Welcome to today’s Morning Coffee Break – U.S futures are indicating a lower open with fair value for the Dow Jones at -23.10, S&P 500 at -2.24 and the NASDAQ fair value at -5.84. Market participants will get to hear from two Federal Reserve officials throughout the day today.CurveAheadMarketStrategies.com Morning Coffee Break

On deck this morning is Federal Reserve Bank of Chicago President Charles Evans’s speech this morning in Michigan, “Perspectives on Current Economic Issues” scheduled for 8 a.m. ET.

Later this evening we will here from Richmond Fed President Jeffrey Lacker who is scheduled to speak before at New York University, entitled “Maximum Employment and Monetary Policy” at 7:15 p.m. ET

Morning Coffee Break U.S. Economic Calendar

Time Event Forecast Pervious
08:30 Current Account -125.5B -137.3B
08:55 Redbook (MoM) 1.90%
09:00 TIC Net Long-Term Transactions 45.3B 9.3B
09:00 Overall Net Capital Flow 16.70B
09:00 US Foreign Buying, T-bonds 32.50B
10:00 NAHB Housing Market Index 38 37
11:30 52-Week Bill Auction 0.195%
11:30 4-Week Bill Auction 0.090%
16:30 API Weekly Gasoline Stock 1.63M -4.16M
16:30 API Weekly Crude Stock 0.23M 0.22M

Morning Coffee Break Global Markets Watch

 

Asian Markets

Asian markets overnight broadly fell again on concerns surrounding the territorial dispute between emerging market giant China iShares FTSE China 25 Index Fund (FXI, quote) and developed nation of Japan MSCI Japan Index Fund  (EWJ, quote) caused investors to be more cautious.

 

European Markets

European Central Bank (ECB) stated it received less demand for one-week credit than last week.

The seven day fund allotment this week was 119.84 billion euros ($156.75 billion) which is down from last week’s allotment of EUR130.34 billion ($170.48 billion).  It’s important to note that the number of bidders did tick up to 84 from 80 the week prior.

Spain was able to sell 4.576 billion euros ($6 billion) of 12-month and 18-month treasury bills in this morning’s auctions. The auction was welcomed news as the borrowing rate moved lower and Spain was able actually sell more than originally expected.  Average yield for 12 month treasury bills was 2.835% and the average yield for the 18 month Treasury bill was at 3.072%.

 

Emerging Markets

India’s equities broke a 9 day winning streak today as investors look to lock in gains ahead of the Ganesh Chaturthi holiday.

Private sector lender ICICI Bank (IBN, quote) was down over 1% while top lender State Bank of India moved higher 3%.

 

Companies to Watch

FedEx (FDX, quote) is scheduled to report earnings during the trading session today with all eyes focused on the name for any indication of the U.S. economic growth.

Apple (AAPL, quote) shares crossed $700 for the very first time last night in afterhours trading on strong iPhone sales.

 

Futures and Commodities Corner

Crude Oil

Yesterday’s WTI crude oil dropped continued in early trading in European markets today.  Crude oil began to roll over around 11:30 until 1:45 when the price crude oil fell off a cliff and plunged $2.50 from the day’s open to the day’s close. Rumors of the U.S. government’s willingness to tap Strategic Petroleum Reserve (SPR) were quickly dismissed after the White House officials made a statement that there was nothing to announce on the matter.  However, White House officials did state “all options remain on the table”.

What appears to be happening at the moment is purely technical trading with the twist of contract expiration occurring as well. It seems the price triggered a technical sell off that many traders were keying off the signal.

This morning crude oil remains weak down $-.30 or 0.31% to $96.31, which remains a surprise with the U.S. dollar weaker on QE3.

Equity only readers can gain exposure to WTI Crude Oil through the United States Oil Fund (USO, quote) ETF that seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The USO will invest in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. It may also invest in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil.

Gold

Gold prices are lower for the second day in row after the spike up in price from Federal Reserve’s strong third round of stimulus (QE3).  Gold bulls seem to be taking profits after a $170 plus move in the metal.  Gold is also feeling some pressure from the tick up in the U.S. dollar the last two days as well.

In today’s session, we are looking for continued pressure on the shiny metal as global market sentiments remain mix with traders taking profits from a most recent run up. Look for continue pressure on the metal from a stronger U.S. dollar this morning.

Gold is currently trading around $1,758.10 with the upward trendline acting as support around the $1,728 – $1,730.

Equity only readers gain exposure to the gold through the SPDR Gold Shares Trust (GLD, quote) ETF that seeks to replicate the performance, net of expenses, of the price of gold bullion. The GLD trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets.

Crude Oil $96.26 -0.36 -0.37%
Gold $1,756.00 -12.00 -0.68%
Wheat $880.00 +2.00 +0.23%
Corn $745.50 -2.50 +0.33%
Live Cattle $128.30 UNCH UNCH
Lean Hogs $73.35 UNCH UNCH
Treasury Bond 145.4688 +0.3125 +0.22%
10yr Note 132.3438 +0.3125 +0.24%
2yr Note 110.2188 UNCH UNCH
U.S. Dollar Index 79.26 0.145 +0.18%
As of 6:36 a.m. ET

 

The Morning Coffee Break Bottom Line

Look for more of the same today as markets digest global and domestic economic growth. Look for gold and silver to remain under pressure while the U.S. dollar regains some strength.  It’s possible that investors are looking at the big picture that QE3 may do the U.S. economy a disservice.

 

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