Equity markets are relatively quiet ahead of this week’s Treasury auctions, inflation data, and the Fed’s Summary of Economic Projections. Expectations for an interest rate cut have now been pushed back to May 2024.
TRANSCRIPT
Good afternoon traders. It’s Chris Chavez with Blue Line Futures and it’s your daily midday market minute equity markets are quiet. Here to kick off the week. Precious metals are experiencing some weakness but before we get to it if you’re watching this video like it subscribe if you’re on our website. There’s also a link to direct you to YouTube and you could subscribe that way.
We would love for you to follow us. We would love for you to help us build our following. So equity markets are quite here to kick off the week, we did just get a contract role when looking at equity index futures. March is now the front month. Technicals that I covered today will be based on the December contract, but an important note to make there.
We’re going to get a ten year note auction today. So important to see the demand come through for some of the longer duration side of the Treasury curve. Also, tomorrow, CPI, Wednesday. Tomorrow, we’re also going to get a 30 year bond auction. And on Wednesday, when we get PPE, we’re going to get the Fed’s interest rate decision and summary of economic projections.
Really important because we’re going to get the Fed’s interest rate expectations in the summary of economic projections. Those interest rate expectations are going to be compared with the current market’s interest rate expectations, and you can bet that there is going to be a pretty sharp repricing between what the Fed’s going to be outlining in those interest rate expectations and what the market is currently reflecting currently mean.
Looking at the CME Fed watch to a 38% chance of a cut in March. When you look at that compared to last week after we got those weak JOLTS numbers and the weak ADP numbers, those expectations were as high as 60%. So after we got Friday’s numbers, you know, nonfarm the unemployment rate average hourly earnings. After we got those numbers, we saw a huge shift in expectations and now March is only a 38% probability looking out to may 79% chance of a cut in May.
We saw it as high as about 85% or so last week. So that’s still pretty consistent with, you know, the data that we’ve seen come through this week. So interest rate expectations from the Fed inflation data this week, retail sales later in the week, initial and continuing claims all going to be really important to pay attention to. But most importantly, the Fed’s summary of economic projections.
Now, looking at, you know, the S&P, the NASDAQ, S&P on the December contract, major four star resistance is going to be 4653. They don’t want to see it break it close above there to see more upward momentum. The Nasdaq 16 to oh nine, that’s going to be a major four star resistance level as well. GOLD The February contract, 1997 and 4/10 is major three star support.
Now, if you break it close above there, you probably see a little bit more weakness to 1980 crude oil on the January contract, 7217 to 7237. That’s a major three star overhead resistance. One thing I want to highlight with crude oil, some of the energies, the energy complex in general, you know, as we’ve seen, you know, inflation data come in a bit more deflationary, you know, sharply, You know, these these crude prices, energy prices have come sharply off of their highs.
Certainly think that could be a good headwind for CPI tomorrow. You know, if we see that, you know, we see a sharp deflation, a deflationary effect could give crude a little bit of room here to run. But that major three star level is going to be an important one to pay attention to. We’re here. If you have any questions, reach out to our Trade Desk.
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