What we are seeing in the bond market also depicts a fall in bond yields. As bond prices get higher, yields move lower. Right now, bonds are one of the top bullish scores on the EdgeFinder. Smart money is over 60% long on bond prices as they are betting on lower yields in the future.
The longer inflation remains elevated, the Fed won't cut. But they are also adamant about staying where they're at. So in a way, yields are capped in the eyes of investors. This means that it's only a matter of time before interest rates begin to drop. That's why COT is buying bonds.
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The longer inflation remains elevated, the Fed won't cut. But they are also adamant about staying where they're at. So in a way, yields are capped in the eyes of investors. This means that it's only a matter of time before interest rates begin to drop. That's why COT is buying bonds.
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Retail is now long dollar by shorting AUDUSD, EURUSD, GBPUSD, NZDUSD. They are also long metals other than gold, long crypto, and long NAS100 and RUSSELL.
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COT is now short NAS and US30, long GBP, EUR, AUD and gold. Seeing this sentiment diverge with retail is a significant indicator that the dollar is weaker. USD saw little to no interest this week again.
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ISM Manufacturing PMI data came in lower than expected at 48.7 indicating another concern in the overall US economy. Events to strengthen the dollar would likely be a higher JOLTS number and a higher NFP from both the private and public sector.
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Gold
Gold is now the top bullish setup on the EdgeFinder at +11. With weaker ISM PMI on Monday, the US is expecting a lower JOLTS report this morning which would mark the fourth straight month of falling job openings. If JOLTS misses, we could see more demand in the gold market. Right now, price is resting on a key support level on the 1D timeframe around a rising trend line. -Frank
Gold is now the top bullish setup on the EdgeFinder at +11. With weaker ISM PMI on Monday, the US is expecting a lower JOLTS report this morning which would mark the fourth straight month of falling job openings. If JOLTS misses, we could see more demand in the gold market. Right now, price is resting on a key support level on the 1D timeframe around a rising trend line. -Frank
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There has been a steady rise in unemployment, steady fall in job openings, and a mostly-lower NFP trend. With earnings season wrapping up, it looks like PMI and NFP are the only things that will affect the stock market. Now that we are nearing all time highs in the S&P, the question is whether it can justify being at this level with a weaker economic outlook. Friday's NFP may be the market's last line of defense this week for the bull market.
-Frank
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-Frank
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The SPX500 has still not gave in to added pressure from a broader decline in economic outlook. With earnings season coming to a close, the only things left standing in its way for the week are JOLTS, Services PMI and NFP. Although we have seen pessimism in the US economy in the past, the market is quick to recover the losses it incurs from bad news.
-Frank
-Frank
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USD/CHF
One reason why the market may be holding up for now is the lack of bullish sentiment around the dollar. And investors want to look for an alternative to where they should put their money. The fact that US interest rates might be capped at 5.5% means that demand in bond yields and dollar are not as strong as they used to be.
One reason why the market may be holding up for now is the lack of bullish sentiment around the dollar. And investors want to look for an alternative to where they should put their money. The fact that US interest rates might be capped at 5.5% means that demand in bond yields and dollar are not as strong as they used to be.
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USOil
Oil prices dump as we start the month of June. An indication of crumbling oil prices could be due to a growing fear of recession as jobs slow again this month. ADP NFP came in lower than expected to 152K. Yields are already falling on the day after worse than expected jobs news. This year is also an election year which could be another reason why oil prices are dropping. There is not a strong reason for the Fed to cut rates unless we see something start to break. If jobs start cooling further, we could see a risk of recession, and the Fed may be prompted to cut. However, they also have to keep in mind that inflation still remains elevated. Until then, oil may continue to fall. -Frank
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Oil prices dump as we start the month of June. An indication of crumbling oil prices could be due to a growing fear of recession as jobs slow again this month. ADP NFP came in lower than expected to 152K. Yields are already falling on the day after worse than expected jobs news. This year is also an election year which could be another reason why oil prices are dropping. There is not a strong reason for the Fed to cut rates unless we see something start to break. If jobs start cooling further, we could see a risk of recession, and the Fed may be prompted to cut. However, they also have to keep in mind that inflation still remains elevated. Until then, oil may continue to fall. -Frank
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We got softer private payroll numbers and a much higher Services PMI report this morning. This PMI number was the highest reported since last October 2023. There is surely mixed economic figures coming out as the stock market chugs on to all time highs in the NASDAQ. Friday's NFP is expected to come in higher than last month, but a miss could signify an overall cooling jobs market. Stocks may be able to keep running if there is no clear sign of a jobs decline. If NFP does come in higher, gold might get weaker and stocks may move higher.
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Today's unemployment number came out higher than expected for the second week in a row. Wednesday's ADP NFP was softer as well indicating a slowdown in the private payrolls. Tomorrow is NFP, and analysts expect a higher number than last month. But the signs so far this week are pointing to a cooling jobs market.
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Gold is still our best bullish reading on the EdgeFinder at +11. The reason behind the metal's bullishness is coupled with the fact that we're seeing a cooling jobs market. Obviously, NFP could change the narrative on Friday, but for now it looks like the economy is not as healthy as analysts hoped.
Investors want signs of a rate cut which coincides with a softer NFP, but it might not be for bullish reasons in the stock market. If the Fed feels forced to cut because of a worse economy, that is not a healthy reason for stocks. But it is for gold which trades as a hedge against the dollar and yields which continue to fall. -Frank
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Investors want signs of a rate cut which coincides with a softer NFP, but it might not be for bullish reasons in the stock market. If the Fed feels forced to cut because of a worse economy, that is not a healthy reason for stocks. But it is for gold which trades as a hedge against the dollar and yields which continue to fall. -Frank
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As the market sits at all time highs, investors may start to question whether the rally is sustainable or not. Regardless of jobs numbers this week, it seems that NVDA is a key factor in the S&P's strength which is now a $3 trillion market cap and is the second biggest company in the world.
NVDA's bullish sentiment is revolved around the 10/1 stock split on Friday which could drive even more demand into the company. Although the stock won't become cheaper on a value basis, it will be less expensive for investors to participate in the trade. -Frank
NVDA's bullish sentiment is revolved around the 10/1 stock split on Friday which could drive even more demand into the company. Although the stock won't become cheaper on a value basis, it will be less expensive for investors to participate in the trade. -Frank
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The dollar remains weaker against the euro as rates seem capped and a rate cut could be the next move from the Fed. EURUSD is now a +10 which up 2 points from yesterday. Regardless of the reason for the cut, this means dollar weakness.
The Fed would like the luxury of cutting as in the economy shows signs of health. However, the signs of a cooling jobs market is not what the Fed wants. And if NFP comes in lower, it's going to look even more bearish for the dollar. This could cause more demand to the bullish side on EU. -Frank
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The Fed would like the luxury of cutting as in the economy shows signs of health. However, the signs of a cooling jobs market is not what the Fed wants. And if NFP comes in lower, it's going to look even more bearish for the dollar. This could cause more demand to the bullish side on EU. -Frank
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