2022/07/13 (049) Technical Analysis – CBOT_MINI-YM1!

The Future Of The US Economy Has Never Looked Worse!
We may Have Had A Psychological Knock Out Of The Bears In June`22?
And That`s Why This Long Trading Capability In The DOW FUTURE Aims For…


US June Budget Deficit Larger Than Expected

The US government budget deficit narrowed sharply to USD 89 billion in June of 2022 from USD 174 billion in the corresponding period of the previous year, compared to market expectations of a USD 76.5 billion gap. Receipts grew by 3 percent to USD 461 billion, marking a fresh record for the month of June as tax collections grew for individuals and corporations over the prior 12 months. At the same time, outlays fell by 12 percent from the previous year to USD 550 billion, largely due to the decline in pandemic-related relief for citizens and assistance to small businesses. The US federal deficit was at USD 515 billion in the nine months of the 2022 fiscal year, 77% lower than the USD 2,238 billion from the corresponding period of 2021.

10-Year Treasury Yield Retreats To 2.9%

The yield on the 10-year US Treasury note, which sets the tone for corporate and household borrowing costs worldwide, retreated back to the 2.9% level as investors continued to assess the risks of a recession following the release of higher than expected inflation in the US. The annual increase of the CPI rose to 9.1% in June, the highest since 1981, and added pressure on the Federal reserve to stick to aggressive interest rate hikes to lower demand in the American economy. Meanwhile, the gap between 2 and 10-year bond yields widened to 20 basis points, the largest since at least March 2010. This closely-watched part of the US yield curve, viewed by many as a warning for economic contraction, has been inverted in the last several trading sessions.

DXY Retreats From 20-Year High

The dollar reversed course after hitting a fresh 20-year high of 107.58 earlier in the day, as investors took profits from recent gains following a hotter-than-expected CPI report. The annual inflation rate in the US accelerated to 9.1% in June, the highest since November of 1981, and above market forecasts of 8.8%. Also, core prices, a measure that strips out volatile food and energy components, increased by 5.9%, a slower pace than May’s 6% but also beating expectations of 5.7%. Following a stronger-than-expected jobs report on Friday, the hot inflation reading likely confirms that the Federal Reserve will stick to its aggressive tightening path to arrest rising consumer prices. The central bank is widely seen hiking interest rates by another 75 basis points this month following a similar move in June.

US Stocks Pare Losses

The Dow Jones recovered from a 400-point drop on Wednesday, while the S&P 500 and the tech-heavy Nasdaq were trading around the flatline as dip buyers emerged following inflation-induced worries that saw equities selloff earlier in the session. The annual inflation rate in the US surged to 9.1% in June of 2022, the highest since November 1981 and well above market expectations, driven by a surge in gasoline and food costs. Such data raised the specter of even faster interest rate hikes by the Federal Reserve, with money markets now expecting 75-basis points rate increases in July and September. Aside from economic data, investors continued to watch second-quarter earnings for clues on how corporate America is dealing with sky-high inflation and tighter financial conditions. Delta Air Lines fell almost 7% after posting mixed results, dragging airline shares into negative territory. Meanwhile, Twitter rebounded more than 6% after the social media company sued Elon Musk.

Wall Street Closes Lower Following CPI Release

US stock indices closed lower on a choppy Wednesday, as hotter than expected CPI figures added to expectations that the Federal Reserve will remain in its aggressive monetary tightening path. The annual inflation rate in the US surged to 9.1% in June of 2022, the highest since 1981 and well above market expectations, driven by a surge in gasoline and food costs. Fed funds futures reacted to the data by pricing an 81bps increase in July, pointing to some fresh bets of a 100bps rate hike. The Dow Jones fell 180 points and the S&P 500 closed 0.4% lower. Delta Air Lines fell 4.5% after posting mixed results, dragging airline shares into negative territory. In the meantime, the Nasdaq closed marginally below the flatline amid some resilience in the tech sector, with sharp rebounds from Netflix and Tesla. Twitter rebounded 7.8% after the social media company sued Elon Musk as he terminated the deal to buy the social media giant.