Wall Street Steady Ahead of More Data – S&P down 0.2%
US markets experienced a relatively quiet day yesterday as investors continued to digest Tuesday’s CPI update and looked ahead at the PPI numbers later today. The Dow edged 0.1% higher, the S&P dropped 0.2% and the Nasdaq fell 0.5%. The dollar dropped off slightly with the Dxy losing 0.1%, the Euro back above 1.0950. US treasury yields ground up, the 2-year gaining just 1.5 basis points to 4.615% and the 10-year adding 3 basis points to 4.187%. Oil prices jumped on the day as US inventories came in much lower than expected, Brent gaining 2.6% to $84.03 per barrel and WTI rising 2.8% back to $79.72 per barrel. Gold bounced nicely off the $2,150 level to rise back to $2,180 before settling around $2,175 per ounce at the end of the session.
Gold Finds Buyers on Dips
There have been some interesting moves in global financial markets over the last few weeks that have kept commentators busy, notably with stocks, bitcoin and Gold all reaching historic highs. Old school traders will immediately notice that one of those is a bit of an anomaly as traditionally Gold makes hay when the sun is not shining, but it is there for all to see on the charts, Gold at historic highs whilst in a very ‘risk on’ environment. Most are still struggling to come up with strong fundamental reasons for the recent gains, yes, the Fed is preparing to cut rates, but it’s been doing that for a while, and if anything, the expectation is being pushed out and yes, there are some geopolitical concerns in the global economy, but once again nothing new that would justify these kinds of moves. So, why the move higher, in truth no one is entirely sure and it’s not fitting in with the usual fundamental narrative, but traders must trade what they see in front of them, and the short-term trend is certainly up. We may hear of some big portfolio diversification over the next few weeks that will clarify this move, but for now, traders are still looking to buy on dips with yesterday’s low around $2,150 the initial support level.
Calm Day Ahead of a US Data Storm
It was a relatively quiet session on Wall Street yesterday and Asian markets are expecting to see more rangebound conditions with little on the macroeconomic calendar to disturb the calm. There is also nothing of note due out in the European day so most traders will be looking ahead to a data-packed US session for fresh direction. All the major data prints are due out at the same time shortly after the New York open, with the PPI, Retail Sales, and Weekly Unemployment Claims numbers all set to hit the market. These are not quite the last tier 1 data releases before next week’s Fed meeting, but they may be considered as the last ones that could have an influence and therefore expect volatility to pick up after the release and push through into the later hours of the trading day.
