The Institute for Supply Management’s factory index fell to 53.2 in May from 54.9 in the prior month, the Tempe, Arizona-based group’s report showed today. Manufacturing in China expanded at the fastest pace in five months. The Russell 2000 Index of smaller companies tumbled 0.9 percent today.
Equities: The e-mini S&P 500 (CME:ESN14) is down 4.5 points to 1917, after stopping at a very key technical market profile target of 1923. The market also bumped up against an important trendline from previous highs, thus today’s retracement seems to be very technically motivated. The data was mixed with ISM falling, but China manufacturing expanding. 1923 is a great level in our view; this could be a short term high point before this week’s nonfarm payrolls report.
Bonds: The bonds are down 27 ticks to 136’20. This is the third day in a row of the bonds trading lower. 135’23 is our next key technical support level. The bond market can have outsized moves on the Friday nonfarm payroll days, and this could again occur this week. If the number is much higher than expected, we could see the bonds break some key levels to the downside. If the number surprises lower, the bonds could test the recent highs made at 138’10.
Currencies: The Canadian dollar (CME:D6M14) is down 46 ticks to 91.73, and the Yen is also down 48 ticks to 97.86. The USD is up 20 ticks to 80.61, while the Euro is down 27 ticks to 136.07. The next ECB meeting is this Thursday. If Draghi and company act to try to stimulate the Euro region economy, we could see more rallying in the USD and more selling in the EUR. The 137.00-137.50 region might be excellent resistance for the EurUsd.
Commodities: Gold (COMEX:GCQ14) is down slightly to $1,246. Gold look to be on a slide, and could even head lower from here. There doesn’t look to be any major reversal signals just yet for gold. WTI (NYMEX:CLN14) crude oil is down $0.34 to $102.37, and we would not be surprised to see it head towards $101. Soybeans are strongest of the grain markets, with soybeans (CBOT:SN14) up $0.35, while both corn and wheat are down on the day. $15 might be a solid magnet for JUL14 soybean prices. Cocoa has been resilient, trading higher again today to $3,074.