EIA sees faster US oil production growth

  • Sees 2022 US output increasing 730k bpd vs 720k bpd a month ago
  • Sees 2023 output increasing 1050k bpd vs 940k a month ago

We’ve had oil prices surging and these numbers just highlight how difficult it is to bring on production. 10,000 barrels per day in nothing and even adding 1 million barrels next year won’t move the needle as the 1 mbpd release of the SPR runs off.

WTI crude is trading at $119.22 today, up 85-cents.WTI intraday

US international trade balance for April -$87.1B vs -$89.5B estimate

International trade balance

  • international trade balance $-87.2 billion vs. $-89.5 billion estimate. The prior report was revised to $-107.7 billion from $-109.8 billion
  • goods trade balance $-107.74 billion. Services surplus $20.66 billion
  • oil import price $94.99 vs. March $87.20
  • exports +3.5% vs. March is +4.9%
  • imports -3.4% vs. March is +9.6%
  • exports $252.62 billion vs. $244.11 billion last month
  • imports $339.7 billion vs. $351.76 billion last month
  • capital good imports $71.68 billion vs. $74.26 billion last month
  • China trade deficit -$30.57 billion vs. $-34.00 billion last month

Exports continue to expand despite the higher dollar. Imports declined however. Trade data can be influenced by reporting issues.

Imports and exports

RBA raises cash rate by 50 bps to 0.85%

  • Also increased the interest rate on Exchange Settlement balances by 50 bps to 0.75%
  • Inflation in Australia has increased significantly
  • Inflation is expected to increase further, but then decline back towards the 2% to 3% range next year
  • Australian economy is resilient; household and business balance sheets are generally in good shape
  • One source of uncertainty about the economic outlook is how household spending evolves
  • Rate hike is a further step in the withdrawal of the extraordinary monetary support during the pandemic
  • The resilience of the economy and the higher inflation mean that this extraordinary support is no longer needed
  • RBA expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead
  • The size and timing of future interest rate increases will be guided by the incoming data and assessment of the outlook for  inflation  and the labour market
  • Full statement

The RBA is certainly liking the idea of not playing it straight now, do they? The expectation coming into the decision was either for a 25 bps move or a 40 bps move, but here they are delivering a 50 bps move instead.

RBA cash rate futures showed a pricing of just over 25 bps (0.56%) so the aussie is gaining strongly on the back of the decision. AUD/USD is up 0.6% to 0.7245 as the RBA doesn’t disappoint the hawks.

German factory orders, Eurozone Sentix investor confidence highlight the agenda in Europe

The selling in the bond market has been the key driver of market moves again in the past few sessions, with 10-year Treasury yields rising back above 3% at the start of this week. Yields are now hovering near 3.05% – its highest in four weeks.

That has seen USD/JPY skyrocket to a technical breakout above 132.00, the first time in two decades. There is little standing in the way of a push towards 135.00 next for the pair, at least if you go by the charts. A resumption of a move higher in yields and USD/JPY is helping to keep the dollar steady, holding its ground against most major currencies.

Equities have been more choppy as of late, with the bond selling starting to invite more concerns once again. The storm clouds involving inflation and the darkening economic outlook are still brewing and that won’t offer much comfort for investors to sit still with risk bets.

There won’t be much in Europe to shake things up today so expect the same push and pull to dominate market proceedings.

0600 GMT – Germany April factory orders
0700 GMT – Switzerland May foreign exchange reserves
0730 GMT – Germany May construction PMI
0830 GMT – UK May final services PMI
0830 GMT – Eurozone June Sentix investor confidence

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

Modest/small gains for the US indices

  • Dow industrial average +16.08 points or 0.05% at 32915.77
  • S&P index up 12.86 points or 0.31% and 4121.44
  • NASDAQ index up 48.65 points or 0.40% at 12061.38
  • Russell 2000 rose 6.831 points or 0.36% at 1889.88

The major indices  opened near their session highs, and wander lower through the day. All of the major indices are still closing above their 200 hour moving averages.

  • For the Dow industrial average, the 200 hour moving average comes in at 32552.27. The prices been 363 points above that bias defining level
  • For the S&P, it’s 200 hour moving averages and 4067.98. It’s price is 54 points above its 200 hour moving average
  • For the NASDAQ index, the 200 hour moving average comes in at 11945.26. It’s current price is 61 points above that moving average level

8 of 11 sectors in the S&P index rose with real estate, energy, and healthcare the only negative sectors. The biggest gainer were materials and consumer discretionary

Some of the big gainers today included:

  • AliBaba, +7.67%
  • Nio, +6.8%
  • Alphabet +2.9%
  • Amazon +2.25%
  • micron, +2.19%
  • Lam research, +1.92%
  • CrowdStrike, +1.9%
  • Tesla, +1.88%
  • Roblox, +1.83%

On the downside,

  • AMC, -3.78%
  • Twitter, -3.69%
  • First Solar -3.24%
  • Snap, -2.89%
  • GameStop, -1.81%
  • Paramount -1.1%

The top 3 Dow stocks were

  • Travelers, +1.6%
  • IBM, +1.16%
  • UnitedHealth, +0.96%

The bottom 3 Dow stocks were:

  • Amgen, -1.21%
  • Salesforce, -1.08%
  • Walt Disney, -0.77%
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