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Analysis, Crude
  • Bloomberg with the report that the world’s two biggest commodities indexes — the S&P GSCI Index and the Bloomberg Commodities Index — are due to ‘reset’, which will trigger selling of futures contracts.

Here is the link to the piece from Bloomberg, main point being:

S&P GSCI Index and the Bloomberg Commodities Index reset

  • For WTI, that means investments tracking both benchmarks could be ready to pull almost 60 million barrels worth of futures contracts from the market, according to Societe Generale estimates.
  • The dollar value of those flows is significant — the French bank estimated in November it would be the equivalent of about $4.6 billion. Citigroup Inc. expects about $3.1 billion of selling, according to a December report.

Something to keep top of mind is that these flows are widely known and it would be bizarre if some, if not all, has been hedged into prices already. the Citi note, for example, was published in December.

Still, a heads up.

Fear the global semiconductor chip shortage could get even worse – fire in key factory

  
  Analysis

Beginning with:

  • “At this point it is too early to make any statement on the damage or whether the incident will have any impact on the output plan for this year,” ASML said, adding that it would take several days to assess the damage and it would update markets as soon as it can.

So, not hitting panic buttons just yet.

ASML Holding has reported a fire at a manufacturing plant

  • ASML Holding is a Dutch company, the world’s largest supplier of photolithography systems and the only source of extreme ultraviolet (EUV) lithography machines, which are more advanced. These devices are used to etch circuits onto silicon wafers and create computer chips used by Apple, IBM and Samsung.

A technology analyst:

  • “We’re entering 2022 with a lot of pent-up demand,” he says. “If the fire is severe and if ASML struggles to recover quickly, we might need to get used to a tough semiconductor supply situation for the next two years.”

More at Reuters here and even more at this link here.

Dow closes at another record

  
Analysis, US Market

The US major stock indices are closing mixed:

  • The Dow industrial average is closing up 214.57 points or 0.59% at 36799.64. That is a new record close. Intraday, the price it reached a new all-time record high 36934.84. The index has 2 record closes in 2022.
  • The S&P index closed down -3.04 points or -0.06% at 4793.53. It closed at record level yesterday intraday, a new intraday high was reached at 4818.62
  • The NASDAQ index was the laggard the day with a sharp decline of -210.07 points or -1.33% at 15622.73.

The move lower in the NASDAQ was helped by higher yields along the longer end of the curve. However, yields did come off there highs for the day, and the two and 10 year yields were actually lower.

  • The 10 year yield reached a day high of 1.686%. There is resistance at 1.705%
  • The 30 year yield reached 2.103%. It is trading at 2.061% currently.
US yields

European indices close higher for the second consecutive day

  
Analysis, US Market

The major European indices are closing higher for the second consecutive day as equity trading gets off to a good year in 2022.

The provisional closes are showing:

  • German DAX, +0.7%
  • France’s CAC, +1.3%
  • UK’s FTSE 100, +1.5% (the UK market was closed yesterday)
  • Spain’s Ibex +0.6%
  • Italy’s FTSE MIB +0.4%

In the European debt market, the benchmark 10 year yields are ending the day mixed/little changed with the exception of the UK 10 year which is up 11.8 basis points.

European 10 year yields
Benchmark 10Y yields are mixed with the exception of the UK

In other markets as European/London traders look for the exits shows:

  • Spot gold is up $10.76 or 0.60% at $1812.24
  • Spot silver is up eight cents or 0.35% at $22.95
  • WTI crude oil futures are trading up $0.63 at $76.72
  • Bitcoin is trading at $46,722 little change from morning US levels

In the US stock market the NASDAQ index suffers while the Dow industrial average as traded to a new all-time intraday high. The S&P index is trading above and below unchanged after reaching an all-time high earlier in the day. Both the Dow and S&P closed at record levels yesterday:

  • Dow industrial average up 218 points or 0.60% at 36803
  • S&P index down -5.5 points or -0.12% at 4791.06
  • NASDAQ index -251 points or -1.59% at 15581
  • Russell 2000-10.74 points or -0.47% at 2262.03

In the US debt market, the selling continues out the longer end of the curve with the tenure up 4.5 basis points and the 30 year up 7.8 basis points. The yield curve is showing the 2 – 10 year spread up to 91.3 basis points from 84.4 basis points at the close yesterday

US yields
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