Our daily research overs the S&P, NQ, Crude Oil, Gold, Silver, Currencies, Corn, Soybeans, Wheat, Livestock, and Softs markets. 

Went out to brokerage clients before the bellE-mini S&P (June) / NQ (June)

S&P, yesterday’s close: Settled at 4007.25, up 6.00

NQ, yesterday’s close: Settled at 12,788.50, down 101.75

Fundamentals: U.S. equity indices are little changed, but price action has softened from its best levels through the European open, with each the E-mini S&P and E-mini NQ trading below yesterday’s low. Globally, the U.S. Dollar Index basket has surrendered some ground due to the Euro strengthening on hawkish ECB comments and better-than-expected Italian and French Confidence data. The Aussie is higher after firm Retail Sales, and the Japanese Yen is stronger despite firmer yields. The U.S. 2-year yield has crawled back above 4.0% and the 10-year to 3.56%, each touching a four-day high.

Bloomberg highlighted comments from BlackRock strategist Wei Li, who wrote in a client note the Fed would keep raising interest rates despite banking fears, essentially saying markets are offside. In recent weeks, our data-dependent opinion has evolved to expect only one more 25bps hike and a high likelihood of nothing at the committee’s next meeting in May. The CME’s FedWatch Tool signals no hike with a 54% probability. Remember, the Fed is hiking rates to fight inflation, and rising base comparisons beginning in March will bring a helping hand. Although inflation rose steadily in Q4 2021, it accelerated in March 2022 by 1.2% m/m (headline) due to Russia’s invasion of Ukraine, the sharpest m/m rise in headline CPI since September 2005 and a level prior to that only achieved in 1980. In fact, through all of last year, only June’s +1.3% was higher. This surged y/y headline CPI by 8.5%, a level only topped in May and June 2022. With that said, the Cleveland Fed Inflation Nowcast expects y/y headline CPI to rise by 5.22%, which would be the slowest since May 2021, and m/m by +0.3%. On Friday, we get the Fed’s preferred inflation indicator, the Core PCE Index, for February. However, the focus has likely already shifted to next week’s Nonfarm Payrolls report and the April 12th CPI data.

Do not miss our daily Midday Market Minute, from yesterday.

On the economic calendar, Case Shiller is due at 8:00 am CT, and CB Consumer Confidence follows at 9:00. We will hear from ECB President Lagarde at 8:15 am CT, and Fed Vice Chair of Supervision Barr at 9:00 am CT, who testifies before Congress. The U.S. Treasury will auction $43 billion 5-year Notes today at noon CT and $35 billion 7-years tomorrow. After the bell, we look to earnings from Micron, a crucial one for the semiconductor space, and Lululemon.

Technicals: Price action has not done anything wrong; E-mini S&P futures are holding out above Friday’s late strength, and the E-mini NQ has held the floor we spoke of here yesterday, defining our more Bullish Bias at 12,688-12,715. Regardless, given Friday’s late strength and three rally attempts into major three-star resistance at 4031.50-4035.75, the soft tape is disappointing. Therefore, we will reduce our more Bullish Bias but remain cautiously optimistic. Not only has E-mini S&P been contained by that aforementioned resistance, the E-mini NQ quickly surrendered the critical 12,884 mark yesterday morning and has yet to make a strong attempt to recover it. We want to re-emphasize the market has done nothing wrong, and today’s reception of first supports through the open will be critical for the S&P and NQ at ... Click here to get our (FULL) daily reports emailed to you!

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NQ (June)

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