Natural gas finishes the week at a two-and-a-half year high. Why the best may still be to come

Natural gas up another 4.5% today

A tight US storage report yesterday sent natural gas prices into overdrive, spiking 6% yesterday and another 4.5% today.
Prices at Henry Hub are at $4.37 per MMBtu, which was a pipedream a year ago when they were at $1.80.
For the Fed, this adds a complication to the inflation picture because as oil prices start to roll off from the CPI, higher natural gas costs will add to home heating and power costs.
The thing is, this might only be the beginning. European and Asian LNG markets are remarkably tight and trading 3-4x higher than US natural gas. In the UK, they hit a record high today.
Inventories in the US are tighter than the 5 year average but in Europe they’re at critical levels. There’s an incredible arbitrage in LNG so US plants are working as fast as they can. Pipeline exports to Mexico are also much higher than recent years.


US stocks close near highs. Record closes for the the S&P and NASDAQ

S&P has its best day in more than a month

The major US stock indices all closed higher.

  • Both the S&P and NASDAQ closed at record levels
  • The S&P closed at a record level for the 52nd time this year
  • Every sector of the S&P closed higher except healthcare and utilities
  • The NASDAQ closed at record level for the 31st time in 2021
  • The Russell 2000 led the way with a gain of 2.85%
  • The Russell 2000 was higher by over 5% this week
  • Energy rose 2.63%
  • Communication services rose 1.6%
  • Materials, +1.33%
  • Financials, +1.32%
  • Healthcare fell -0.16%
  • Utilities fell -0.03%
The final numbers are showing:
  • Dow industrial average rose 242.68 points or 0.69% at 35455.80
  • S&P index rose 39.37 points or +0.88% at 4509.37
  • NASDAQ index rose 183.69 points or 1.23% at 15129.50
For the week all major indices rose:
  • Dow +0.95%
  • S&P index +1.53%
  • NASDAQ index +2.82%
  • Dow 15.83%
  • S&P index up 20.06%
  • NASDAQ index up 17.39%

US 10-year yields back away from the August highs as Powell stays mum on taper

Consolidation or a short pause?

Consolidation or a short pause?
10-year Treasury yields nearly touched 1.36% just before Powell’s speech but they’re down to 1.32%, highlighting that the bond market is less worried about a September taper.
I think the market discussion will shift away from a Nov/Dec/Jan timing on tapering decision to more of a focus on the pace. At $10B per month it would take a year, a $15B it would take 8 months and at $20B it would take six months.
There’s a decent argument for any of those paths but the $15B camps appears to be in the lead. Expect that debate to heat up in the next few weeks.
In terms of price action, if delta continues to crest (or better yet, fall off rapidly) and we get some strong data next week, then I expect the top of the August range in 10s to break, which should pull USD/JPY with it.

WTI crude oil futures settle at $68.74. Up over 10% this week.

Up $1.32 or 1.96%

The price of WTI crude oil futures are settling at $68.74. That’s up $1.32 or 1.96%. The high price reached $69.05. The low price extended to $67.52.

Up $1.32 or 1.96%_

For the week the price was up four of the five trading days. The low price was on Monday at $61.74. That low price tested the swing low going back to May 20 at $61.56. Buyers leaned against that old level and started the move back to the upside.
The high price was today at $69.05.
The close last week was at $62.14. With the current price trading at $68.74 that represents a gain of $6.60 or 10.62%.
Technically, the price moved back above its 100 day moving average currently at $68. Stay above that level would keep the buyers more control.

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