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

 

S&P, last week’s close: Settled at 4087.50, down 12.25 on Friday and on week

NQ, last week’s close: Settled at 12,390.00, down 92.50 on Friday and up 43.75 on the week

 

Fundamentals: E-mini S&P and E-mini NQ futures incurred fresh selling pressures overnight, led by Asia with the Hang Seng -1.7% and hitting the lowest level since the second trading session of the year. Elsewhere, both the U.K. FTSE and German DAX pared early losses to remain at not only elevated levels but, in the FTSE’s case, record highs. From the U.K., flash PMIs beat expectations across the board. In the Eurozone, Manufacturing PMI was dragged by a larger contraction than expected from Germany at -46.5. However, sentiment is improving via the ZEW Sentiment gauge, which looks six months out. Both Germany and the Eurozone topped expectations, coming in at the best level since the onset of Russia’s invasion of Ukraine. U.S. flash PMIs are due at 8:45 am CT. As the week unfolds, Minutes from the Fed’s meeting earlier this month will be released tomorrow, the second look at Q2 GDP is out Thursday, and the Fed’s preferred inflation indicator, the Core PCE Index, is due Friday.

 

After a deluge of economic data showing a stronger economy and resilient inflation, the CME’s FedWatch Tool is signaling a 21% probability the Fed hikes by 50bps at their March meeting, the highest yet, with the remaining factoring in the discounted 25bps. Comments from Fed members this week will play a crucial role in the risk-environment. The 2-year yield is at 4.65%, the highest since November, and the 10-year yield is nearly 3.9% and testing the December high, each improving by more than 0.50% from their pre-Nonfarm Payroll low on February 2nd. Although the 2s10s inversion has improved from a fresh record low -of 0.88% Wednesday, the strength in the short-end cannot be ignored.

 

Retail earnings are in focus this week, and Walmart, the world’s largest retailer, kicked things off alongside Home Depot. Both companies are -4% ahead of the bell after cautioning on the economy and lowering forecasts. Walmart did beat EPS and revenue estimates, whereas Home Depot missed revenues. Palo Alto Networks reports after the bell today, along with Realty Income, Diamondback, Coinbase Global, Caesars, and others. Tomorrow, NVIDIA headlines after the bell.

 

 

 

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NQ (March)

 

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Crude Oil (April)

Last week’s close: Settled at 76.55, down 2.19 on Friday and 3.37 on the week

Fundamentals: An uncertain geopolitical landscape and demand from China’s reopening have helped underpin a rebound to start the week from last week’s selling. Tensions between the U.S. and China are not improving as President Biden made a surprise visit to Kyiv and is expected to speak in Poland today. Data shows exports of Russian Crude and fuel to China hit a fresh record, beating that from April 2020 when China emerged from the initial virus restriction, from @staunovo on Twitter. Sticking with the Russia Oil export story, although China’s demand remains robust upon their reopening, this news, along with other reports, shows more Russian Oil is in the market than anticipated post-sanctions, and this could prove to be a negative of sorts. However, a string of economic data from the U.S., U.K, and Eurozone over the last week show a better economic picture than what may have been calculated a few weeks ago. Weekly inventory data is delayed by one day due to yesterday’s U.S. holiday.

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Gold (April) / Silver (March)

Gold, last week’s close: Settled at 1850.2, down 1.6 on Friday and 24.3 on the week

Silver, last week’s close: Settled at 21.715, up 0.005 on Friday and down 0.36 on the week

Fundamentals: Gold and Silver have shown life from Friday’s overnight low as the U.S. Dollar retreated from such highs. However, rising rates are proving to be a headwind to a larger dead-cat bounce from the two-week bludgeoning. As we noted in the E-mini S&P/NQ section, the 2-year yield is at 4.65%, the highest since November, and the 10-year yield is nearly 3.9% and testing the December high, each improving by more than 0.50% from their pre-Nonfarm Payroll low February 2nd. This comes as the Federal Reserve is seen stepping up its hawkishness, with rates now pricing in a 21% probability the Fed hikes by 50bps in March. The other side of this extrapolation would pave the way for the Fed to force a slowdown and create an environment where Gold and Silver can thrive. For now, we look to U.S. flash PMIs at 8:45 am CT and a week full of Fed speak.

 

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Silver (March)

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