Data today showed job openings in the U.S. climbed to a five-year high in October, indicating employers were confident about demand. Twelve out of 35 economists surveyed by Bloomberg on Dec. 6 predicted that Fed policy makers will begin to slow the asset-buying program at their Dec. 17-18 meeting. The S&P 500 has rallied 27% in 2013, putting it on course for the best year since 1997. In China, a report from the National Bureau of Statistics showed that industrial production in the world’s second-largest economy rose 10% in November from a year earlier. A key USDA report on agricultural markets will be released at 12pm EST.
Equities: The DEC13 E-mini S&P 500 (CME:ESZ13) is down thus far this morning, trading lower by 3.5 points to 1805.50. 1807 is our key pivot level, and we sense a lower volatility environment may occur from now until the next FOMC meeting, which is one week from today. We would not be surprised to see a pullback in the S&P 500, and then a potential rally in Q1 2014. 1780 is our first support level. However, if the market can stay strong above 1807, we look for 1830 to be approached.
Bonds: The MAR14 U.S. 30-year bond market (CBOT:ZBH14) is up 19 ticks to 129’29. We believe the bonds are still in “short-covering” mode after the jobs report did not deliver the fireworks the bond market needed to really make a big move lower. However, we still hold the belief that the bond market is susceptible to a sustained down move if indeed the Fed turns more hawkish and indicates the taper cycle will commence in December. We have only one week to see how the FOMC decides.
Currencies: The DEC13 U.S. Dollar Index (NYBOT:DXZ13) continues its weakness, trading below the key 80 level this morning. The DEC13 Aussie is relatively very strong today, trading up 43 ticks to 91.46. It looks like 90 is the key support level. The Aussie has made a big down move in not a lot of time (97 down to 90), thus we look for either a congestion period or even a slight rally, possibly to 92.50. The DEC13 Yen/USD is also seeing some buying today, up 35 ticks to 97.23, still not yet able to breach 2013 lows.
Commodities: FEB14 gold (COMEX:GCG14) shot up this morning, trading up $27 to $1,261. $1275 is our next key target and resistance level. Gold now looks like it could have some momentum to the upside, and possibly approach $1,290. JAN14 natural gas (NYMEX:NGF14) is unchanged from yesterday at $4.23. Perhaps the rally is losing some steam, and the $4.25 area may be a consolidation. We have a key USDA report today which will likely affect grain futures. JAN14 soybeans (CBOT:SF14) are rallying in front of the report, up $.07 to $13.51. $13.60 is our next key level. FEB13 live cattle futures (CME:LCG14) are down to $1.3245, and we believe this market will head lower to at least $1.31, if not lower.