Market Overview – Morning Express

3 years ago 934 views 5 min read

Bill Baruch

President and Founder

Blue Line Futures

Geopolitics

– Diplomatic talks between Russia and Ukraine are ongoing, but difficult.

– All eyes on call between President Biden and Chinese President Xi today, for the first time since Russia invaded Ukraine.

– China denies providing Russia with military equipment, but can we trust them? Keep your friends close, and your enemies closer; they are guilty until proven innocent.

– China and Russia issued a 5,000-word joint statement on February 4th, in an unprecedented step of unification.

– The statement opposed Taiwan’s independence. Only a matter of days or weeks before China makes a formal move on Taiwan.

Federal Reserve

– Fed Chair Powell successfully lifted rates off zero, 25-bp hike

– 69.4% probability for 25-bp hike in May

– 80.2% probability for 75-bp of new hikes through June

– 99% chance of 150-bps of hikes this year through December

– 90.9% chance of 175-bps of hikes this year through December

– 61.6% chance of 200-bps of hikes this year through December

– The hawkish St. Louis Fed President Bullard, as expected, spoke with CNBC this morning and called for 300-bps of hikes this year, half point increases at meetings, with balance sheet run-off.

– The balance sheet run-off will become a pivotal conversation as we move closer to the May meeting.

– CNBC is rolling out all the hawks this morning with Fed Governor Waller on deck.

– Richmond Fed President Barkin is scheduled to speak at 11:30 am CT and Chicago Fed President Evans at 1:00 pm CT, neither are 2022 voters.

– Fed Governor Bowman speaks at 2:00 pm CT.

Yield Curve

– Spread between U.S. 10-and 2-year Treasuries hit a low on March 8th and is lingering above 20-basis points, the lowest since March 10, 2020.

– Spread between U.S. 30-and 5-year Treasuries set a new low of 25-bps yesterday before reversing. Lowest since October 2018.

– The 30-5 spread can be a leader, but never went negative through 2019, like 10-2. It was last negative in 2006.

– However, the spread between U.S. 10-year Note and 3-month Bill has improved for the second week in a row. Steepening to the highest since March 2017. This has certainly eased the Fed’s concerns.

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

S&P, yesterday’s close: Settled at 4402.00, up 52.50

NQ, yesterday’s close: Settled at 14,107.75, up 158.00

– Prices are elevated against resistance but holding strong and underpinned by major three-star support.

– Previous resistance is now support in the S&P at 4259.25-4371.50 and the NQ at 13,899-13,950.

– There are several waves of strong support below the market, denoted below, but the most crucial is the S&P at … Click here to get our (FULL) daily reports emailed to you!

Crude Oil (May)

Yesterday’s close: Settled at 101.65, up 8.06

– OPEC Compliance in February confirmed at 136%, we noted this last week, echoes the lack of spare capacity and the fragility of the supply-demand landscape.

– April contract is rolling off.

– Geopolitical bid into the weekend?

– We still view 103.01-103.61 as significant due to April ranges, but now only key level.

– For front month May we now have a crucial level in which the bulls are clearly in the driver’s seat, while above … Click here to get our (FULL) daily reports emailed to you!