to higher prices can be expected.  US fixed income markets are responding positively to the ECB news, also rallying after the announcement, thinking this action may prompt the Fed to take a more aggressive stance at its meeting next week and beyond.  Lower global monetary policies are bullish for gold. 

 

The grain markets finally receive some fresh data today, in the form of the WASDE report from the USDA.  The market has been questioning the USDA’s read on production all summer, and hence on available stocks, given the disastrous start to the season and what the weekly conditions reports have been showing.  Nonetheless, the USDA continues to project yields, and the crop sizes, to be larger than what seems possible, given what has been observed.  Thus, if there are any changes to the projections, the market expects them to be to the downside.

 

Cotton prices are also trading higher in front of the report, as there could be some minor adjustments down to what has been projected, to this point, to be a large crop year as well.  Renewed hopes on the trade front, and the softer dollar (pre-ECB) also help push prices up.  Coffee prices are rotating down, following a several day rally on the hot and dry weather that has been observed in Brazil so far in September, and the extended forecast showing more of the same.  There may be some relief in that call, which allows for a correction down.  Sugar prices continue to leak lower, trading near the lows for the move, as the funds continue to grow a huge short position.  A very large surplus of sugar is expected, following this growing season.  Orange juice has been rallying of late, putting some weather premium into the price as we move thru hurricane season.  Hog prices have been trading lower, in spite of thoughts of increased demand for US pork following ASF, as China is aggressively looking at means to fix and improve domestic production of hogs.         

 

Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                       884.75                   886.25                   915.25

CZ9                      402.50                   410.25                   404.00

WZ9                     492.25                   498.25                   511.50

KWZ9                  430.25                   450.00                   484.75

MWZ9                 526.00                   543.00                   565.75

SMZ9                   304.9                     310.2                     316.2

BOZ9                   28.73                     28.52                     29.40

CLV9                    56.17                     57.57                     56.97

GCZ9                    1479.5                   1406.2                   1361.2

LHZ9                    67.605                   73.340                   70.530

LCZ9                    108.915                 110.670                 114.670

KCZ9                    102.80                   102.40                   106.80

CCZ9                    2353                       2386                       2353

CTZ9                    61.16                     65.07                     70.01

SBH0                    12.73                     13.09                     13.48

JOX9                    103.65                   105.40                   117.05

HGZ9                   263.70                   269.00                   275.70

 

Thanks,

Mike

 

 

Michael Clifford

 

141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC                                              

312-604-6404