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MACRO MORNING NOTE June 20, 2017

SPX Up, DXY Flat, WTI Up 

SBA’s Alastair Williamson concludes the Macro Morning Note from Baltimore, Maryland.

Global stocks and S&P futures are mixed following the sudden 5:30am decline in WTI to the 43 handle. Alastair Williamson warns “there is very little support in WTI <43.20. If price was to breach that level, then low volume nodes would push the auction lower in a very quick fashion. It’s now time to panic, because support is so thin down here. We’re now dealing with the consequences of a P-shape distribution unraveling”. As a whole, commodities via CRB Index are imploding with downside targets of an S1 165. Looking ahead, it’s another light day of US-economic data with more Fed speakers.

US Event Calendar

  • 8:30am: Revisions: Current Account
  • 8:30am: Current Account Balance, est. $123.6b deficit, prior $112.4b deficit
  • 3:15am: Fed’s Fischer Speaks in Amsterdam
  • 8:15am: Fed’s Rosengren to Speak at Macroprudential Conference
  • 3pm: Fed’s Kaplan Speaks in San Francisco

Brent crude oil verse G10 economic surprises. Oil market now understands global economic growth is deteriorating.

US yield curves flattening, along with commodities and the dollar declining for the entire span of 2017. Meanwhile, central banks have induced an equity decoupling.

2s and 10s yield curve verse WTI

ATL and NYFED 2Q17 GDPNow forecasts continue to deteriorate

SPX500 verse Economic Surprise Index

Global equity markets in China, EU, and Japan have stalled, along with S&P futures.

In commodities, Oil tumbles to the 43 handle in the 5:30am est. hour. Base metals such as copper and iron ore are mute. Precious metals are under pressure including gold and silver due to a dollar probing in the midpoint of the 97 handle. Bitcoin stabilizes in the 2600 handle attempting to force the next leg up over 3,000. It’s astonishing how commodities as a whole via CRB Index are rolling over and broader equity markets ignore. It seems commodities have already sniffed out economic turbulence.

In currencies, dollar demand has surged in recent sessions to the midpoint of the 97 handle. USD/JPY continues a strong upward trend from last week now probing into the midpoint of the 111 handle. Overnight, GBP/USD declined as BOE Carney reversed the earlier vote split hawkishness and still said he’s worried about the impact Brexit will have. Commodity FX is lower including AUD and CAD.

CRB Index monthly/weekly index collapse with S1 165 downside projection.

DXY monthly/weekly pivot 99.26 unlocking overhead with S1 94.78 downside projection. Attempting countertrend.

SPX500 monthly/weekly R2 2398 attempting to force reverse polarity of resistance to support. No projections.

UST10Y monthly/weekly pivot 2.13 reversion completed. No projections.

WTI monthly/weekly pivot 44.78 unlocking overhead probing into 43 handle. If pivot rejects there could be a major liquidation well into the 30s. OPEC needs an engineered event.