Chart of the Day
The CFTC Commitment of Traders report shows that non-commercial traders are once again taking a long position in the S&P 500. By contrast, they remain heavily short the Russell 2000 index of small-cap stocks. This seems to imply traders think the re-opening narrative has now gone too far, and that either small caps are set to par some of their gains, or that they will at the very least underperform large-cap stocks. That seems to go against the idea that the Fed is about to get more hawkish, given higher real interest rates would hit the big tech firms of the S&P 500 hardest.
Macro
US vehicle sales have plummeted, perhaps due to lower inventory, or perhaps as stimulus-related demand falls.
Inflation is heating up in Turkey, due to the sharp fall in the lira that made imports more expensive – there’s a lesson here, in that truly high periods of inflation are rare without exchange rate depreciations (the USD has been appreciating recently…)
The growth outlook is slowly improving in Japan.
Markets
Non-commercial traders remain short the USD, despite its recent strength.
Non-commercial traders’ net positions in gold and silver decreased last week.
Perhaps they fear the negative effects of higher interest rates – gold has recently done worse than actual real rate developments imply they should.
Palladium has been doing better – with EV related demand rising, perhaps it will soon rise above its earlier 2021 high.
Oil prices keep grinding higher, this time because OPEC failed to announce a new schedule for raising output, due to disagreements between members.
While gasoline prices will march higher, those staying at home can at least now better afford some home improvements thanks to the sharp fall in lumber prices lately.
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