Congress playing a high stakes game of chicken

3 years ago 927 views 5 min read

Bill Baruch

President and Founder

Blue Line Futures

– Congress playing a high stakes game of chicken. Government shutdown Friday without funding.

– Potential separation of funding bill and debt ceiling. Opens the door to a stopgap funding bill to avoid shutdown.

– Then gives two weeks to drag each other through the mud and posture before needing to raise the debt ceiling and avoid default.

– Vote on $4 trillion ‘infrastructure spending’ bill was set for Thursday and looks to be delayed.

– Risk of default has certainly opened a trap door in Treasury market, but not alone. Massive tailwinds from energy crunch and supply chain disruptions stoking inflation as Delta subsides and brings a global reopening of the reopening.

– U.S. Dollar Index is breaking out.

– Psychological 1.5% in 10-year and 2% in 30-year tested, but the key levels are 1.55% and 2.06% respectively.

– September CPI data in Spain higher than expected 4.0% versus 3.7%

– Fed Chair Powell will join ECB conference at 10:45 am CT. Deluge of central bank talk throughout the day. Comments from ECB President Lagarde throughout the day.

– Philadelphia Fed President Harker speaks at 8:00 am CT. Does not vote until 2023

– Atlanta Fed President Bostic at 1:00 pm CT, 2021 voter

– NY Fed President Williams at 4:00 pm CT, permanent voting seat.

– China Manufacturing for September tonight at 8:00 and 8:45 pm CT.

– China’s Shanghai Composite -1.83% on growth fears due to power rationing.

– Evergrande payments due today, news that several offshore holders did not receive payments hit the tape at 5:30/6 am CT.

E-mini S&P (December) / NQ (December)

The S&P500, yesterday’s close: Settled at Settled at 4343.50, down 89.50

NQ, yesterday’s close: Settled at Settled at 14,764.75, down 430

– NQ worst day since March and closed at lowest since July 20th. Rising yields a direct hit to Tech sector.

– S&P held major three-star support and big level at 4337-4343.25

– Dip ahead of the bell pins both S&P and NQ well below momentum indicators at 4366 Pivot and 14,855-14,896 resistance.

– Must find traction within the first 90 minutes and regain those momentum indicator levels or face continued selling and a battle at yesterday’s low.

Bias: Neutral

Crude Oil (November)

Yesterday’s close: Settled at 75.29, down 0.16

– Sharp pullback through overnight held major three-star support perfectly and price action has responded

– Still must regain 74.90 and hold above there

– EIA data due at 9:30 am CT. Expectations are -1.65 mb Crude, +1.4 mb Gasoline, and -1.648 mb Distillates.

– Yesterday’s API was a massive surprise build across the board; +4.127 mb Crude, +3.55 mb Gasoline, and +2.483 mb Distillates. Sellers sold on this data, and it sets a low bar for stability on official EIA read.

– Remain very Bullish in Bias as long as it holds above major three-star support at 73.58-73.98

Bias: Bullish/Neutral

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Gold (December) / Silver (December)

Gold, yesterday’s close: Settled at 1737.5, down 14.5

Silver, yesterday’s close: Settled at 22.467, down 0.227

– U.S. Dollar breakout weighing on precious metals.

– However, some stability from yesterday’s low in Treasuries helping to offset.

– Despite weakness in Gold and Silver, Platinum is beginning to look interesting.

– Major three-star supports holding at 1731.7-1737.4 in Gold and 22.02-22.35 in Silver

– Due to ongoing weakness with no real bounce, momentum indicators align with major three-star supports.

– Close above 1753-1756.4 in Gold and 22.93 in Silver can begin neutralizing some ongoing weakness.