Market Overview – Morning Express
– Nonfarm Payrolls on Friday was a strong report. Despite Omicron headwinds 467,000 jobs were added in January and December was revised higher by 311,000. This means 778,000 jobs were created.
– Some talk of adjustments for temporary layoffs or time off due to the virus that could have boosted results.
– Regardless, this is strong with added tailwinds from Wage Growth.
– Average Hourly Earnings surged by 5.7% YoY, the fastest since the onset of pandemic stimulus.
– This is an inflationary factor, also +0.7% MoM.
– Report allows the Federal Reserve to stay in step with mounting expectations for tightening policy.
– March’s liftoff a forgone conclusion, now 30.8% probability of 50 basis points, instead of only 25 bp.
– May is now pricing in the second 25 basis points with 99.8% probability and June is pricing in third 25 basis points with 98.8% probability.
– Guess what? The U.S. Dollar Index has all but surrendered all of the Nonfarm Payroll gains.
– U.S. 10-year is holding at and above 1.90%.
– U.S. 5-30-yr and 2-10-yr spreads have flattened to new lows, thought stabilizing. (chart above).
– German sovereign debt is tightening the gap between U.S. With the German 5-year now positive. (two charts above)
– With the Euro erasing Nonfarm losses and holding at the highest since mid-January which is the mid-November breakdown (chart above), ECB President Lagarde’s address to EU Parliament should be closely watched at 9:45 am CT.
– Final Thoughts: Bending, Still Not Breaking – the inflation story has pressured the Federal Reserve to speed up their timeline in which to tighten policy. U.S. equity indices have healthily bent quite a bit, but the pattern has remained extremely technical and very tradable through our daily roadmap. Similarly, inflation has risen, but it has not broken the camel’s back, so to speak, and base comparisons will bring a higher bar in the coming months. We have expressed our belief the U.S. Dollar tops at the onset or early stages of a hiking cycle. Similarly, we believe rates of duration 10-years and longer are nearing their peak, a 10-year Note high of 2.00-2.15%. This narrative will present tremendous opportunity and patience will remain key as the path will be as imperfect as ever. With this said, Treasury auctions through midweek and CPI on Thursday will be critical.
E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 4492.50, up 23.50 on Friday and 69.25 on the week
NQ, yesterday’s close: Settled at 14,685.50, up 193.25 on Friday and 252.50 on the week
– What a perfect test to rare major four-star support at 4440-4446 on Friday, low of 4438.50 rallied nearly 100 points to 4432.50.
– Range defined very well our major three-star resistance is 4528-4535.
– Price action is battling firmly at and above our momentum indicators, this is constructive, denoted as our Pivots in the levels section below.
– Both the S&P and NQ have back-tested last Monday’s range breakout as support.
– As we noted Friday, a close below rare major four-star support at 4440-4446 will be seen as near-term bearish and encourage added selling.
– Will be seen as near-term bullish, potentially setting in motion a rally into CPI, upon a close above major three-star resistance in the … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (March)
Yesterday’s close: Settled at 92.31, up 2.04 on Friday and 5.49 on the week
– Physical market continues to tighten though WTI front month spreads, March-June and March-December are coming in a bit after Friday’s rip.
– Iran Nuclear talks back on the table. White House restored sanction waivers to pave the way for talks. Iran has reiterated successful talks will require removal of sanctions.
– No major disruptions from Texas freeze. Was one of several tailwinds for higher prices to close out last week.
– White House and German leadership meet on Russia. France’s Macron to meet with Russia’s Putin.
– This morning, price action pinged Friday’s 2:00 am CT and European open level of 90.73, bounced as support.
– Tape remains very constructive, potential floor building at 89.72-90.30.
– We see near-term opportunity, with good risk reward using a broken butterfly structure. Call out trade desk at 312-278-0500 or email info@bluelinefutures.com.
– Friday’s surge opened the door to what we highlighted as a melt-up. Remains in effect while price action is above our rising momentum indicator at … Click here to get our (FULL) daily reports emailed to you!
Gold (April) / Silver (March)
Gold, yesterday’s close: Settled at 1807.8, up 3.7 on Friday and 21.2 on the week
Silver, yesterday’s close: Settled at 22.475, up 0.100 on Friday and 0.174 on the week
– Gold and Silver are resilient despite strong payrolls. Coincides with U.S. Dollar weakness as money flows out of the U.S. Dollar and into the Euro as now the German 5-year is in positive territory. Something we have been highlighting for weeks as a potential underpinning to the metals. (chart above).
– No big data to start the week but look for surprise Fed comments on payrolls.
– Both Gold and Silver have achieved first key resistance on the session.
– Strength has supported our momentum indicators, rising to … Click here to get our (FULL) daily reports emailed to you!
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