Initial Jobless Claims come in higher than estimates, crude inventories fall, and a 7-year note auction is due at 1 pm ET. Stocks are attempting to push higher, but is the Goldilocks narrative at risk?
TRANSCRIPT
Good afternoon, traders. It’s Chris Chavez with Blue Line Futures and it’s your daily midday market. Minute yields rise here today and stocks are trying to push higher. But before we get to it, if you’re watching this video, like subscribe if you’re on our website, there’s also a link to direct you to YouTube and you can subscribe that way.
We would love for you to follow us. We would love for you to help us build our following. Looking at the markets here today, we did get initial and continuing claims. Initial claims came in slightly higher than estimates estimates for corn for 210,000, we got a print of 218. A continued claims did come in at expectations yields are actually a little bit higher here today.
The ten year notes kind of seeing a little bit of overhead resistance. Ten year yield is up about four basis points today. Really when looking at some of this economic data, this jobs data that we got this morning, cumulative upticks are not what we want to see. Bad news is no longer good news for the market because sentiment is really believing this Goldilocks narrative.
So if you start to see cumulative upticks in jobless claims, cumulative weakness in the labor market, that could really spook the markets. And maybe today we’re kind of seeing a little bit of, you know, capitulation, some consolidation. There is a lot of overhead technical resistance as well. You know, this wasn’t a major, you know, prints of jobless claims.
But I do think that you could see a little bit of a repricing in, you know, why yields are just in slightly positive territory here today, or at least why bonds are just kind of consolidating. We will get some more Treasury auctions as well. There’s a seven year note auction today at 1 p.m. Eastern time. So the markets could be pricing in a little bit of weakness ahead of that as well.
We did see a good five year note auction yesterday which did lift the market. So hoping to continue to see strength in demand coming from some of these Treasury auctions as well. When looking at the December Fed fund futures, right now we’re trading at about 147 basis points in the December contract. That’s above the front month. So right now that means the market is basically pricing in 625 basis point cuts or so for next year.
Is that a little bit too aggressive? Right now? We’re at least premature, especially if we’re not really seeing a lot of economic weakness yet. Well, we could be pricing in a little bit of weakness. At least that’s what the market is kind of showing us right now. So I do think that maybe we could be getting a little bit of ahead of ourselves.
The bond market could be, you know, six interest rate cuts for next year does seem a little bit aggressive. However, when you look at the CME Fed watch tool right now, the probabilities of, you know, a march cut now 88%, May 99%. So really it’s just going to depend on some of this economic data that we’re going to get and we’ll watch it from there.
Now, if data starts to look stronger, things start to heat up. Maybe we see, you know, six cuts move down to four, maybe move down to five. And that could definitely create the risk for the markets. You know, I don’t think it’s just going to be this linear path upward for 2024. Definitely going to want to continue to pay attention to some of this data.
And tomorrow’s data will get Chicago PMI. That’s just about it. Now, the latest release that we did get, we showed a large uptick, you know, that the manufacturing sector had been struggling and we finally saw Chicago. You might get a boost. Now, will tomorrow’s release confirm from a bottom in the manufacturing sector and at least in manufacturing activity?
We don’t know yet, but that certainly could provide a little bit more relief for the markets if we do see some more strength, will you some of the technicals to start resistance for the S&P? Yes. Beneath S&P mini futures is 4841 and a half for the Nasdaq to start resistance 17 111 to 17 127 crude oil, a three star resistance, three star support, rather, 70 to 40 5 to 7255.
We did get inventories here today. They fell by 7.1 million versus 2.7 million expected. Despite that, crude is in negative territory here today. And gold, a four star resistance level, 2089 and a half to 2093 and 8/10. If you have any questions, reach out to our trade desk. We’re here for you. Remember, futures trading involves substantial risk of loss and is not suitable for all investors.
Chris Chavez, Market Strategist