Futures are off by about 0.60% as December gets under way.

continued for members…

The strong month-end rally opens up the possibility of a breadth thrust.

But, SPX’s RSI will need to reverse first.

VIX and VX are again at cross purposes, with VIX back to broken out status.As we’ve discussed many times, Japan is facing very problematic inflation which, in turn, could unravel the very beneficial yen carry trade. The devaluation of the yen was predictable, with USDJPY rallying from 139 in April to 158 about a week ago.

Ueda’s comments last night suggest the BoJ is considering a rate hike in the Dec 18-19 meeting which, of course, strengthened the yen nicely.

The EURUSD has been less predictable. The pullback to the SMA200 at the intersection of the channel midline never materialized but, instead, has yielded a well-managed shuffle  which is patiently awaiting the arrival of the rising SMA200.

The DXY is following suit – breaking back below its SMA200 after the brief breakout. Keep an eye on 98.97 as we approach the FOMC decision on Dec 10.

There’s no question that Trump will select a very dovish Fed chair to replace Powell. NEC director Kevin Hassett is all but certain to get the nod – which might result in some of the FOMC members who don’t get the nod acting a little more responsibly with respect to US inflation.

CL and RB are both seemingly chomping at the bit, no doubt being suppressed by our Saudi friends in order to facilitate Trump’s agenda. It comes with a hefty price tag: America’s self respect. The fealty shown to MBS during his recent state visit was beyond the pale.

Meanwhile, the 10yr jumped back above the large white channel midline, suggesting that the momentary dip below 4% might have been a headfake. The charts still suggest a drop to as low as 3.25% in the next few months, particularly if equities hit the wall.

GLTA