U.S. Equity markets ended yesterday’s trading session soft ahead of this afternoon’s inflation data, with the Dow leading the decline with a loss of 0.44%. Markets were largely unchanged for most of the day. Inflation data are the focus for the rest of the week – with the release of U.S. CPI at 1.30 pm. Investors will be expecting a spike in inflation, as May was another easy comparable period. The only question is whether it is a large enough spike to cause concerns over longer-term inflation. There was also positive commentary on consumers. Visa’s spending momentum index showed that 52% of consumers were spending more in May 2021 than they did in May 2019. Elsewhere, the National Retail Federation (“NRF”) raised its sales growth outlook for the year. The industry group said that it is seeing a quicker-than-expected economic recovery, as well as pent-up demand for shopping. European Markets closed mixed. German export figures for April were weaker than expected, falling versus March, and signalling economic momentum in Europe may be stalling. Italy’s 10-year government bond auction yesterday saw demand levels of 10 times the amount being offered, signalling a healthy investor appetite for European sovereign debt. In Asia, China’s producer price index data for May were stronger than expected, hitting the highest level since 2008, on the back of rising commodity prices. China’s consumer price index data for May were weaker than anticipated, although they rose versus April, as food-related costs saw the largest gains. South Korea’s statistics office said the economy experienced job gains for the third straight month, adding 619,000 new positions, as the country recovered more than 80% of COVID-19-related losses. Australia’s Westpac-Melbourne Institute consumer confidence data for June fell versus May, as individuals’ and households’ optimism about the current economy and outlook eased. Elsewhere, Bitcoin surged 10% as El Salvador officially made the cryptocurrency legal tender, as well as Interactive Brokers announcing that it would soon launch crypto trading, while Oil closed 0.43% lower as U.S. gasoline inventories unexpectedly rose, implying lower demand for crude in the near term.
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Equities
The S&P 500 closed 0.18% lower at a price of 4219.
The Dow Jones Industrial Average closed 152 points lower for a 0.44% loss at a price of 34,447.
The NASDAQ 100 closed 0.03% higher at a price of 13,814.
The Stoxx Europe 600 Index closed 0.2% higher.
Yesterday, the MSCI Asia Pacific Index fell 0.1%.
Yesterday, the Nikkei closed 0.35% lower at a price of 28,860.
Currencies
The Bloomberg Dollar Spot Index closed 0.1% higher.
The Euro closed 0.1% higher at $1.2181.
The British Pound closed 0.4% lower at 1.4109.
The Japanese Yen fell 0.2%, closing at $109.65.
Bonds
Germany’s 10-year yield closed two basis points lower at -0.24%.
Britain’s 10-year yield closed four basis points lower at 0.73%.
US 10 Year Treasury closed four basis points lower at 1.49%.
Commodities
West Texas Intermediate crude closed 0.43% lower at $69.92 a barrel.
Gold closed 0.16% lower at $1,888.10 an ounce.
This afternoon on the Economic Front we have the ECB Rate Decision at 12.45 pm, followed by the Lagarde Press Conference at 1.30 pm. Also, at 1.30 pm we have the U.S CPI and the Weekly Jobless Claims. These numbers should ensure a volatile afternoon trading session.
June S&P 500
The S&P fell shy of my 4240 sell level with a 4234 high print before falling 15 Handles into the close and I am now flat. This move lower saw the VIX close 4.8% higher. I am expecting the VIX to rally back into the high 20s given the slope of the forming wedge on the Daily Chart. If the VIX can finally break back above 25 we should see a decent correction for the U.S Indexes. The release of CPI and the Weekly Jobless Claims will set the tone for today’s trading. I will now lower my S&P buy level to 4180/4195 with a lower 4169 ‘’Closing Stop’’. I will now lower my sell level to 4237/4252 while leaving my 4261 ‘’Closing Stop’’ unchanged.
EUR/USD
I am still flat as I continue to be a buyer on any further dip lower to 1.2080/1.2125 with the same 1.2055 tight stop. I still do not want to be short the Euro at this time.
September Dollar Index
No Change. I am still a buyer from 89.20/89.65 with the same 88.75 stop. If I am taken long I will have a T/P level at 89.95.
June DAX
The DAX fell shy of my 15450 buy level before rallying 100 points into the close and I am still flat. I still do not trust this market for all the reasons given over the past two months. However, for me to turn bearish we need to break and close below 15300. I will now lower my buy level to 15240/15320 with a lower 15165 stop.
June FTSE
There seems to be no end to the small trading range in the FTSE which has persisted for over six weeks now. Ahead of today’s inflation data, I will now lower my buy level to 6950/7010 with a lower 6895 stop. If I am taken long I will have a T/P level at 7045.
Dow Rolling Contract
No Change. I am still a buyer on any dip lower to 34150/34320 with the same 34045 ‘’Closing Stop’’. I will now lower my sell level to 34740/34890 with a lower 35005 ‘’Closing Stop’’.
June NASDAQ
My NASDAQ plan worked well with the market trading higher to my 13900 sell level before selling off to my 13856 revised T/P level and I am now flat. Today, I will again be a seller from 13930/14000 with a wider 14105 ‘’Closing Stop’’. The NASDAQ has strong support from 13590/13670 where I will again be a buyer with the same 13495 ‘’Closing Stop’’.
September BUND
My BUND plan also worked well with the market trading higher to my 172.70 sell level before trading lower to my 172.40 revised T/P level and I am still flat. With 10-Year Treasuries closing under 1.50% last night I would expect the rally in the Bund to continue ahead of today’s ECB Rate Decision. The Bund has further resistance from 173.05/173.45 where I will again be a seller with a 173.81 wider stop. If I am taken short I will have a T/P level at 172.75.
Gold Rolling Contract
No Change. I am still a buyer from 1845/1860 with the same 1833 stop.
Silver Rolling Contract
I am still flat and today, I will raise my buy level to 26.60/27.20 with a tight 26.35 stop.
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