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Market Brief – Wednesday 6/12/19

Stocks followed Asian and European markets lower before open, but buyers eagerly jumped in to push stock prices and Treasury yields higher. The Consumer Price Index (CPI) fell to +1.8% on an annualized basis, which is slightly below the Fed’s two-percent target. Keep in mind, the Fed is more focused on producer prices than they are consumer prices.

The EIA reported crude oil inventories as Crude: +2.21mm (-1.0mm expected), Cushing +2.096mm (-1.97mm expected), Gasoline +764k (+700k expected), and Distillates -1.0mm (+1.1mm expected). Crude oil stockpiles are at their highest level since July 2017, which a near its record high. Crude oil fell following the report.

Today’s $24 billion 10-year Treasury auction was met with very strong demand. Foreign bidders took a healthy 65.6% of the auction, domestic bidders grabbed 13.6% which left securities dealers with 20.8%. Yields fell across the curve following the auction.

Stocks closed the day slightly lower and Treasury yields slightly higher on light trading volume. Oil and gas producing stocks were hit the hardest as crude oil closed pennies over $51 per barrel. Physical gold retested overhead resistance at $1,340 per ounce and was rejected once again. Agricultural commodities moved higher as more rain is headed to the Midwest over the next two weeks.