Consumer sentiment and construction spending came in weaker than expected, and treasury yields are lower. Gold is approaching unchanged on the year, Stocks set new highs, and Crude is breaking out! Can this risk asset rally continue?
Transcript
Good afternoon traders. It’s Chris Chavez with blue line futures and it’s your daily, midday market minute. The NASDAQ and the s&p trade up to new all time highs and precious metals catch a bid. But before we get to it, if you’re watching this video, like and 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. Yeah, gold and silver trading higher here today gold is actually approaching unchanged on the year. We’re looking at the equity indices. The Russell is outperforming here today. When you look at the Russell and you look at the precious metals. This is really driven by interest rates. Today, the two year down about seven basis points tenure down about four basis points. Looking at the CME FedWatch tool, interest rate cut expectations for June and July have ticked up a bit. And the reason behind all of that is the economic data that we got this morning. Consumer sentiment and consumer expectations came in below estimates. And when looking at some of the other data like isn manufacturing PMI that number contracted more than what the consensus was calling for. And also construction spending came in at a negative two tenths decrease versus a positive two tenths that was estimated. So this weakness is what’s really pushing precious metals. The Russell 2000 broad based risk assets crude oil is breaking out here today, the NASDAQ and the s&p trading up to new all time highs. Now that’s definitely fueling this rally. And the Russell is outperforming when looking at, you know the equity indices. But you know, specifically on the return on the other risk assets, like precious metals and crude oil, really have been faced with some major resistance line in the sand, especially looking at crude oil. We’ve highlighted 7966 as a major resistance level, and we’ve traded right past that here today, which is definitely an interesting thing to see, especially with crude and precious metals, you know, really want to see us, you know, specifically for gold break above 2089 and three tenths to 2093 and five tenths. That’s basically right at unchanged for the year. And if we can break and close above here, we’re definitely going to be you know, moving up to 20 2100. And it’s adding a lot of conviction. Right now, I did highlight some of the CME FedWatch tool in the interest rate cut expectations how they’ve shifted a bit today, there’s now a 70% chance of a cut in June 90% chance of a cut in July, those odds are up about 1510 to 15%. From the beginning of the week, definitely adding more conviction as you saw some of this weaker data this morning that we are going to see some interest rate cuts in June or July. With more conviction in July. Now fed fund futures are pricing in about 80 basis points worth of cuts. You know we’ve really been trading neck and neck with the Fed summary of economic projections at 75. So it’s looking like the markets are a little bit more convinced that we’re going to see that 75 That’s how I would view it five basis points. That the that the fed fund futures are pricing in is not a significant change. But it definitely adds more conviction that we’re going to see 75 basis points worth of cuts. Austen Goolsbee was also speaking earlier here today, he was speaking about the real interest rate and how financial conditions are very restrictive right now. And they don’t want to wait for inflation to get to 2% before they start cutting. He felt that their target was 2.4% You know when looking at PCE, and that we could still see 75 basis points worth of cuts and see inflation at 2.4%. And that was something that they would feel pretty good about. So he’s typically a bit more dovish, there’s going to be more fed speak later here today. Bostick will be speaking I think Waller was also speaking here as of this video. So definitely some important commentary to pay attention to looking at the s&p and looking at the NASDAQ three star support or resistance levels for either for both rather, is going to be 5131 and a half on the s&p if we break and close below above there, we can definitely push a bit higher looking at the NASDAQ three star resistance 18 366 and crude oil. Like I highlighted earlier, we’re finally above major Forestar which is 7966. I want to see us close above here more than anything, I wouldn’t want to see us reverse. But the next level to pay attention to is 8169 to 8180. If we can break and close above there and be up to 83 and a half you know test some of those levels. And gold like I mentioned earlier is that 2089 and three tenths to 2093 and five tenths. 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.