The good news is that the Philly Fed Index hit new highs for June. The bad news is that the Philly Fed Index hit new highs for June. Not only is a 41 handle hawkish from an FOMC standpoint, but peaks in the index almost always coincide with corrections – which is exactly what we’re expecting. From the excellent Trading Economics:

Then there’s the part of the index that contradicts the recent official inflation data. Recall that CPI and PPI came in well below expectations – no reason to worry about inflation or consider raising rates. Survey participants didn’t see things that way. It’s hard to imagine a 0.4% MoM decrease in prices if 0.0% of survey participants saw price decreases.

We had a brief downturn overnight which has been halved by a retreat by VIX back below its SMA10 — as we discussed yesterday, the input the algos are watching at present.

We’ll continue posting after a couple of conference calls.

Stay tuned…

The bond market is once again saying the quiet part out loud. Both the 2Y and the 10Y were bumping up against trend lines which posed breakout risk when both CPI and PPI both posted inflation data that was well below expectations – in fact, the lowest since the depths of the COVID crisis.

Remember, these prints come from the Bureau of Labor Statistics – the very same organization that used to be run by Erika McEntarfer, who was fired by Trump when the BLS released employment data that wasn’t favorable to him. He posted that she was incompetent and unqualified and that the data was manipulated.

Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes.

I couldn’t agree more. The market tanked, as investors everywhere wondered what it meant now that we couldn’t trust the BLS to operate independently of politics.

Now we know. The 10Y has recently broken out, thanks largely to Trump being outplayed by the Iranians, but hasn’t yet popped above the TL from Oct 2023. It would undoubtedly be much lower if Trump hadn’t started the war in the first place. But, here we are.

Algos are less impressed than they were yesterday, perhaps due to the latest attacks by both Iran and the US which have left CL and RB pushing new highs.

The 10Y has retreated somewhat, leaving the 2s10s backtesting the TL from Sep 2023.

Futures are up modestly.

VIX’s dip back below its SMA10 is all it would take for the bulls to keep the momentum going.

And, the DXY is continuing to trend sideways, for now at least.

SPX/ES are both at a point where it would be quite easy to break out. But, at the same time, the SMA200 is coming up on the previous high – an enticing target if a backtest will be allowed. There are plenty of available catalysts – both real and fabricated – in either case.

GLTA

CPI supposedly fell 0.4% in June, the biggest drop since April 2020 in the depths of the COVID disaster.  If nothing else, it’s a great reminder of how suspect every bit of data coming out of the federal government has been since Trump fired Dr. Erika McEntarfer for reporting employment data that wasn’t favorable to the White House.

The 9.9% monthly drop in gas prices might have produced a temporary drop in inflation. But, the more important data point is the 29% YoY gain, which supposedly produced a 3.5% YoY print in CPI.

Futures had been flat going into the CPI print, but shot up 30 points after the release – perhaps as carbon-based traders took a gander at WTI prices.

The  open looks likely to be a more modest bump.

RB has risen 15.5% in the past two week – one of the reasons the 10Y had already broken out.

It remains broken out, though it’s been on a wild ride this morning.

Warsh testifies today, which has had traders a little nervous given his hawkish sound bites. But, this morning’s CPI print will likely give him some reassurance that something as drastic as a rate hike might be completely unnecessary.

Stay tuned.

The ceasefire between the US and Iran is no longer in place, sending oil prices and interest rates higher in advance of tomorrow’s CPI print.

 

 

 

Futures are flat following a day that saw the algo-inspired meltup surge yet again.

Aside from VIX suppression, the algos are encouraged by the inability of CL to push through its SMA200.

RB also remains constrained, with its own SMA200 reaching an important channel midline.

So, though TNX remains broken out, it’s behaved itself for the past couple of sessions.

Stocks are slightly higher despite a further escalation of hostilities in Iran. The US said it hit 90 targets overnight while Tehran says it targeted American bases in Qatar, Kuwait and Bahrain.

In the US, it’s all about keeping a lid on the 10Y.

Trump says the US-Iran cease fire is over.

As we’ve said from the start, Iran will do everything in its power to thwart Trump’s midterm ambitions – which means the conflict will continue until at least October. This is merely the latest chapter.

The algos were busy, reversing VIX at its SMA200 which allowed futures to recover more than half of their premarket losses.

Oil pulled a similar move, getting hammered by TPTB at its SMA200.

If the manipulators can continue manipulating so well, this will be a minor blip. But, Trump is now talking about hitting Iran “hard again tonight.” So we’ll see if volatility can continue to be contained.

Stay tuned.

Futures are off modestly ahead of the open after another disappointing trade balance print and amidst a global selloff on chip stocks.

CL’s .786 remains stubborn support.

Which to believe: SPX, which just completed a bullish 10/20 cross, or ES, which is stubbornly showing a bearish 10/20 cross?

The odds of the stasis continuing rise with Trump ringing the bell today…

Futures are moderately higher following disappointing jobs data (57K vs 130K), CL’s drop through support, and another pointed decline in VIX. The algos are happy.

CL’s drop through the .786 at 68.78 helped the 10Y back off its breakout, which in turn reversed DXY’s breakout. The level to watch is 100.77.