RJO FuturesCast

June 25, 2021 | Volume 15, Issue 25

The Markets

Metals - Don't Count Gold Out!×

Gold and precious metals may have gotten slammed off a “shift” in Fed language. A willingness to talk about talking about rate hikes. The Fed won’t be able to control inflation, and inflation will be persistent. Not transitory. We have never seen anything like what has happened to the global economy over the past twelve months. The huge increase in money supply. The rate of savings. The reopening of the economy. The pent-up demand.

I believe that it’s usually a level on the chart that turns a market around. It looks to me like gold has found a value range around $1,775. On the downside, $1,760 needs to hold or we will likely see a test of $1,740. On the way up, gold needs a close above $1,800 then a good pop above $1,820 to get back on the uptrend.

Platinum back above $1,100 is a positive, but we need to see a close up there today.

Gold Aug '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-4124 or fcholly@rjofutures.com.
Metals - Silver Market Sideways×

The silver market chopped sideways this week around the $26 level after falling $2 the end of last week’s trade. There has been a nice recovery in stocks since the Fed meeting last week and that along with the Fed reiterating that inflation will be temporary has limited any bullish strength in silver. The market also saw a PCE number that was higher than the prior month but in line with expectations. This would typically show increasing inflation expectations and benefit the gold and silver but the market hasn’t been reacting to traditional drivers such as increasing demand and signs of inflation. Although Sept silver has found support around $26, it was unable to hold any push higher off that level. A break of $25.85 would likely see the price trade down to $24 which is the lower end of the longer term, sideways channel it has been trading in. The bulls need to see a rally that goes to test resistance of $28 but with the way the market has been ignoring any fundamental data that it normally follows it might be difficult for any bullish rally in the near term.

Silver Sep '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 therrmann@rjofutures.com.
Energy - Crude Oil Near Three Year High×

Oil prices have come off their Wednesday lows as the global recovery demand continues to come into focus amidst higher highs in European high frequency data following an improvement in German business confidence and Eurozone manufacturing as well as services PMI earlier this week. This was coupled with a drawdown in oil inventories as US crude inventories fell to their lowest since March 2020 with US gasoline stocks posting a surprise draw as well, according to the EIA. OPEC+ are set to meet on July 1st to discuss output cuts and a potential increase in production. This comes as doubts remain regarding Iranian oil coming back online despite claims of an impending end to Iranian sanctions. The market remains bullish trend with today’s range seen between 70.22 – 74.13.

Crude Oil Aug '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.
Agricultural - Have We Seen a Top in Grains?×

The question on most traders and producers’ minds is have we seen the top in the grain markets?  I don’t believe we have yet.  The chart patterns still suggest the long-term upside trend remains in place even with corn off over $1 and soybeans off about $2 from their most recent highs. Until we see failure of the major trend lines in these markets, I believe traders should still look for buying opportunities. Recent rainfall has put the market under some pressure, to be expected, which should be used as a buying opportunity but not without a solid risk management plan in place. In the corn and soybean market traders could consider buying futures at these levels and using an option strategy to manage the risk. With the sizable daily ranges and increased margins using an option strategy to manage your futures positions risk can reduce margin requirements and allow you to weather the day to day “market noise” while keeping your focus on the bigger trend. Feel free to call me at 1-800-367-7290 to discuss some current trading strategies.

Corn Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7290 or msabo@rjofutures.com.
Interest Rates - Fed Could Raise Rates Soon×

Looking at the September 10-year note, we have had a narrow range today with a high of 123-15 and a low of 123-06. The market has been somewhat supported today with data showing mixed news. We saw market manufacturing a bit stronger than expected, but new home sales month on month were weaker than expected. Yesterday, Chairman Powell, testified before congress and basically reiterated what he has been saying all along that he sees inflation being transitory and any jump that we have seen in the last month has been caused by the economy reopening. I am not sure he is correct in his assumption as one just needs to visit your local grocery store or gas station and see prices are up substantially. The big test will come on Friday when the PCE comes out at 7:30 central. Rumors are it will come out very strong and if it does, traders should watch out below because the Fed could say that they will soon begin to taper, meaning they will cut back on their bond buying which is a precursor for the possibility of raising rates sooner rather than later.

10-Year Note Sep '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 Hit New All-Time Highs×

The September S&P futures have printed another all-time high this morning.  A week after the Fed put the rally on pause by expressing some concern about the rate of inflation, optimism about the reopening and hope that a bipartisan infrastructure bill may actually get done has us trending higher yet again.  The Dow, Nasdaq, and Russell failed to print new all-time highs so far, but the Russell and Nasdaq are not terribly far off. 

Confirming Fed Chair Powell’s inflationary concerns, this morning’s PCE reading (Fed’s preferred measure of inflation) went up another .4% in May.  That means that the price of goods has gone up 3.9% over the past year.  The Fed expects these numbers will start to cool off as the economy normalizes and the labor shortage resolves itself.  Anyone who has filled up their tank, visited the grocery store, looked for a house or car, etc. recently can only hope that he’ll be right about this all being “transitory.” 

Next week’s news slate is a strong one.  Traders will be most focused on next Friday’s jobs data.  Powell has stood firm that he won’t consider tapering until we reach full employment, and the last few jobs numbers have been underwhelming at best.  We’ll see if we can finally start to turn the corner, but I don’t expect that to happen until we see greater expiration of benefits.  Have a great weekend. 

E-mini S&P 500 Sep '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 Outlook w/John Caruso - 06/23/2021×
John Caruso talks about the latest news in the futures market, including the news that Atlanta Fed Chairman Raphael Bostic believes that interest rates could be raised by the end of 2022.
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.

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