pebblewriter

Tag: DXY

  • Jobless Claims Spike Higher

    Initial claims spiked to levels not seen since October 2021, another indication of a slowing economy.  Applications rose by 28,000 to 261,000, well above the consensus of 237K.

    So far, futures have ignored the print.

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  • Blowout NFP Complicates Fed’s Job

    Non-farm payrolls exploded higher in May, tallying 339K versus 190K consensus. On the other hand, unemployment rose from 3.4% to 3.7%.

    Futures initially slumped, as blowout job gains argue for further Fed tightening. But, VIX was hammered to lows of 15.12, a level not seen since Nov 2021, and the overnight ramp was salvaged, for now.

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  • Charts I’m Watching: May 30, 2023

    The meltup continues on yet another after-hour VIX dump.

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  • Some Like It Hot

    If you’re a retailer, you might be thrilled with the personal income and personal spending beat last month (0.4% vs 0.3% exp and 0.8% versus 0.4% expected.) If you’re a manufacturer, you might be pleased with durable goods coming in at a +1.1% versus the -1.3% expected.

    But, if you’re a member of the FOMC, you have to be chagrined that those hot numbers, combined with hotter core and headline PCE and tightening credit conditions, will force tighter monetary conditions.  The algos agreed for a few minutes, but were quickly reminded of the requirement to take their cues from VIX.

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  • Mixed Messages

    Futures bounced off our 50-day MA target and are up sharply on NVDA‘s blowout earnings/forecast, egged on by Speaker McCarthy’s latest promise that a debt ceiling resolution is on the way.

    Of course, this bullishness is unwarranted from a Fed rate hike perspective. Initial claims came in below expectations and Q2 GDP (the deflator was 4.2% vs 4.0 expected) was hotter than expected. Not exactly a scenario that supports a pause/drop.

    Unless VIX plunges below 18.58, this ramp job should be faded.

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  • Fed Minutes: May 24, 2023

    Futures are off about 0.5% in advance of the latest FOMC minutes. While these releases don’t often shed much light on what to expect, they can help us understand what the Fed fears the most. Based on recent comments, the fear of sticky inflation seems to be outweighing the fear of a recession.With the debt ceiling crisis, banking crisis and recession still grabbing headlines, it’s clear that the Fed is still stuck between a rock and a hard place.

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  • Charts I’m Watching: May 23, 2023

    Today marks the third day in a row that ES has backtested the former resistance at 4190ish. Just a reminder, these things don’t happen by accident.

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  • Stocks vs Bonds

    The OPEX meltup continued overnight, with futures up modestly to new 9-month highs.

    Powell speaks at 11am ET and might shed some light on the implications of treasury yields which have pushed to new cycle highs – reflecting a much more cautious assessment of the debt ceiling negotiations.

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  • Jawboning an OPEX Rally

    Yesterday’s 1.2% spurt higher was driven not only by the usual push in USDJPY and plunge in VIX, but a healthy dose of hopium regarding the debt ceiling crisis. Congressional and White House reps were nearly unanimous in declaring that a deal is as good as done.

    Whether they’re speaking the truth or simply trying to avoid a market meltdown a la 2011 remains to be seen. Both SPX and ES saw a bullish 10/20 cross, but it could unwind if ES closes back below the former resistance at 4166. Keep on eye on the ever proficuous VIX, which usually triggers algos to buy any significant dips by breaking below support such as the purple channel bottom below.

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  • Debt Ceiling Worries

    We’re starting to see cracks in the equities and bond markets related to the debt ceiling. Interest rates are ratcheting higher. And, although OPEX-related maneuvers are working to prop up stocks, we had a momentary breakdown in SPX yesterday.

    Utilities, a bond proxy for some, have taken a big hit this week as investors shift into shorter-term, less volatile treasuries.

    Which would you rather own, XLU with a beta of .56 and yield of 3.01% or a 6-mo Tsy paying 5.25%?

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