Fed Week Begins | 12/12/2022

Posted: Dec. 12, 2022, 8:45 a.m.

  • Do not miss our weekly Top Things to Watch this Week, out every Sunday.
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  • PPI on Friday was hotter than expected, reaccelerating a bit m/m with headline +0.3% vs +0.2% exp and Core +0.4% vs +0.2% exp. However, headline y/y at 7.4% rose at the slowest pace since June 2021, and Core at 6.2% y/y, the slowest since July 2021.
  • Fresh Michigan Consumer Sentiment for December jumped to a three-month high, but it is Inflation Expectations most closely watched. 1-year inflation exp came in at 4.6% vs 4.9% exp, the lowest since September 2021.
  • Fed Chair Powell has said inflation expectations can be a self-fulfilling prophecy, higher expectations of inflation will lead to higher prices, entrenching the trend.
  • A pivotal read on CPI comes tomorrow, and the Federal Reserve begins its two-day meeting tomorrow to conclude with a policy decision at 1:00 pm CT Wednesday.
  • The CME’s FedWatch Tool expects a 50bps hike with a 74.7% probability, but the expectations through February and March are most critical.
  • Odds of only 75bps total through February have fallen to 39.1%, with at least 100 bps through February at a 60.9% probability and odds of 125bps rising to 12.1%.

E-mini S&P (December) / NQ (December)

S&P, yesterday’s close: Settled at 3936.25, down 29.50 on Friday and 139.25 on the week

NQ, yesterday’s close: Settled at 11,569.75, down 75.75 on Friday and 440.50 on the week.

The December contract expires Friday morning, it is roll week, but we do not use updated levels and contract until Tuesday. However, new longer-term positions are suggested to be in March beginning today.

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NQ (December)

 

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Crude Oil (January)

Yesterday’s close: Settled at 71.02, down 0.44

         -Cautiously bullish at this $70 retest. MANAGE YOUR RISK. Contact our desk or your broker for defined risk option strategies            at 312-278-0500

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Gold (February) / Silver (March)

Gold, yesterday’s close:  Settled at 1810.7, up 9.2 on Friday and 1.1 on the week

Silver, yesterday’s closeSettled at 23.717, up 0.471 on Friday and 0.467 on the week

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Silver (March)

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