Will monetary markets make sense in July?

As we approach the books on another generation, I realize that a moment has passed since I wrote my last article on the monetary markets. Re-digging through the archives took me back to mid-March when I wrote about “3 questions to ask at the March FOMC meeting.” As I read that passage again, the truth is that much is different but much is the same. That being the case, monetary sector excess remains a fascinating puzzle as we head towards the third quarter of 2024. And as a teaser, I’ll upload everything that might happen where the S&P 500 closes in July. The fate of the region will probably depend on it.

With that in mind, let’s take a look at the other items of the financial puzzle as the calendar web page turns to July. Back in March, Fed investment futures indicated that the USA Federal Watchable Marketplace Committee could cut rates three times in the last 9 months of 2024, with the first cut possible at the conclusion of the June meeting. As everyone knows, this did not happen, and the advance response to the July meeting (July 30 and 31) is no longer as clear as we expressed earlier in the day. One has to wonder how much of an impact this might have on the S&P given that remarkable move on July 31. I will tell you after this. For now, Fed investment futures are indicating two payment cuts in the second half of 2024, the first at the conclusion of the September meeting (September 18), and the second at the end of the December meeting (December 18). Meanwhile we’ve got alternative key momentum for the S&P 500, October 31st and then the US election generation (November 5th).

Speculation about a return to the Fed investment fee setting fits in line with what I’m seeing on the long-term per month chart for US 10-year Treasury Observed Futures (ZNU24). The market has been in a large (long-term) 5-wave (Elliott Flow) uptrend since a 2-month bullish reversal in October and November 2023, with Flow 1 reaching a top of 113-120 in December 2023 and Flow 1 peaking in April 2024. 2 at a low of 107-040. If the market is in Flow 3, shown through the untested 4-month top of 111-175 (March 2024), one can expect to take out the highs of Flow 1 from the upcoming near-term respect mark. Process age. Essentially this makes sense, as fiscal costs increase as yields fall along with lower interest rates.

The closest comes the USA Buck Index ($DXY). Once again, interest rates are a key element of the strength and/or position of any currency (except crypto currencies), so the USA Buck Index should be in a long-term downtrend if the FOMC is expected to make an upcoming rate cut. Taking a look at the thirty day chart presentations of the buck it doesn’t seem so, as the growth looks related rather than moving the counter into 10-year notes. It appears that USDX is in Flow 3 of its main uptrend, which means it is expected to take out the Flow 1 top of 107.35 (October 2023). This doesn’t seem to be in line with the state of the financial markets as a whole, though, unless it’s telling us that we shouldn’t get ahead of ourselves when it comes to expected interest rate cuts.

As far as the S&P 500 ($INX) is concerned, and the US market overall, the long-term trend is up. This has been the case since the S&P 500 closed at 3,871.98 in late October 2022, following a sharp reversal. The index reached a close of 5,460.48 in June 2024, a rise of 41% despite no interest rate cuts. Traditionally, US stocks move higher as soon as interest rates are cut, so is there additional room to move higher? The monthly chart of the S&P 500 appears to be top-heavy, although this is not unusual as the index extends its main uptrend. I know the chickens on one side of the political aisle in America keep crowing about how the sky is actually falling, despite evidence to the contrary. On the other hand, depending on what happens between July 31st and October 31st, good events in the not-so-distant future may actually be gone forever.

As far as the commodities sector is concerned, other long-term developments began to appear in late June for the three kings of commodities:

• The cash index for gold (GCY00) was still technically in an uptrend, even though it was consolidating below its fresh high of $2,449.34. Momentum signals are telling us that the uptrend is nearing its end, a move that is more in line with the uptrend in the United States Buck Index, which is being driven by lower interest rates and higher levels of 10-year T-notes. Growing instead of growing.
• WTI Crude Oil (CLQ24) is trending sideways, with a potential bullish technical pattern offset by a bearish seasonal time frame from late June through late December.
• Corn is in a major downtrend, with the December 24 reference term (ZCZ24) pushing the price higher starting in late May 2022 to a low of $4.13 in June 2024.

We will see what happens as the next quarter could be interesting for investment investors.

Postscript: I would like to thank all of you at Brace Trade(i). The frenzy you heard following the latest USDA quarterly grain stocks and acreage reports (I’ve uncovered “epic!” and “amazing” were almost constantly used phrases) were invaluable to those of us who actually paid attention to the markets. This increased the hedging/investing/trading gains we already had. I’ll use the late Charlie Munger’s quote in my previous article, “It’s remarkable that people like us have constantly tried to be very intelligent.” How much long-term benefit has been gained by trying not to be stupid”.

(i) Brace = agent/newshound/analyst/commentator/economist. Speed ​​no longer plays a big part in all the businesses that come into this team. There are two clear indicators: 1) regurgitating USDA data and 2) ignoring the truth so everything is always bullish.

Additional security market information from Barchart

As of the time of the newsletter, Darin Newsom did not have (either directly or indirectly) any positions in any securities discussed in this article. All data and information on this article is for informational purposes only. For more information please see Barchart Disclosure Coverage right here.