SPX Flat, DXY Flat, WTI Down

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

Asia stocks, European stocks, and SPX500 futures are mixed this morning ahead of this morning’s main event featuring key US CPI and retail sales. BOFA this morning provides a last minute warning ahead of US retail sales. If BOFA is right this could decrease the probability of a Fed rate hike next month leading towards a repricing of the reflation trade.

In the past week, the US reflation trade has gathered partial upside momentum with the US Dollar probing into the midpoint of the 99 handle and UST10Y tagging the 2.37 area. Prior session, the VIX rose to it’s highest level in a week 10.60 following weakness in equities stemming from US retailers Macy’s and Kohl’s, after an extremely disappointing quarterly earnings report. In today’s calendar, the important data will be  US CPI and retail data at 8:30am est. following U of Mich. Sentiment and Business Inventories at 10:00 am est. Simultaneously, the Federal Reserve feels obligated to have three members speak today in attempt to channel markets to their liking.

US Event Calendar

  • 8:30am: US CPI MoM, est. 0.2%, prior -0.3%; Ex Food and Energy MoM, est. 0.2%, prior -0.1%
    • US CPI YoY, est. 2.3%, prior 2.4%; Ex Food and Energy YoY, est. 2.0%, prior 2.0%
    • US CPI Core Index SA, prior 251
  • 8:30am: Real Avg Weekly Earnings YoY, prior -0.01%; Real Avg Hourly Earning YoY, prior 0.3%; Retail Sales Advance MoM, est. 0.6%, prior -0.2%
    • Retail Sales Ex Auto MoM, est. 0.5%, prior 0.0%; Retail Sales Ex Auto and Gas, est. 0.4%, prior 0.1%; Retail Sales Control Group, est. 0.4%, prior 0.5%
  • 10am: U. of Mich. Sentiment, est. 97, prior 97; Current Conditions, prior 112.7
  • 10am: Business Inventories, est. 0.1%, prior 0.3%

Central Banks

  • 9am: Fed’s Evans Speaks in Dublin
  • 10:30am: Fed’s Evans Live Interview on Bloomberg TV
  • 12:30pm: Philadelphia Fed’s Harker Speeks at Drexel University

US stocks start to negatively diverge Total World <VT>

US reflation trade including DXY and UST Yields, plus SPX500 decline through the Asian session into Europe ahead of key economic events in US.

US reflation trade has not traded the same post March rate hike. Overall reflation trade is stalling.

30 minute timeframe of bonds yields, currencies, and stock indexes (US, China, Europe, & Japan)

Currencies are mute ahead of US economic data. Volatility is expected.

In the commodity patch, WTI and /NG continue a rebound on the week. Base Metals including Copper and Iron Ore have been suppressed mostly due to China deleveraging. Precious metals are bracketing on a low attempting to reverse. Commodity Index <CRB> continues a downside break of the daily 200sma.

Major commodity indexes on a daily timeframe with China’s deleveraging has forced deflationary trends in recent months. Caution in the commodity complex.

Rehash on this weeks EIA dataset

Global credit impulse is negative for 2017. Heed warning for slower global economic growth and lower commodity prices.

UST10Y monthly/weekly R1 2.63 resistance with pivot 2.13 reversion. Major resistance level 100sma monthly 2.45.

WTI monthly/weekly R1 55 overhead resistance unlocking supply with completed reversion to pivot. Waiting for next clue resides with the monthly 320sma 47.60.

DXY monthly/weekly pivot 99.26 support continues with recent spring up. The important understand is how long with spring up last?

SPX500 monthly/weekly R2 2398 resistance.

<CRB> monthly/weekly Pivot 181 downside break with projections to S1 165.