Friday, July 21, 2017

Goodbye to the Rate Hikes in 2017?

Flat CPI and dissapointing Retail Sales.


Today's data confirms Yellen's dovish tone on Wednesday: CPI monthly inflation that remains un-raised (flat, when expected + 0.1%), and Retail Sales again with negative numbers in all its headings, that is, consumption does not rise, something I mentioned previously was already a worrying trend. Its index XRT to the downside, although recovering at noon, however I keep my short position in it. With these two data, I see the promised Promise Rate Hike unlikely in the next FOMC session in September and even difficult in December if those macro numbers do not improve.

Bull momentum in markets


The other expected event, the opening of the earnings season, with the "Big Four", yielded poor reports that knocked down these banks and the XLF finance sector. At midday the tone changed and they recovered, I understand by the euphoria in the new records in the main indices of Wall Street, happy to know that for now they do not expect more rate hikes: SP500, Dow Jones, Russell 2000, and probably soon on the Nasdaq (it had its best week of the year), on all-time highs. I appreciate a bull momentum in the markets, I think this trend may last a few days more.

After today's events, assets such as the dollar close on firm downward, and gold upward but stabilizing. Meanwhile, the Treasury10-year rate and the Finance sector recovered their initial decline.


Arabia says that OPEC agreement is totally fulfilled...


And regarding Crude Oil /CL, Arabia estimates lower oil exports in August and affirms that the OPEC agreement is being fully complied ... do we believe it?

To this report it is necessary to add the low data of inventories of the EIA on Wednesday. With both favorable data, the outlook for this commodity changed completely, as shown by the easy overcoming of the SMA50 average at $ 46.5, which could be expected to continue for some days, as it has bounced evenly among the Bohlinger Bands for months. You have to be vigilant if you break them, as it could be your take off at quarterly highs.


Technically, the price of crude oil has been bouncing in the Bohlinger Bands since the beginning of the year, so the $ 48 can be your next resistance, after surpassing the SMA50 today.
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