Today started with 203k ESU and 900 SPU traded on Globex, trading range was 1687.60 – 1681.60. Tuesday’s regular trading hours (RTH’s), pit session trading range was 1677.50 – 1688.00 before settling at 1684.70, up 2.2 handles. Eurozone unemployment fell in June. ADP checked in at 200k vs exp 180k and June’s data was revised +10k to 198k. U.S. GDP (surprise) beats expectations on higher state and local spending. As the underwhelming earnings season winds down, yes, many beat lowered expectations and now the GDP shows the economy grinding higher in Q2? Month end is here and so are the central bankers!
Today’s pit hours opened fractionally higher at 1685.50 – 1685.00, held under 1688 area until 9:25 before grinding up to a high of 1692.40 at 9:50. Pre FOMC and Fed Chairman Bernanke, the financials opened firm and were leading the upside surge along with the morning’s encouraging economic data. At 9:00 Chicago PMI posted its 4th miss in last 5, checking in at 52.3 vs exp of 54.0, up from 51.6 in June. New orders, employment and production dropped, prices paid were up. The [DJIA] climbed to new record territory on the final trading day of the month in light morning volume. After trading 1692.40 the SPU stepped lower after the European close and through the lunch hours, trading a low of 1684.20 by 12:15.
Fed Statement Tracker http://projects.wsj.com/fed-statement-tracker/ Minutes later the e-mini topped 1M volume on the day and held 1689 area before fading to new lows of 1681.50 by 1:15. “The last Ben” was 1646, which was the price level that was trading when Ben Bernanke started his presser following the last FOMC meeting in mid-June. The current Ben, 7-31-13, is 1685.20. It is a simple over/under of who is and is not trapped above and below for “fundamentals type institutional investors.” After holding 1681.50 the SPU was retesting 1689 area by 1:27 and 1694.00 at 2:00 – a lot of price chatter following the event – noise which is normal as portfolios adjust their books especially following events and month end … and boy did they adjust. After printing the intraday high of 1694 at 2:00, the SPU reversed hard to a new intraday low of 1680.30 going into the cash close as the closing imbalance showed a whopping $4.3 BILLION FOR SALE. The spoos traded 1682.20 area on the cash close before trading 1685.80-1685.20 during the closing range, up .8 handles on the day with almost 2M e-mini volume. The month end adjusted settlement was 1680.50.
BOE decision Thursday 6am CT, ECB decision 6:45am CT, followed by the U.S. jobs report, 185k consensus on Friday at 7:30 am CT. Also, the final PMIs will check in – China tonight and the US/Europe tomorrow morning. Data from these latter two countries has generally been moving in the right direction and the formal July prints will likely continue that trend.China is the big wild card – the Markit flash reading deteriorated further in July, although the official government NBS calculation is a bit different and thus could hold in better.