Futures Sink as ADP Pukes, Data in Focus
Good morning, folks! As of 8:45AM on Wednesday morning, US Futures are seeing some light weakness with the Dow down -0.33% to 35,003, the S%P down -0.27% to 4,411, the Nasdaq down -0.10% to 15,046, the the Russell down -0.82% to 2,202.80. The ADP Employment Change came in moments ago at 330k vs the 650k expected, and the weak print has erased some of the overnight gains, but we're still holding on to most of yesterday's gains, so nothing to write home about.
The dollar (DXY) is holding steady just under a 92 handle (91.91), while the US10Y yield is also seeing persistent pressure as we continue to see heavy bond inflows. The Treasury has announced that they will begin reducing the size of bond auctions at the Nov 2021 meeting. That's going to make it tough for the Biden Administration to maintain current spending levels, and so with a reduction in Treasury supply ahead, monetary conditions are going to tighten as early as November, maybe even earlier if the Fed decides to taper purchases/hike rates at Jackson Hole.
Clearly the bond market knows something the stock market doesn't, and if the crashing US10Y yield is mimicking last years drop, we're likely about to see a major correction in markets. Having said that, we still have room to the upside in stocks (based on the technicals), particularly considering we're holding on to key supports like it's a religion, and money is still free. Every dip is being bought without hesitation, and that really hasn't changed (yet). Yesterday was a perfect example of how easy it is for the bulls to achieve new ATH's.
Gold is seeing some solid flows here as Powell continues to punish the Ctrl + P buttons on his keyboard. But, while Gold rallies, Bitcoin (BTCUSD) is seeing persistent pressure at 40k and has been unable to breakout since we lost this level in May 2021. Bitcoin and Gold do not trade in tandem - Gold trades as a safe haven along with the JPY, Dollar, Treasuries, to name a few, while Bitcoin trades like a risk asset. When markets correct and money flows out of risk, crypto gets hit the hardest as it carries the most risk/highest beta across most asset classes.
Let's see how the day shapes up as more data rolls in. At 9:45AM we'll see the IHS Markit Services PMI for July, then at 10:00AM we'll get the ISM Non-Manufacturing Index, and then finally at 10:30AM we'll see the latest EIA Crude Oil Inventories for last week. Good luck out there today, my friends, and see you all at the opening bell for our Live Analysis. Cheers, Michael.
* I am/we are currently long UVXY, HUV
The dollar (DXY) is holding steady just under a 92 handle (91.91), while the US10Y yield is also seeing persistent pressure as we continue to see heavy bond inflows. The Treasury has announced that they will begin reducing the size of bond auctions at the Nov 2021 meeting. That's going to make it tough for the Biden Administration to maintain current spending levels, and so with a reduction in Treasury supply ahead, monetary conditions are going to tighten as early as November, maybe even earlier if the Fed decides to taper purchases/hike rates at Jackson Hole.
Clearly the bond market knows something the stock market doesn't, and if the crashing US10Y yield is mimicking last years drop, we're likely about to see a major correction in markets. Having said that, we still have room to the upside in stocks (based on the technicals), particularly considering we're holding on to key supports like it's a religion, and money is still free. Every dip is being bought without hesitation, and that really hasn't changed (yet). Yesterday was a perfect example of how easy it is for the bulls to achieve new ATH's.
Gold is seeing some solid flows here as Powell continues to punish the Ctrl + P buttons on his keyboard. But, while Gold rallies, Bitcoin (BTCUSD) is seeing persistent pressure at 40k and has been unable to breakout since we lost this level in May 2021. Bitcoin and Gold do not trade in tandem - Gold trades as a safe haven along with the JPY, Dollar, Treasuries, to name a few, while Bitcoin trades like a risk asset. When markets correct and money flows out of risk, crypto gets hit the hardest as it carries the most risk/highest beta across most asset classes.
Let's see how the day shapes up as more data rolls in. At 9:45AM we'll see the IHS Markit Services PMI for July, then at 10:00AM we'll get the ISM Non-Manufacturing Index, and then finally at 10:30AM we'll see the latest EIA Crude Oil Inventories for last week. Good luck out there today, my friends, and see you all at the opening bell for our Live Analysis. Cheers, Michael.
* I am/we are currently long UVXY, HUV
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