Who’ll Stop the Fed
The market fears the so-called hard Brexit, in which all ties with the European Union will be severed at an accelerated rate. This should occur by the end of March, as Prime Minister Theresa May quoted in a speech. This sent shockwaves, which sent the U.S. dollar soaring and plummeted gold to lows not seen since the June 23rd U.K. vote to leave the European Union.
If that was not enough to hammer the gold, Richmond Federal Reserve President Jeffrey Lacker gave a hawkish speech on interest rates, only adding gasoline to the fire. His comments were to take drastic action to curb inflation and asset-price bubbles. He was quoted, “in terms of our employment and inflation goals, things actually look good now.”
I think he should have his head examined. This was by far the worst recovery in the history of our country under this administration, due to government regulation and taxes. The GDP data will strongly concur with my opinion. Sometimes the Fed has to put their ebb into a market that is just getting back to continuity.
However these two events did slow but not stop the rise in crude oil with a Bullish API number last night showing draws of 7.6 million barrels in the weekly data and this morning we have the weekly EIA Energy Stocks while Hurricane Matthew is disrupting oil tankers movements and the evacuation of oil-rig workers.
We also have Tropical Storm Nicole out in the Atlantic and a disturbance forming several hundred miles east of Windward Islands. In the overnight electronic session, the November crude oil is currently trading at 4949 which is 80 points higher. The trading range has been 4959 to 4910 so far.
On the natural gas front, the market is pulling back after yesterday’s rally late in the trading session. In the overnight electronic session, the November contract is currently trading at 2.929 which is 3 ½ cents lower. The trading range has been 2.987 to 2.927 so far. Tomorrow the weekly EIA Gas Storage data will be released.
On the ethanol front, the October contract expires today and the open interest still shows 77 contracts open that must be liquidated today. The November contract settled at 1.520 and did not post any trades in the overnight electronic session. The market is currently showing 4 bids at 1.500 and 5 offers at 1.522.
On the corn front, the market cannot seem to sustain any type of rally. We have warmer temperatures and rain forecasted for today and tomorrow, only to cool off and rain heading into the weekend.
The weather of the weekend could slow harvest already ahead of schedule in most growing regions. In the overnight electronic session, the December Corn is currently trading at 346 which is 2 ¼ cents lower. He trading range has been 348 ¼ to 345 ¾. We could see a spike later in the week.