The Monday session entered NY on a note of uniform discomfort. A down day in long bonds stuck to the low of the day all day. A market that clings to its lows implies unfilled selling above. CME yen futures came in on their lows and stayed on their lows. Stocks were nudged into a slow and steady slide lower. The dollar index finished on its highs.
The media was pounding out a shortage narrative in distillates at full volume. More on that in a minute. Trump and IRGC were doing the “I’m the winner. No! I’m the winner” nonsense as a 60 day ceasfire expired. I was on the phone with Robert Bryce today and I had an epiphany: Trump would rather lose 10 billion dollars than lose 10 soldiers. More on that in the vibe.
A bullish LME copper narrative fizzled on the COMEX. September copper closed on its lows. Gold and silver tested the top of last week’s ranges and fizzled. Saylor announced a new round of MSTR and token machinations and bitcoin added $1500. Grains were higher. Doomberg wrote an excellent piece on Ukraine titled “a minor detail” last Thursday.
In a nutshell he said Zelensky attacked Russian grain ships, violating an agreement to not to interfere with food bound for the world. This was a foolish miscalculation because Putin inflicted harsh reprisals on Ukrainian ports effectively shutting in a major source of Zelensky’s revenue. Worse, Europe still depends on Russian energy more than ever and there are nuances involving Turkey through which said energy must flow. Meanwhile in NY today NYMEX natural Gas traded at and under its November 1990 monthly high of $2.65.
in the markets
September heating oil made new contract highs today on ordinary volume and low but rising open interest. Here in America domestic demand for distillates was an unimpressive 3.7 mm bpd last week according to the EIA. Export demand is strong for reasons I explained this morning; the EU funding Zelensky and Zelensky focusing on the destruction of Russian refineries.
WTI added $2 bux on the back of the rally in distillates, probably refiners maxing their runs of distillates as the heat season approaches.
In the stock market, this chart of NDX with the latest TFF COTs was frequently posted on X. Fwiw CME Yen futures had a record short position when Bessent intervened and so far futures positioning hasn’t been much of a factor. In other COT futures data, S&Ps are mildly short and DOW futures are roughly flat.
The net negative NDX record short entered the market between August 7 and August 12 (chart below) and as the short-seller sold… prices went up on falling volume.
As always… if a narrative or indicator is not validated by prices… ignore it.
Despite all efforts to incite a bullish froth in copper this morning, the copper market went down. In daily and weekly data it is clear open interest is high and rising and volume is rising. The backwardation narrative is attracting new longs at the highs.
Considering the dearth of activity across the board, I doubt copper is going to make its move this week or even this month. Depending on AI and its funding, Q-4 seems likely. A lot can happen in metals in Q-4.
There is a potential 3 week down wiggle forming in Comex copper in weekly data that will or will not confirm on Friday at settlement.
LME copper closed on the lows following second failed auction since August 6. A failed auction is a clear rejection when a market attempts to extend its range into a new significant high (or low as the case may be).
Both of these LME highs were not record highs. The ATH in LME copper was made on January 29 when gold and silver made their all time highs.
The long bond broke its July 31 lows by 2 ticks. The trend is solidly down but it’s a painful grind. You’d think by the furiousf posting on X there was a run on the US treasury.
In other markets… Gold, silver and platinum did nothing bell to bell. The bias was firm.
my vibe
Quiet markets go where they want to go because no one is threatened by light volume and small ranges. New lows in the long bond, a soft yen and iffy stocks spoke quirtly but firmly. Gold and silver traded comfortably off their July lows. The rage for new highs in heating oil, one of most minor futures markets in the oil complex, smacks of late stage development and a seasonal tilt.
Cracks are not for tourists and trading rbob and heating oil takes practice, patience and the ability to say no to wide spreads and heinous liquidity.
Among all the things for which Trump may be justly pilloried, his approach to war is uniquely abhorrent of gratuitous mortality. True there have been some regrettable tragedies and the IRGC has been quick to publicize them… if there had been higher numbers of civilian suffering we would have heard about them. And the IRGC could have easily killed innocent sailors on ships in the Strait but they didn’t. They shot at the engines.
night all… good luck in Asia…
JJ
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Charts and data CQG and Bloomberg… occasional cartoons by Gary Larson
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TLT feels like it is at an uncle point.
Some nice little nuggets here. It's time to write a book, Alyosha.
-A market that clings to its lows implies unfilled selling above.
-If a narrative or indicator is not validated by prices… ignore it.
-A failed auction is a clear rejection when a market attempts to extend its range into a new significant high (or low as the case may be).
-Quiet markets go where they want to go because no one is threatened by light volume and small ranges.