RJO FuturesCast

May 28, 2021 | Volume 15, Issue 21

The Markets

Energy - Oil Near Monthly High×

Oil prices are holding steady as of Thursday afternoon enhanced by strong economic data prints with unemployment claims falling more than expected and business spending accelerating in April. Prices have been weighing the prospect of Iranian oil coming back online with OPEC+ set to meet June 1st to assess any potential changes to easing production cuts. Concerns remain regarding Indian demand as Covid-19 has continued to ravish the country, the world’s third largest consumer. Crude stocks fell 1.662 million barrels with implied gasoline readings coming of 9.479 million barrels per day and now approaching an all-time high, according to the EIA. The market remains bullish trend with oil volatility (OVX) continuing to fall towards the 30 handle with today’s range seen between 62.02 – 67.80.

Crude Oil Jun '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-438-4805 or aturro@rjofutures.com.
Softs - Smaller Brazil Harvest to Help Support×

For the second time in a month, coffee prices have broken out of tight consolidations level with a sharp upside move. Coffee is at multi-year highs, coffee should be able to maintain upside momentum over the rest of this week. Diminishing views for brazils 21/22 off year Arabica crop, have been underscored by the latest forecast from Brazilian government agency which projects 31% decline from last seasons output. A little more rain has been added to Brazil weather forecast this week, but then switching back to mainly dry by next week.

Daily technical indicators have crossed over up, which is a bullish indication. The near term upside objective is at 16120. The next area of resistance is around 15900 and 16120. Support comes in at 15245 and below that at 14800.

Coffee Jul '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-2270 or tcholly@rjofutures.com.
Agricultural - Grain Futures Update w/Stephen Davis - 05/28/2021×
Stephen Davis discusses the grain futures market ahead of the June 30th crop report. We should see things get interesting as we head towards summer.
Interest Rates - Interest Rates Doing Surprisingly Well×

Looking at the June 10-year note this morning, we have a high of 133-02, a low of 132-265 and currently sit at 133-00.  The note has been somewhat of a confusing trade the last ten days as many Fed speakers have stated that the economy is robust and acting strong with continued strong economic numbers.  Normally when the Fed says things like we see it as bearish, but the market has been somewhat resilient.  In addition, many have continued to express the need for the Fed to start to taper, meaning buying less treasuries as the economy is showing good strength.  One explanation of why the treasuries have acted well in the last week is the China has come out and said it’s concerned with all the volatility we have seen in many of agricultural sectors and might start to import and purchase less.  So, we will see how that plays out for the rest of the week.

Looking at tecnicals for the note, I see good resistance at 133-125 level which coincides with the 100-day moving average and support comes in at 132-21 which is the 50-day moving average.  So, any move above or below those stated levels should start a new leg.  Not much in the way of economic news today besides the five-year auction, so barring any big surprises I would expect today’s trade to be quiet and orderly.

10-Year Note Jun '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-2270 or gperlin@rjofutures.com.
Equity - Stocks Look to Finish Week Strong×

Indices opened strong this morning with the Dow and S&P making runs at their all-time highs from earlier in the month.  The Nasdaq and Russell also look strong, but they will have a bit more ground to make up before they can say the same.  Inflation fears have market participants worried about the Fed beginning to taper.  We’re seeing more Fed participants suggesting current conditions warrant a conversation on the topic, but Jerome Powell doesn’t seem to be there just yet.  He has said in the past that he doesn’t have an issue with letting inflation run a bit hot for a while to compensate for all the time we spent below their target.  Today’s PCE reading (Fed’s favorite inflation measure) was the highest in nearly 30 years.  Perhaps that will get him to move off his “transitory” stance at the FOMC meeting in two and a half weeks. 

Personal incomes saw the biggest month over month drop ever.  Combine that with inflation, and it seems like grounds for…  more stimulus!  In fact, President Biden will be releasing more details on his proposed $6 trillion dollar budget at some point today.  That figure would represent the largest budget increase since World War II. 

Equity futures will trade Sunday night and until noon on Monday.  I hope everyone has a wonderful Memorial Day weekend. 

E-mini S&P 500 Jun '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-669-5354 or bdixon@rjofutures.com.
Economy - Futures Market Look-In w/John Caruso - 05/25/2021×
John talks about the latest developments in the housing market. As home prices continue to climb, buyer are starting to become discouraged, despite historically low interest rates.
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-669-5354 or jcaruso@rjofutures.com.

Coming Up Next Week...

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