Houston: We have Pockets of Disinflation | Morning Express | 11/11/2022
Posted: Nov. 11, 2022, 9:06 a.m.
- Houston, we have pockets of disinflation. Rocketing inflation is showing signs of cooling in yesterday’s CPI report for October. Headline and Core, month-over-month, and year-over-year, all came in below expectations.
- Headline CPI +0.44% vs +0.6% and +7.7 YoY vs +8.0%. Core CPI +0.27% MoM vs +0.5% and +6.3% YoY vs +6.5%.
- Amid the disinflationary factors, Services Less Rent of Shelter was the biggest standout -0.10% MoM, Durables -0.66% MoM. Also, Household Furnishings and Supplies, Apparel, Used Cars and Trucks, Car and Truck Rental, and Airfare, all disinflated MoM.
- The first look at November Michigan Consumer data due at 9:00 am CT. Along with Sentiment, the 1-year and 5-year Inflation Expectations are critical.
- China officials commented last night to prioritize growth and eased some virus restrictions, lifting the Yuan and, thus, commodities.
- Broad U.S. Dollar weakness continues, lifts risk-assets.
- As risk-on rally takes hold, the 3m-10yr yield spread inverted decisively. The lag in inversion here was used as a positive to stay the course by Fed Chair Powell. Does inversion encourage a slower pace of hikes? That will be a key topic going forward.
- CME FedWatch Tool signals a 50bps hike in December with 85.4% probability. February has become a coin flip between 25bps and 50bps.
E-mini S&P (December) / NQ (December)
S&P, yesterday’s close: Settled at 3961.00, up 205.50
NQ, yesterday’s close: Settled at 11,632.25, up 801.50
- S&P rare major four-star resistance is .382 from 3502 low back to all-time high, overnight high was 3997.
- Must be aware of 11,721-11,760 ceiling in the NQ, and we ideally need price action to close out above here today.
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NQ (December)
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Crude Oil (December)
Yesterday’s close: Settled at 86.47, up 0.64
- Bloomberg cited Saudi Oil Minister saying OPEC+ will remain cautious on production.
- China easing virus restrictions despite the rise in cases cited above.
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Gold (December) / Silver (December)
Gold, yesterday’s close: Settled at 1753.7, up 40.0
Silver, yesterday’s close: Settled at 21.702, up 0.375
- If Treasuries slip, it will halt the immediacy of the rally in precious metals, pullbacks must remain constructive against support.
- S. Dollar might be getting a bit oversold in the near-term; a bounce will halt the immediacy of the rally in precious metals.
- Chinese Yuan strength could just be getting started, supporting more intermediate-term strength in precious metals and commodities.
- Remain more Bullish in Bias, but important to monetize and capitalize on a portion of longs at a minimum.
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Silver (December)
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