COMMODITY PRICES UNDER PRESSURE AS CRUDE OIL DROPS $9

Published Date 7/6/2022

Overnight the 10 yr. note yield increased a little to 2.83% from 2.80%, this morning in US trading more buying, at 8:30 am ET the 10 at 2.76% -4 bps. In pre-open trading stock indexes were not much changed from yesterday.

High levels of volatility increasing as the world no longer sees a recession as a possibility, but a probability. Yesterday most all commodity prices declined, led by crude oil that dropped almost $9.00, a huge move; ag prices fell, metals prices dropped; all in big moves. This morning crude oil up slightly, metals increasing a little, ag prices some minor improvements. The first trading session in the second half of the year began with global recession fears escalating. Current thinking is the global economies are headed for what now is seen as a hard landing. Jerome Powell meantime is making it clear the Fed won’t be side-tracked on the plan to reduce inflation. Inflation is becoming ebbed in consumers’ outlooks that inflation may me be a self-fulfilling prophesy.

Yesterday the yield curve has flattened, in the afternoon yesterday the curve did invert. At 4 pm yesterday the 2,5 10 10 yr. notes traded at the same rate (2.83%).

The FOMC minutes from the July meeting will be released at 2 pm this afternoon.

At 9:30 am the DJIA opened +29, NASDAQ +11, S&P +4. 10 yr. note at 9:30 am 2.79% -2 bps after trading at 2.76% at 9 am. FNMA 4.5 30 yr. coupon prices at 9:30 am +9 bps after being up 21 bps at 8:30 am. From 9:30 am yesterday the 4.5 coupon up 3 bps.

At 10 am June ISM non-manufacturing index (services), expected at 54.8 from 55.9 in May, the index reported 55.3.

Then there is the JOLTS May job openings, kind of a meaningless data point but expected at 11.250 mil openings, reported at 11.1 nil.

Source: TBWS

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