This story is a partial of an interesting read by Rich Miller with Bloomberg. In it’s latest measure to combat economic fallout from the coronavirus pandemic, the Fed said Tuesday it was establishing a temporary repurchasing agreement to allow foreign banks to swap Treasury securities they hold for cash. That’s yet another step beyond the actions it took in the 2008 financial crisis. “To the Federal Reserves credit, it is playing the role of central banker to the world rather than denying it and trying to ward it off”, said former Fed official Ted Truman, who is now a senior fellow at Peterson Institute for economics in Washington.
The Fed is trying to prevent a liquidity squeeze amid the rush into dollars, as the virus wreaks havoc on the global economy that is heavily dependent on the greenback as its linchpin. “ A lot of borrowing and commerce and investing is done in dollars”, Julia Coronado, founding partner of Macro Policy Perspectives in New York and former Fed economist, said on Bloomberg Radio.
Today we had reports with MBA Mortgage Applications coming in at 15.3% versus the previous -29.4% and MBA 30-Year Mortgage Rate coming in at 3.47% vs. the previous 3.82% at 6:00 A.M. and at 7:15 A.M. the ADP Employment Change came in at -27K versus the previous robust number of +179K, At 8:45 A.M. we have Market Manufacturing PMI Final for March, at 9:00 A.M. we have Construction Spending and ISM Manufacturing Index, followed by EIA Energy Stocks at 9:30 A.M., and later at 2:00 P.M. we have Cotton System, Dairy Product Sales, Fats & Oils and Grain Crushings.
On the Corn front the Grain complex is in the red this morning. Yesterday, Corn Stocks came in at 7.953 billion bushels with estimates at 8.125bb and last years 8.613bb. Prospective Plantings were down from estimates expecting 94.33 million acres planted but came down to 94 million acres and was up from 2019 89.7 million acres but throw in last year’s weather in the mix, these were not supportive numbers. In the overnight electronic session the May Corn is currently trading at 337 ¼ which is 3 ½ cents lower. The trading range has been 347 ½ to 341 ½.
On the Ethanol front the Corn numbers just added to the somber feeling in this industry for the moment. With yesterday’s news that Brazilian Fuel Distributors declaring a Force Majeure with their consumption huge nose dive of 50% in one week. There was finally some trading activity in this complex in the overnight electronic session which went out to the June contract that posted a trade at 0.950 which was .005 lower with 3 contracts traded. The market is currently showing 2 bids @ 0.880 and 1 offer @ 0.950 with Open Interest at 176 contracts.
On the Crude Oil front, the Trump-Putin conversation on the Oil markets only seemed to put a band-aid on a glaring wound as the war between the Russians and Saudi’s seems to be intensifying. The market was in the green at yesterdays settle but was 141 points off the high. Last nights API Energy Stocks did little to stifle pressure with Crude Oil stocks coming in +10.845mb, Gasoline stocks +6.085mb, Distillates –4.458 and Cushing +2.926. We will wait for the EIA Energy Stocks at 9:30 A.M. In the overnight electronic session the May Crude Oil is currently trading at 2028 which is 20 points lower. The trading range has been 2080 to 2000. In this feast or famine industry it looks like the Saudi’s bit off a little more than they could chew attempting to keep their market share and may have lost the war all together. Are you not glad you did not invest in Saudi Aramco now considering where the prices were when they went public?
On the Natural Gas front what is cheap can get even cheaper. However, eventually, it will be a golden buy and the future of energy as we know it. In the overnight electronic session, the May contract is currently trading at 1.630 which is 1 cent lower. The trading range has been 1.679 to 1.623...
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