Opening Bell: Futures, Stocks Rise As Focus Shifts To Recovery; Oil, Yields Up

Key Events

US contracts on the Dow Jones, S&P 500, NASDAQ and Russell 2000 all jumped on Thursday, along with European stocks as traders decided to ignore the Fed's inflation debate—and what it might mean for monetary policy—opting instead to stick with the recovery narrative, ahead of a slew of US data, including GDP and Initial Claims, to be released later today.

Yields have been rising and oil climbed.

Global Financial Affairs

S&P 500 futures accelerated overnight, even after the underlying benchmark index fell during Wednesday's Wall Street session. But the contracts hit a snag toward the end of the Asian session, though they found new life with the European open, reaching their highest level since its June 14 record.

SPX Futures 60 Minute Chart

The futures completed a falling flag, bullish after the preceding sharp rise, having provided an upside breakout, a pattern retest, and a new high. The flag could provide the contract with sufficient momentum to strike a fresh record.

The Stoxx Europe 600 Index rebounded from yesterday, lifted by banks and retail stocks, including automobile producers. The pan-European benchmark was unchanged earlier in the week as confused traders were looking for direction, not knowing what to make of the Fed’s mixed messages on inflation and its effect on the recovery.

Earlier this morning, the Asian session was listless as investors remained cautious ahead of today's US data. Tokyo’s Nikkei 225 and China’s Shanghai Composite treaded water. South Korea’s KOSPI and Hong Kong’s Hang Seng edged higher.

Australia’s ASX 200 was the only regional benchmark to finish in the red, -0.2%, pressured by a double-digit rise in COVID cases amid an outbreak of the delta strain, threatening renewed lockdowns.

Yields, including for the 10-year benchmark note, have been rising for four hours, completing a bullish pattern This not only reflected but threatens to move the trajectory of interest rates.

UST 10Y 60 Minute Chart

Rates have completed an hourly H&S continuation pattern, supporting the bottom of a larger bottom.

UST 10Y Daily

Now, the price is struggling against the bottom of a descending triangle, a pattern that demonstrates that Treasury demand is overtaking supply. A downside breakout for the Treasury yield would likely boost the sovereign bonds further, pushing the yields lower still.

The dollar is down for the day. 

Dollar Daily

The USD might be producing an hourly H&S bottom, which would help it complete a falling flag, bullish after the preceding nearly 3% jump in a week.

Gold could be forming a rising flag, bearish after its 7.6% crash in a week.

Goldl Daily

The precious metal is nearing a long-term uptrend line, and might also be forming the right shoulder of a H&S—after having returned into its falling channel since the August record high.

Bitcoin retreated from a two day rebound.

BTC/USD Daily

The cryptocurrency is likely to meander as long as the inflation debate endures. We can see it ranging with a downward tilt, after having topped out. A fall below $29,000 will likely see a continued downtrend.

Oil climbed for the second day on shrinking US inventories, after the EIA released data showing last week saw the fifth week of drawdowns.

Oil Daily

WTI has been struggling after clearing an Evening Star, as the price mostly actualized a bullish triangle’s implied target. Two catalysts continue to fuel this rally.

Up Ahead

Bank of England is scheduled to issue an interest rate decision Thursday.

Also on Thursday, the Fed releases the results of stress tests on the largest U.S. banks

U.S. Wholesale Inventories, Initial Jobless Claims, GDP and Durable Goods Orders also print on Thursday.

On Friday, U.S. personal income and spending, as well as University of Michigan consumer sentiment are announced.

Market Moves

Stocks

• The Stoxx Europe 600 rose 0.5%
• Futures on the S&P 500 gained 0.3%
• Futures on the NASDAQ 100 added 0.3%
• Futures on the Dow Jones Industrial Average rose 0.4%
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index rose 0.3%

Currencies

• The Dollar Index fell 0.1%
• The euro ticked up 0.1% to $1.1939
• The Japanese yen was little changed at 110.86 per dollar
• The offshore yuan was flat at 6.4743 per dollar
• The British pound was remained steady at $1.3961

Bonds

• The yield on 10-year Treasuries advanced one basis point to 1.50%
• Germany’s 10-year yield rose one basis point to -0.16%
• Britain’s 10-year yield was little changed at 0.79%

Commodities

• Brent crude rose 0.3% to $75.44 a barrel
• Spot gold fell 0.1% to $1,776.48 an ounce