Indices quiet, Oil and Gold stronger awaiting economic data releases

Stock trading remains quite quiet at midday today as traders mark time ahead data expected to influence the Federal Reserve's decisions about monetary policy changes when it meets in a few weeks. The consumer price index and produce price index are out on Wednesday and Thursday, with retail sales data is scheduled for release on Friday. Traders will also be monitoring the weekly jobless claims numbers on Thursday. Oil and Gold have become risk hedges for different reasons, and both maintained recent strong trends.

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All eyes on the Fed

Wall Street is fixated on the Federal Reserve and its perception of what the central bank will do at its next meeting that will impact the economy. The Fed in turn is focused on data, which is why Wall Street is also focused on the data that it believes that the Fed is following. Last week it was the jobs numbers from a series of reports. This week it is inflation data and retail sales data.

Former Fed Chair Ben Bernanke moved towards Fed transparency 15 years ago, which seemed like it was a noble cause. Prior to that, we really didn’t know when the Fed adjusted policy until we saw it in changes in the marketplace. However, the move to transparency made the market so fixated on every word coming out of the central bank that it’s become unhealthy in my opinion as it frequently dominates market action.

Indices and Dollar flat, Bonds fall

• At the time of writing, the broad S&P 500 index and the tech heavy NASDAQ were pretty flat, respectively up by 0.2% and down by 0.3% at 4,115 and 12,045, respectively
• The VIX, Wall Street’s fear index, edged lower to 18.7 reflecting a moderate view of risk
• The dollar index was off by 0.3% 102.9, with £/$1.24 and €‎/$1.09
• Yields on 2- and 10-year Treasuries edged up at 4.05% and 3.46%, trending up after bond market strength last week

Gold, Oil keep new highs, strong trend

• Gold’s was 0.7% higher at $2,017 per ounce, re-establishing maintaining its recent uptrend and reputation as the safe haven asset
• Crude oil prices were almost 2.0% lower at $81.3 per barrel, continuing the positive trend seen since April 3 when OPEC+ announced more production cuts
• Grain and oilseed prices traded mixed after today's World Agricultural Supply and Demand Estimates (WASDE), a monthly report published by the US Department of Agriculture, showing gradual shift to focusing more on supply and demand fundamentals
• Domestic and global wheat stocks tightening over the coming year, while corn and soybean stocks can start to grow if the weather cooperates from this point forward

China’s inflation below expectations

• Today’s Chinese CPI data was the lowest in the past year and a half, further reflecting its post-COVID economic recovery problems
• China’s CPI rose 0.7% year-on-year in March, below analyst expectations of 1.0%, and down from 1.0% in February
• The CPI fell 0.3% month-on-month in March, after being down 0.5% month-on-month in February
• The core CPI, excluding more volatile food and energy prices, was flat month-on-month in March, but up 0.7% year-on-year

Ukraine’s crop production surprises

• Ukraine’s agricultural sector reflects the resiliency of its people through the horrors and challenges of war
• The Institute of Agrarian Economics predicts that crop production in Ukraine will fall by just 2.1% year-on-year this year; with most of the decline coming in corn and wheat
• Spring crop planting is expected to increase by 8.2% this year, offsetting a drop in winter crops, leaving just an “insignificant” decline in total crop area
• Sunflower and soybean planting is expected to rise by 10% to 12% this year, replacing winter crops and other summer crops that require higher inputs

 Analysis by Arlan Suderman, Chief Commodities Economist.

Read more of Arlan’s thoughts at StoneX Market Intelligence at https://my.stonex.com/