The World Bank cut its forecast for global growth. The World Bank forecast in a report that the global economy will expand 2.8 percent this year, down from a January projection of 3.2 percent. European stocks fell from a six-year high. U.K. unemployment fell to the lowest level in more than five years.
Commodities:Gold (COMEX:GCQ14) is up $2 to $1,262, finding some buying recently below the $1,250 level. The next key resistance area could be at $1280. WTI (NYMEX:CLM14) crude oil has been overall very strong this year, and we believe it could break out above the $105 level. Soybeans (CBOT:SNM14) have been steadily selling off over the past few weeks, today down $.03 to $14.59. We believe they could even head lower from here, as we get closer to the key July month. RBOB dipped below $2.94 recently, but today is right near the $3.00 mark, up $.0181 on the day. It will be interesting to see if RBOB can breakout and hold above $3. Feeder cattle, which has rallied at a blistering pace this year, is down to $203.2 today, after trading above $205 yesterday.
Equities: The E-mini S&P 500 (CME:SPM14) is down 6.5 points today to 1944. Our next key support lines come in at 1931, and then 1925 could also be a good support level. We would not be surprised at all to see this market trade lower over the next few days. Next week is a big week for the SP500, as the June futures expire on Friday, which could bring added volatility, but also there is the FOMC meeting as well. We believe the S&P 500 (CME:SPM14) might approach 1925 going into the Fed meeting.
Ed Note: Each trading day going forward, traders can listen to live, streaming squawk box commentary on FUTURESmag.com coming directly from the S&P trading pits in Chicago.
Bonds: The U.S. 30-year bonds (CBOT:USU14) are up 8 ticks to 135’06, likely due to the World Bank issuing a disappointing global growth forecast. 135’20 could be key resistance for the bonds, which have come down nicely from the 138 level recently. The 134’16 area seems to be short term support. Overall, next week could be a very interesting week for the bond market. If the Fed ups the pace of QE reduction, we could see a substantial bond sell off. Even if the Fed affirms that the U.S. economy is improving and they have a somewhat hawkish tone, we could see both bonds and stocks decline.
Currencies: The U.S. Dollar Index is down 7 ticks to 80.77, while the Euro is also down 7 ticks to 135.37. The strong currencies today are the CAD, the Pound, the Yen, and the Aussie. The Yen seems to rising in inverse correlation with U.S. stocks. The Yen has had trouble staying below 98 for sustained periods and we still believe we could see a short covering rally in the Yen to at least 100. The Aussie has been strong over the past week, and today is up 21 ticks to 93.88. It has broken a key resistance trendline recently.