The Institute for Supply Management’s factory index rose to 57.3 in November from 56.4 a month earlier. Euro-area manufacturing output expanded more than initially estimated last month, led by Germany. Purchases at stores and websites fell 2.9% to $57.4 billion during the four days beginning with the Nov. 28 Thanksgiving holiday, according to a survey commissioned by the National Retail Federation.
Equities: The DEC13 E-mini S&P 500 (CME:ESZ13) is up just under 1 point to 1804.75. 1801 looks to be a short term support level for this market, but we would not be surprised to see it test levels below the key 1800 mark. Our next level we target is 1792. The next key data points are the jobs numbers, with ADP employment report on Wednesday and the famous monthly non-farm payrolls report this Friday, both of which could be market moving, especially Friday. The “taper effect” could come into play if we see a 250K or higher jobs number on Friday. This could result in a stock market sell-off, possibly at least to that 1792 level if not lower.
Bonds: The MAR13 30-year bonds (NYBOT:ZBH14) are down 23 ticks to 130’01. We believe the bonds are building momentum to the downside and once again, we focus on Friday’s jobs numbers to lead the bond market potentially much lower (if we see a big jobs number). If the jobs report is lackluster, we believe we’ll see a quick reversal higher. We believe, over the next several months though, that we have good potential to see another big wave of bond market bearishness as the Fed might taper soon.
Currencies: The DEC13 U.S. Dollar Index (NYBOT:DXZ13) is higher by 21 ticks this morning, still below the barrier of 81. We don’t believe we will see big moves before Friday’s jobs report. The USD could start trending higher if the market starts to think the taper will not only happen the first time, but will be an ongoing and consistent process. The DEC13 Yen continues its weakness, trading lower by 41 ticks to 97.20, inching closer to its 2013 lows. The DEC13 Pound is strong again, up 11 ticks to 163.71. We believe the Pound might keep heading higher, and over the longer term, might head to 1.70 as UK economic numbers have started to improve and may continue to do so.
Commodities: FEB14 gold (COMEX:GCG14) is down $22 to $1,228, and is certainly closer to the key $1,200 level. We still would not be surprised to see gold approach $1,200, and possibly even its 2013 lows. We believe $1,100 may be a floor for gold, if it does get there. MAR14 cocoa (NYBOT:CCH14) is very strong today, trading up $42 to $2,830. Cocoa could very well at some point in the near future approach the $3,000 mark. The grain markets are very weak today, with MAR14 corn (CBOT:CH14) down 1.4% to $4.18. JAN14 natural gas continues its strength, trading up to $3.957. We would not be surprised to see this market break $4.00 and possibly head to $4.10.