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MACRO MORNING NOTE June 27, 2017

SPX Flat DXY Down, WTI Up 

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

Global stocks in all regions are mixed this morning following an unexpected hawkish speech by Mario Draghi in Portugal. The immediate reaction was a 96 handle DXY and 1.12 EUR/USD. Regional gov’t yields in Europe surged with declining stock indexes such as the CAC40, DAX, and UK100 dropped. In the US, SPX is mixed with UST Yields surging, but a declining dollar.  It seems that the S&P futures are following the dollar lower, while UST yields surge higher with WTI. In commodities, gold and silver catch a bid following the downward draft in the dollar. Oil probes the higher 43 handle with API after-hours.

US Events

  • 9am: S&P CoreLogic CS 20-City MoM SA, est. 0.5%, prior 0.87%;  YoY NSA, est. 5.9%, prior 5.89%
  • 10am: Conf. Board Consumer Confidence, est. 116, prior 117.9; Present Situation, prior 140.7; Expectations, prior 102.6
  • 10am: Richmond Fed Manufact. Index, est. 5, prior 1
  • 11am: Fed’s Harker Speaks on Economy in London
  • 1pm: Fed’s Yellen Speaks on Global Economic Issues in London
  • 5:30pm: Fed’s Kashkari Speaks at Townhall Event in Houghton, Michigan

Here’s what’s happening in Europe, regional gov’t bond yields surge with EUR/USD, as stock market indexes drop.

In the US, the dollar has dropped to the 96 handle following the hawkish comments from Draghi with S&P futures following lower. UST Yields advance with a higher WTI.

In Japan, the Nikkei225 and USD/JPY continue multi session fade.

In China, regional stock market indexes include HKG33 and SCHOMP are positively diverging CN02Y and CN10Y.

World Stocks <VT> and SPX continue to bracket for the month of June. Direction will follow….

Overnight, Asia wanted nothing to do with the SPX500. Perhaps, that’s because of Draghi’s speech was right after the start of the European session, which dropped the DXY to the 96 handle. Immediately, UST Yields started to bid, along side WTI. SPX seems to be somewhat correlated to the dollar this morning.

2s10s and 2s30s curves flattening with commodity and dollar declines are signaling major warnings for US economy. Meanwhile, the SPX500 is totally decoupled. When the high timeframes come knocking for liquidity in SPX—be-careful..

2s10s curve could be a forward indicator alluding to a drop in consumer sentiment for 2H17.

The scariest chart for 2017 signals global credit impulse collapse. This signals lower commodity prices and slower economic growth.

US Soft Data verse US Hard Data

US Macro Surprise Index Collapses

Prior session, Chicago Fed National Activity Index collapses 

Prior session, durable good orders continue to plunge for the second month

Peak everything

2s10s and 2s30s curves on a weekly basis continue to flatten

SPX500 monthly/weekly R2 2398 attempts to create support, but exhaustion is present. No upside projections.

US Dollar monthly/weekly Pivot 99.26 unlocking overhead with downside S1 94.78 projection.

WTI monthly/weekly pivot 44.81 unlocking overhead supply. No projections need a monthly to close, but we do note the P-shape distribution is a deadly pattern if unlocked.

CRB Index monthly/weekly Pivot 181 unlocks overhead supply with S1 165 downside projection met.

UST10Y monthly/weekly pivot 2.13 reversion complete. Price action compressed direction nearing use 2.13 as line in the sand.