- Better-than-forecast growth in a manufacturing gauge tempered concern about the strength of the global economy.
- Fed Chair Janet Yellen last week said the economy has strengthened enough to withstand continued cuts to monetary stimulus. The International Monetary Fund said yesterday the global recovery is still weak and “significant downside risks remain.”
- In China, the preliminary February reading of a purchasing managers’ index by HSBC Holdings Plc and Markit Economics was 48.3, trailing the 49.5 projection of economists.
Commodities: Several commodities saw wild moves yesterday: Natural gas(NYMEX:NGH14) and coffee(NYMEX:KCK14). Today natural gas is settling down, especially now that the storage report information has been released. This contract is down 13¢ to $6.02, making a low of $5.88. We believe that even with the crisis in Ukraine, March natural gas may gravitate towards $6 until this contract expires next Wednesday. We noted that our key resistance level for May coffee was $1.75. This market spiked to almost $1.78 this morning, and then swiftly traded lower, now down over 4% to $1.6550.
Equities: The March E-mini S&P 500(CME:ESH14) is up 6.25 points to 1831.75; 1831 is a pivot for intraday action, and if the market can stay above it, we look for 1835 to be the next key level to watch. The market may need to see more economic growth confirmation to really start to rally hard. One of our key support levels is 1810. We continue to focus on the possibility that as weather starts to warm up, we could start to see economic growth accelerate and potentially contribute to more rallying for the market.
Bonds: March 30-year bonds(CBOT:USH14) are down 13 ticks to 132’18. The bonds’ range of recent days has been from around 132 to 134. If the stock market continues to rally, we could see the bonds start to head lower. The fact that the market seems to believe that interest rates may stay low for a while, may have an effect of bond prices going down to account for potential inflation. This is of course just one possibility, but one that could make sense to us.
Currencies: The euro(CME:ECH14) is down 39 ticks to 137.05. It seems to be near the upper end of its recent range of 1.35 and 1.37. The yen futures(CME:JYH14) is down 3 ticks to 97.70, but the daily candlestick seems to be a bearish signal for the yen, which potentially complete a downward move to the 96 level, especially if we see the S&P 500 continue to rally beyond the recent contract highs. The Canadian dollar is down 13 ticks to 90.08, after having a very significant down day yesterday. Our next key support level is 89.80, with 89.00 as the recent low.