We kicked off the day with Current Account, Export Sales, Initial Jobless Claims, Philadelphia Fed Manufacturing Index, Continuing Jobless Claims, Jobless Claims 4-Week Average, Philly Fed Business Conditions, Philly Fed CAPEX Index, Philly Fed Employment, Philly Fed New Orders, and Philly Fed Prices Paid at 7:30 A.M., Existing Home Sales, Existing Home Sales MoM, and CB Leading Index MoM at 9:00 A.M., EIA Natural Gas Storage at 9:30 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year and 30-Year Mortgage Rate at 11:00 A.M., 10-Year TIPS Auction at 12:00 P.M., and Fed Balance Sheet at 3:30 P.M.
Image Source:
At the end of the day the market did not BUY the dovish move by the Fed. We also have a glaring weakness with the impending ports strike crisis that would cost taxpayers at least $5 billion a day if the government does not intervene with a cooling off period. After falling to a multi-year low in July, US housing starts rose sharply in August. Starts were up 9.6% for the month, marking the largest increase since February, and were 3.9% higher than a year ago, breaking a 3-month streak of declines. Starts of single-family homes rose by 15.8% to 992,000 homes, which was enough to offset a 6.7% decline in starts of homes with 5 or more units. At the same time, building permits jumped 4.9% to 1.475 million in August, which was the most in 5 months. Permits for buildings with 5 units or more rose 8.4% to 451,000 and permits for single-family homes increased 2.8% to 967,000. The real estate industry is hpeful that a correction on interest rates will spur both home sales and development in the coming months. Regardless, the shipping ports from the US East Coast to the Gulf coast could have devastating effects as it coincides with holiday shipping and shopping.CBOT Corn Ends Unchanged; Global FOB Premiums Choppy; US Yield Data Strong as Expected:Global corn markets did not react or did nothing as the Fed’s decision on lending rates was awaited. Additionally, the battle between positive seasonal trends worldwide and fancy end user margins against a speedy US harvest will continue for another 30 days. Early yield across South Midwest are record large, but sample sizes are small. A definitive yield trend will take another 2-3 weeks. Brazil’s cash corn price index shows there lows have been scored. Fundamentally, key is whether meaningful rain is allowed to creep into C & N Brazil in the first half of October. Trade range of $395-$425 December into the release of the USDA WASDE October 11th . A smaller US corn yield is forecast from NASS in October. US crude production so far in September has averaged a record 13.3 Mil barrels per day, vs. 12.8 Mil a year ago in August-September. Total disappearance is now routinely 19.5-20.5 Mil barrels/day, with weekly imports accounting for 44-53% of production. US current crude inventories, including Strategic reserves, cover just 5.8 weeks of consumption. This compares to 8+ weeks prior to 2020. The tightening of the US crude balance sheet has been due to the collusion of reserve sales post-Covid an unabled growth exports. It will take time to replenish the US crude oil supplies heading into winter. The potential port strike on the US East Coast & Gulf Coast will spark supply-chain glitches. Retailers and manufactures will shift cargo to the West to avoid disruptions. This will only accelerate higher prices and inflation across the board, regardless what the US Central Bank does now. The International Longshoreman’s Association union represents 45,000 workers at 36 ports including New York, New Jersey, Houston and Savanna, Georgia. The union vowed to stop work if it does not have a new labor agreement in place when the current six-year contract expires Sep 30 at midnight.More By This Author:
Fed Can’t Save Out Of Control Spending. The Corn & Ethanol Report
