The U.S.’s AA+ credit rating outlook was increased today to stable from negative by Standard & Poor’s, which cited receding fiscal risks. Also, over the weekend, China came out with economic data showing industrial production rose a less-than-forecast 9.2% last month, while export gains were at a 10-month low.
Equities: The JUN13 E-mini S&P 500 is up 7 points today. Our key pivot level for this market is 1637, and our next upside target is 1656. Overall, we believe the market is in bullish environment, and we would not be surprised to see the market end the year at higher levels than where it is currently at. Buyers came in very strong last week to buy when the market dipped below 1600, and we believe this is a very bullish sign.
Bonds: The bonds continue on their bearish track this morning, with the JUN13 30-year bond futures trading down 25 ticks to the 140 level. We believe this market could easily head to 137 over the next 60 days, especially if the US data coming out is above market expectations. The MAR16 Eurodollar futures are down 6 ticks to 9851, and moving a bit closer to our next downside target of 9842. We believe that any rally in the bond markets and eurodollar futures markets are opportunities to be bearish.
Commodities: Gold is starting off the week on a quiet note. Gold is up $1 to $1,383. Our key resistance level for gold is $1,393, then $1,397. Our first downside target for gold is $1,360. We believe gold is in a very bearish environment. Crude oil futures (JUL13) are down $0.13 to $95.90. Our key pivot level for the short term is $95.68. If crude can stay above this level, we believe it can go $2 higher to the high $97s. The grain markets are down today on speculation that hot, dry weather in the U.S. Midwest will improve crop prospects.
Currencies: We have seen some very extended moves in the Japanese yen recently, and today this currency is down almost 200 ticks to 100.82. We believe we could see some strong support about 100 ticks lower than current prices, at around 99.80. The market is also closely watching this week’s BOJ meeting for any further cues on monetary policy and stimulus size. The Aussie dollar gapped down on opening trading for the week. We believe this market is clearly in a downtrend, but at the same time could reverse course for the short term this week, especially if the mid week Aussie economic data surprises to the upside. We think the Wednesday evening employment data out of Australia could potentially have a large impact on the Aussie. We could see a big wave of short covering if the number is higher than forecasted.