E The Daily Shot And Data - June 3, 2016

Greetings,

We begin with several updates on commodities.

1. Soybean meal futures continue to rocket higher. While China's rising demand for feed is one of the factors, at this point hot money is all over this market. 

Source: @barchart

2. The situation is similar with US sugar and soy futures, where the rally has accelerated.

 

Source: Investing.com

3. US lean hogs futures jump as pork prices in China reach record highs this week. This market is contributing to the soy meal rally. 

Source: @barchart

4. Zinc rally resumes on lower production. See an overview from the FT.

 

Source: @FT

5. Coal prices in Asia are waking up.

Source: @barchart

6. While some of these rallies look impressive, the CRB broad commodity index recovery will take a while.

7. Precious metals are under pressure ahead of the Fed's rate hike. Here is platinum spot.

Source: @barchart

8. The US gasoline market is well supplied, as inventories remain way above the typical levels for this time of the year.

Source: Tradingeconomics.com, @MarkitEconomics

9. We continue to see a disconnect between crude oil and the trade-weighted US dollar index.

Source: ‏@enlundm

Next, we have a few updates on the Eurozone.

1. The Eurozone continues to be haunted by the deflation ghosts. The PPI year-over-year decline was the greatest since the Great Recession. This is likely to keep downward pressure on the CPI.

2. The Eurozone's small and medium size businesses no longer have problems accessing credit. Weak demand seems to be more of an issue.

Source: Goldman Sachs

Italian banks are particularly eager to lend.

Source: Goldman Sachs

4. Investment-grade euro-denominated issuance remains highly elevated as the ECB is about to begin corporate bond purchases. Also, the ECB decided it won't automatically dump corporate bonds that are downgraded to junk. 

Apparently some firms will use the proceeds of this debt sale to the ECB to buy back stock. This program, therefore, should be a positive for the European equity markets.

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