The European Central Bank was said to weigh a negative deposit rate to help bolster the economy. Private sources have apparently indicated that policy makers would reduce the rate for commercial lenders who park excess cash at the ECB to minus 0.1% from zero. The 0.4% gain in U.S. retail sales was the most in three months and followed no change in September, Commerce Department figures showed today. The Fed will release minutes of its October policy meeting today.
Equities: The 1792 barrier we have been focused on continues to serve as key resistance for the DEC13 E-mini S&P 500 futures (CME:ESZ13). The relatively strong retail sales figure this morning also seems to be stoking more taper-talk, which could be more headwinds against a further upside move beyond 1800. We still believe that the market could correct at least 1% from these levels down to the mid-1770s. The minutes this afternoon could potentially be an impetus for selling especially if they discuss a December taper with considerable intent. The next major data point for markets is the November jobs report, which will be released the first Friday of December.
Bonds: The DEC13 U.S. 30-year bonds (CBOT:ZBZ13) are up 5 ticks to 132’20, likely fueled by a non-threatening CPI reading this morning .However the FOMC minutes loom this afternoon as a potential next key driver for this market. We believe the jobs report in December will be one of the more important jobs reports of recent memory, as there is back and forth discussion on whether or not the Fed will taper at any of the next couple of meetings.
Currencies: The DEC13 Euro futures have tumbled today on news that the ECB is weighing a negative deposit rate to help boost the economy. The Euro is down 63 ticks to 134.69. We have our next key chart level at 1.33, which could very well be hit, especially if we continue to get good data out of the USA. The DEC13 Swiss Franc is also down 38 ticks to 109.36. We are looking for 1.06 as the next major support level on a longer term chart. We believe the Franc may head lower over the next few months, again especially if taper-talk in the USA really results in a taper in December or January.
Commodities: Gold broke the key support level of $1,275, and the DEC13 contract (COMEX:GCZ13) is now down $10 to $1,263. We would not be surprised to see gold try to break through $1,250. DEC13 WTI crude oil (NYMEX:CLZ13) is up $.51 to $93.85, while DEC13 natural gas (NYMEX:NGZ13) is up $.09 to $3.64. Natural gas seems to have found solid support at $3.50, and crude oil could not break the $92 level to the downside. DEC13 cocoa (NYBOT:CCZ13) continues its bull run of 2013, trading up $20 to $2815. $2,860 is our next upside target, which could be excellent resistance.