The Fed is Data Dependent, and You Should Be Too | Morning Express 08/30/2022
Posted: Aug. 30, 2022, 8:57 a.m.
E-mini S&P (September) / NQ (September)
S&P, yesterday’s close: Settled at 4031.25, down 28.25
NQ, yesterday’s close: Settled at 12,492.75, down 127.75
Fundamentals: The Federal Reserve has anchored policy to data dependence, therefore, we must do so with our trading. This week culminates into Friday’s Nonfarm Payrolls, but today brings the Case Shiller House Price Index for June at 8:00 am CT, followed by CB Consumer Confidence for August and JOLTs Job Openings for July at 9:00 am CT. Broadly speaking, the housing market has begun to roll over, and a month-to-month acceleration in home values peaked through the end of Q1. Also, today’s year-over-year read for June will face its toughest base comp on record. CB Consumer Confidence has been trending lower since mid-2021, but August is expected to show a light at the end of the tunnel today, and this comes after the Michigan data did so on Friday. After Job Openings accelerated to a record of 11.855 million in March, it has eroded for three straight months and is expected to come in at the lowest level in a year. Of all data points today, Job Openings is arguably the most critical. The fewer the openings, the more the pricing power stays with the employer and therefore trickles into containing one of the stickiest inflationary effects, wage growth. Although a July read, today’s JOLTs will be viewed as a segue to Friday’s jobs report for August.
NY Fed President Williams is scheduled to speak at 10:00 am CT.
Do not miss our daily Midday Market Minute, from yesterday.
Tonight, we look forward to a slate of PMIs from China at 8:30 pm CT.
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NQ (September)
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Crude Oil (October)
Yesterday’s close: Settled at 97.01, up 3.95
Fundamentals: Fed Chair Powell could not have been happy with yesterday’s banner day for Crude Oil, October WTI gained 4.24%. Underpinning yesterday’s rally was a stew of narratives coming out of the weekend, not the least of which was fighting within Iraq and Libya. Price action hit an overnight high of 97.66 and exceeded our intermediate-term target of 96.75-96.85, a level we have been calling for since taking a more directly Bullish Bias two weeks ago. The rally stalled when Iraq said exports were not impacted by the fighting and prices began retreating into the onset of U.S. hours, coughing up a bulk of Monday’s gains. There seems to be budding concerns on the global demand landscape after data showed China’s refined fuel consumption for July fell 8.6% MoM. Tonight’s slate of Chinese PMIs will be front and center at 8:30 pm CT. Additionally, Iraq’s state owned marketer SOMO said it can export more to Europe. This is a nice headline but let us not forget the politically driven violence in Baghdad, which has encouraged Iran to begin controlling its border.
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Gold (December) / Silver (September)
Gold, yesterday’s close: Settled at 1749.7, down 0.1
Silver, yesterday’s close: Settled at 18.67, down 0.155
Fundamentals: Although U.S. Dollar Index weakness is due to Euro strength, the USDCNH is firmer on the session and remains in a full-on breakout. Furthermore, underlying weakness in the Treasury complex on the heels of Jackson Hole and added hawkishness from ECB members is weighing on precious metals. Overall, the Euro is only strengthening from lows due to the hawkishness, which becomes counterintuitive for a currency rally to reinvigorate Gold and Silver. This week’s economic data will be critical, as we began today’s note in the S&P/NQ section, “The Federal Reserve has anchored policy to data dependence, therefore, we must do so with our trading.” We went on to say JOLTs Job Openings at 9:00 am CT may be most crucial today as the week builds up to Nonfarm Payrolls Friday. JOLTs was preceded by weaker than expected Case Shiller and will be accompanied by CB Consumer Confidence. Also, NY Fed President Williams is scheduled to speak at 10:00 am CT.
Do not miss our Chief Market Strategist Phillip Streible's daily Metal Edge.
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Silver (September)
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