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St. Patrick’s Day is historically considered among the best trading days. Apparently, judging by the results, it may have brought some luck to natural gas. The second target hit – BOOM! Yesterday, on St. Patrick's Day, the opportunity to bank the extra profits from my recent Nat-Gas trade projections (provided on March 2) finally arrived. That trade plan has provided traders with multiple bounces to trade the NYMEX Natural Gas Futures (April contract) in various ways, always depending on each one’s personal risk profile. To get some more explanatory details on understanding the different trading ways this fly map (trading plan) could offer, I invite you to read my previous article (from March 11). To quickly sum it up, the various trade opportunities that could be played were as follows (with the following captures taken on March 11): The first possibility is swing trading, with the trailing stop method explained in my famous risk management article. Henry Hub Natural Gas (NGJ22) Futures (April contract, hourly chart) The second option consisted of scalping the rebounds with fixed targets (active or experienced traders). I named this method “riding the tails” (or the shadows). Henry Hub Natural Gas (NGJ22) Futures (April contract, 4H… Read More »Natural gas hits its final target. the luck of St. Patrick’s day?

WTI oil WTI oil returned above $100, after dipping to $93.51 earlier this week and is likely to close above this level that would generate initial positive signal, in addition formation of reversal pattern on daily chart. Although recovery picked up, it still needs more work at the upside to generate firmer reversal signal, with lift and close above pivot at 107.63 (Fibo 38.2% of $130.48/$93.51) needed to confirm. Daily studies are mixed, with rising negative momentum that keeps the downside vulnerable. The contract is also on track for the second weekly close in red, although, long tail of weekly candle suggests that bears from new peak at $130.48 are running out of steam, but weekly studies show momentum and stochastic indicators heading south, with enough space at the downside signaling that correction might not be over. Fundamentals remain the main driver, with rising tensions over Ukraine that directly fuel fears of possible supply disruption, while OPEC output is still short around 1 million bpd that would add to potential nightmare scenario in case Russian supplies stop. Res: 106.23; 107.63; 110.00; 112.00. Sup: 102.23; 100.00; 99.30; 94.83. Interested in WTI technicals? Check out the key levels

S&P 500 extended gains, and the risk appetite in bonds carried over into value rising faster than tech. Given the TLT downswing though, it‘s all but rainbows and unicorns ahead today. Not only that quad witching would bring high volume and chop, VIX itself doesn‘t look to slide smoothly below 25 today. Friday‘s ride would be thus rocky, and affected by momentum stalling in both tech and value. Real assets though can and will enjoy the deserved return into the spotlight. With much of the preceding downswing being based on deescalation hopes (that aren‘t materializing, still), the unfolding upswing in copper, oil and precious metals (no, they aren‘t to be spooked by the tough Fed tightening talk) would happen at a more measured pace than had been the case recently. Pay attention to the biting inflation, surrounding blame games hinting at no genuine respite – read through the rich captions of today‘s chart analyses, and think about reliable stores of real value. And of course, enjoy the open profits. Let‘s move right into the charts. S&P 500 and Nasdaq outlook S&P 500 looks likely to consolidate as the 4,400 – 4,450 zone would be tough to overcome, and such a… Read More »Good volatility ahead

Summary Existing home sales fell 7.2% in February to a 6.02 million-unit pace. While it is tempting to blame rising mortgage rates for February's larger-than-expected drop, the decline continues a recent pattern with annualized sales bouncing around from month-to-month. Mortgage rates have been rising since last fall, and concern about rising interest rates picked up after the FOMC signaled it would accelerate plans to normalize interest rates and begin to reverse the expansion of the Fed's balance sheet. Those concerns likely caused some buyers to accelerate their timetable for purchasing a home, which is a point we raised with January's surprisingly strong rise in home sales, so sales were poised for a drop. Pending home sales, which reflect purchase contracts for existing homes, fell sharply in November, December and January, dropping 2.9%, 2.3% and 5.7%, respectively. Unusually lean inventories are also likely restraining sales. While the inventory of homes available for sale rose 2.4% in February, they are down 15.5% over the past year and remain near an all-time low. With inventories low, homes are selling unusually quickly and often have multiple bids above their asking price. The median price of an existing home has risen 15% over the past… Read More »Existing home sales fell in february

Since the outbreak of the war in Ukraine, the publication of the PMI for March in the Eurozone is the first important data point for the outlook for the economy. Due to the outbreak of the war, prices for important raw materials such as industrial metals, energy and food have risen sharply. In addition, there is the threat of renewed problems in global supply chains after the war disrupted the land route through Russia and Ukraine for the transport of goods between the EU and China. Renewed lockdowns in China to control an outbreak of Covid-19 pose an additional risk to global supply chains in the short term. Against this backdrop, we expect a significant decline in sentiment in March, especially in the manufacturing sector. Among service providers, sentiment could stabilize at a high level, given the end of Covid related restriction measures in many countries. The outlook for global commodity prices as well as short-term supply issues should ease somewhat in the event of an early cessation of hostilities. This would help reduce the short-term downside risks to the Eurozone economic outlook. However, we see two main risk factors that could pose longer-term risks to the economy and inflation.… Read More »How much is sentiment suffering from the Ukraine war?

Summary United States: Significant Monetary Policy Tightening Ahead In a full week of economic data, Wednesday's FOMC meeting took center stage. FOMC officials lifted the target range for the federal funds rate by 25 bps. Meanwhile, data on retail sales, industrial production and housing underscored a similar backdrop across the economy—price pressure remains hot and supply is still hard to come by. Next week: New Home Sales (Tues), Durable Goods (Wed) International: G10 and EM Central Banks Continue Hiking International central banks were quite active this week. In the G10, the Bank of England (BoE) opted to lift interest rates another 25 bps and take its main policy rate to 0.75%. While the decision to raise rates was largely expected, the details surrounding the decision were a bit of a surprise and were interpreted as relatively dovish. In the emerging markets, the Brazilian Central Bank opted to lift the Selic Rate 100 bps and take the main policy rate to 11.75%. Next week: South Africa CPI (Wed), Eurozone PMIs (Thurs), Central Bank of Mexico (Thurs) Interest Rate Watch: FOMC Sends a Hawkish Signal As was widely expected, the Federal Open Market Committee (FOMC) decided to raise rates by 25 bps… Read More »Weekly economic and financial commentary

The upcoming week will quieten down a bit after what was a busy time for central banks and geopolitical events. But there’s still plenty of activity ahead as the latest flash PMI readings are due and the Swiss National Bank will keep the monetary policy theme running, not to mention how the war in Ukraine will unfold amid slow progress in the negotiations for a ceasefire.

The Federal Deposit Insurance Corporation in the final 12 CFR Parts 303 and 337 Rules effective April 1 2021 changed the concept of the national interest rate rate cap and the national interest rate. “The FDIC views the “national rate” as  as the average of rates paid by all insured depository institutions and credit unions for which data is available, with rates weighted by each institution’s share of domestic deposits.”  “The “national rate cap” is calculated as the higher of: (1) the national rate plus 75 basis points; or (2) 120 percent of the current yield on similar maturity U.S. Treasury obligations plus 75 basis points. The national rate cap for non-maturity deposits is the higher of the national rate plus 75 basis points or the federal funds rate plus 75 basis points.” The national rate speculatively is the Money Market interest rate at 0.08 which matches the previous  effective Fed Funds rate before the Fed raised. Add 75 basis points and the money market rate is capped at 0.83. The new effective funds rate should be 0.20 or capped at 0.95. The old savings rate at 0.06 is capped at 0.81 while the new savings rate should be 0.18… Read More »Currency market: National interest rate, national cap and next week trades

Positive signals from Russia-Ukraine talks boosted market sentiment this week. Media reports that Ukrainian and Russian negotiators are discussing a 15-point draft peace deal raised early optimism that the two sides could be approaching a diplomatic solution to the ongoing war in Ukraine. In our Research Russia-Ukraine – Updated scenarios and implications for commodity markets, March 9, we argue that the two sides are likely to eventually agree on a ceasefire/truce but that will require some painful concessions from the Ukrainian side. Despite a potential truce, some level of conflict/unrest is likely to remain but on a baseline we do not expect an escalation of the conflict outside Ukraine. In our base case of a frozen conflict in Ukraine, we think the global economy will see weaker growth but escape a recession (see Big Picture – Headwinds to the global economy from Ukraine and Fed tightening, March 17). In a downside scenario, where there is an escalation of the war beyond the borders of Ukraine, the risk of recession in Europe increases significantly. With rising inflation, euro area consumers will see the biggest real income erosion in decades this year, and we revise down our 2022 euro area GDP forecast… Read More »Weekly focus: Hopes for peace boost market sentiment as Fed starts hiking

UK Spring Budget – 23/03 – at a time when the UK is facing a cost-of-living crisis and inflation levels that could well head back to levels last seen in the 1990s it beggars belief that the Chancellor of Exchequer is set to go ahead with a National Insurance tax rise, that will add to the tax burden for both business and consumers next month. While it can certainly be argued that taxes must rise to pay for the costs on the NHS of the Covid crisis, the decision to implement these measures was taken at a time when the economic situation today was expected to be quite different. There is a saying in financial markets that when the facts change, I change my mind, and surely it should be no different when managing the public finances. Pursuing a bad investment strategy in financial markets and then doubling down it would usually result in an even worst outcome, and yet what we have here appears to be the political equivalent. When Chancellor of the Exchequer Rishi Sunak gets up later this week to announce his spring statement, he isn’t expected to resile from the increase in NI rates which are… Read More »The week ahead: UK Spring Statement, UK CPI and retail sales, Next, Saga and Nike results