Sales of previously owned U.S. homes unexpectedly declined in March, causing the U.S. stock market to start the week off on a bearish note, only to see the S&P 500 recover to slightly positive levels this morning. Purchases of previously owned houses, tabulated when a contract closes, fell 0.6% to a 4.92 million annual rate last month, figures from the National Association of Realtors showed today. Investors continue to watch corporate earnings as an indicator of current economic strength in the US.
Equities: The JUN13 S&P 500 is trading up 2.5 points to the key magnet level of 1550. The support level of 1530 held up well last week, but we would not be surprised to see that level tested again, as the market looks to be in what can be called a micro-downtrend since hitting a high of 1593 earlier in April. Earnings results will likely play a key role in whether this market will stay above or below 1550 over the next few weeks.
Bonds: The JUN13 US 10yr note is up 5 ticks today to above the 133 level, at 133 ’05. With market chatter circulating this morning that perhaps the Fed might not be done at all this year with QE, the market has taken a quiet but bullish tone this morning. Quiet has been the key word for the U.S. treasury market recently. It seems as though, even with the volatility in commodities and stocks increasing, the same cannot be said for the bond market. Where did the volatility go in the bond market?
Currencies: Most major FX futures are down against the US dollar this morning, but not by a large margin. The Aussie dollar is flirting with a break of 102. The Euro is down 12 ticks to 130.54, yet the Pound is up slightly by 26 ticks. We believe the Euro and the Pound are still in a neutral to bearish environment. The UK has an important GDP release scheduled for Thursday morning before the US market opens.
Commodities: Gold is up almost 2% this morning, as bargain-hunting after the major sell-off of last week has turned this market up above $1400. Gold is now up around $27 to $1422, and silver is up 1.6% to $23.33. We have our first resistance level for gold at $1455. We focus more on the grain market today. All major grain markets are down this morning. JUL13 corn is down $.09, JUL Soybeans are down $.20, and JUL13 wheat is down $.15. It seems as though reports of favorable weather conditions in growing regions are pushing these markets down. We believe wheat has room to fall farther. We would not be surprised to see wheat touch its recent low of $6.70.