Last Week's Close
E-mini S&P 500 Futures (December): Settled at 3698, up 33.50 on Friday and 61.50 on the week
E-mini Nasdaq-100 Futures (December): Settled at 12,526, up 63.75 on Friday and 268.50 on the week
Risk-assets are starting the week on their back foot as USD strengthens and Treasury yields rise. Other than a continued rise in Covid-19 cases, the 2 major factors driving USD are fiscal stimulus and Brexit. Congress is expected to reveal the details of its $908 billion Covid-19 aid bill later today.
Nonfarm payroll data on Friday wasn’t awful, per se; the unemployment rate did drop to 6.7% and average hourly wages jumped by 0.3% MoM. However, job creation is dwindling without added stimulus and fell short of expectations for the 3rd month of the last 4. Furthermore, the unemployment rate was bubble wrapped with a participation rate that fell from 61.7% to 61.5%. All things considered, nonfarm payroll exudes the need for Washington to pass a fiscal package and pressures Congress to act as they iron out a spending bill ahead of the December 11th deadline.
As for Brexit, the 4.5 year rollercoaster faces the transition period deadline at year-end. Reports that talks have again stalled between UK Prime Minister Boris Johnson and the EU Commission are weighing on sentiment and weakness in GBP is lifting USD.
U.S. benchmarks have worked themselves off the worst of the overnight session. On a positive note, data from China last night showed a surge in exports; 21.1% YoY versus 12% expected. At face value, this embodies a global economic rebound which should only be perceived as positive — but not so fast. Imports by China came in at 4.5% versus 6.1% YoY and the trade “imbalance” reached a record of $75.42 billion. This reinvigorates trade war worries just as the White House plans to impose sanctions on Chinese officials tied to actions with Hong Kong.
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