Tuesday's Close

E-mini S&P 500 Futures (June): Settled at 4225.75, up 0.25

E-mini Nasdaq-100 Futures (June): Settled at 13,811.50, up 7.25

This week’s price action across U.S. benchmarks has been broadly mixed. Although the S&P is unchanged, the Russell 2000 is up 2.5%, and whereas the Nasdaq is +0.5%, the Dow is -0.5%. 

Tech capitalized terrifically on Friday’s lukewarm jobs report and lower rates have buoyed the sector this week. In fact, the U.S. 10-Year yield is down more than 5 basis points this week to leak below 1.5% this morning. Furthermore, 10- and 30-Year futures are trading at the highest levels since the first days of March. 

Wait a minute, what about all this inflation everyone’s anticipating? Exactly: this move in rates comes ahead of tomorrow’s pivotal inflation data, but it highlights our ongoing discussion; we might be seeing peak inflation right here, right now. Yesterday, we dove deep into the inflation narrative, or shall we say deflation narrative.

Last night, inflation data from China was mixed. CPI was below expectations at 1.3% YoY and -0.2% MoM. PPI was firm at 9.0% versus 8.5% expected, the highest since October 2008.

Today’s economic calendar is quiet. Traders will look to the EIA’s weekly Petroleum Status Report (Crude and product inventories) at 9:30 a.m. CT and a 10-Year Note auction at noon CT. 

Tomorrow’s the data dump; ECB policy decision at 6:45 a.m. CT, with a presser at 7:30 a.m. CT, along with Core CPI and Jobless Claims. 

One might wonder, “why are you so bullish on Crude Oil and the energy space, yet believe we are at peak inflation?” It’s a great question. That’s because we believe inflation via the Federal Reserve’s metrics, Core PCE and Core CPI, is peaking. Remember, these Core reads exclude food and energy. Essentially, they exclude what hits your pocket!

Interested in our technical perspective? Please sign up to have Blue Line Futures technical outlook, actionable bias, and proprietary levels emailed to you each day.