Ford Motor Co. lost 1.7%, as carmaker stocks slipped amid November sales reports. The Standard & Poor’s 500 Index declined 0.4% to 1,793.11 at 11:35 a.m. in New York. Central-bank policy makers are considering scaling back their monetary support “in coming months.” The Commerce Department will release data tomorrow on new home sales and the central bank will publish its Beige Book.
Equities: The DEC13 E-mini S&P 500 (CME:ESZ13) is down 7.75 points to 1792, dipping briefly below 1790. As we mentioned yesterday, we believe this market may close the year below 1800. There is key data being released later this week focused on jobs, so we expect big moves to occur if the jobs numbers are either much higher or much lower than expectations. We believe this market is susceptible to a 2% correction if we get a jobs number large enough to fuel speculation the Fed will taper in this month’s meeting.
Bonds: The MAR14 30-year bonds (CBOT:ZBH14) staged a fairly impressive rally today, after a big sell-off yesterday. This contract is up 20 ticks to 130’13. No surprise here…we are waiting for Friday’s jobs report to help paint the picture of where bonds might head into 2014. It looks as though bonds are cautiously preparing for a taper in the coming months. 129’22 is the key support level at this point. Overall, if we do see a big upside surprise in the jobs report, we could see a multi-point down-move in bonds, possibly breaking the 125 level by Q1 2014.
Currencies: The DEC13 U.S. Dollar Index (NYBOT:DXZ13) is down 35 ticks this morning to 80.60. The DEC13 Pound and the DEC13 Euro are both up over 50 ticks. The Pound has broken 1.64, and we believe it could be in ‘trend-mode’ and may head to 1.67. The DEC13 Yen has staged a turnaround this morning, trading higher by 70 ticks to 97.70. The DEC13 Canadian dollar continues its downtrend, trading down 27 ticks to 93.73.
Commodities: FEB14 gold (COMEX:GCG14) dipped below $1,220, but now is up slightly to $1,222. Gold does not seem to be attracting major buying interest even at these levels. We believe that gold could break $1,200 and approach 2013 lows of around $1,180. However, this could easily change if we get a surprise on Friday with a very weak jobs report. Crude oil (NYMEX:CLF14) has rallied significantly today, trading up around $2 to $95.82. We are also focusing on the Soybeans futures. JAN14 soybeans (CBOT:SF14) are at $13.22 now, down from yesterday’s high of around $13.46. We believe this contract will head lower and break $13 soon.