Heavy CPI Positioning
Risk-on sentiment indeed ruled yesterday and also overnight as stocks, bonds and real assets are positioning for declining CPI – just as I wrote in yesterday‘s analysis would happen:
(…) Not only that bonds turned decidedly risk-on yesterday, but crucially market breadth and sectoral posture (at relative expense of tech, which I also told you about) including the speed with which gold downswing was rejected, provided more confirmatory clues as to the CPI positioning – the market expects disinflation to continue, and is willing to yet again front run Powell in its Fed pause bets.
Sectorally and otherwise, yesterday‘s session turned out to the letter, and I reviewed it for you in a video published shortly before yesterday‘s close. Do check it out for pre and post CPI expectations – the Youtube channel is as integral part of what I‘m bringing you as much as Twitter is.
Lot more ground is covered in the individual chart section below. My next analysis would come on Monday only as I‘m taking a little break till then, and will serve you chiefly with occasional tweets whenever markets merit so.
As for upcoming data, I‘m looking for tomorrow‘s PPI to underscore even more the disinflationary period the economy is still in, with unemployment claims not delivering a stunning upside surprise equals more room for the Fed to tighten as the economy isn‘t imploding (similar message what BoC policy statement would deliver), and finally Friday‘s consumer sentiment still coming in positive around 64-65 with consumer inflation expectations around 3.5%.
All in all, nothing that would signal green light for the Fed to refrain from hiking in Jul, and Jul pause is what markets are leaning towards this week as their reactions tell (but not Fed futures).
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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 4 of them.
S&P 500 and Nasdaq Outlook
Not only that 4,432 didn‘t come into any jeopardy, but 4,450s held intraday during the regular session as the rush to still buy and buy more, is alive and well – with improving equal weighted index, market breadth characteristics and also Russell 2000. That‘s the kind of magic a little bond yields retreat delivers – all talked lately also in extended format.
The spike into 4,490 / even 4,500 – 4,510s discussed in another video, is still very much possible, and I‘m not looking for CPI kneejerk reaction to sink this scenario. As per today‘s opening analytcal part, the same applies to PPI.
Gold, Silver and Miners
Precious metals participated in the prepositioning run higher, and their upcoming performance would reveal just how close we are to the end of long basing period. True, could have risen more given dollar weakness, therefore the upcoming yields path and Fed tightening conviction would determine the short-term prospects.
Crude oil seems to be embracing no sharp deterioration in data, and Fed pause bets – this week‘s basing period had been really brief, and $76 – $77 battle is approaching really fast.
Copper also delivered on the condition of erasing yesterday‘s intraday setback – even the high $3.75 area is fine for today, more than fine.
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All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice.
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