US MARKET WRAP – On This Day The Dips Were Bought

Risk flows reversed as we moved through the US session, as the North Korean missile launch from overnight took a back seat. There was not much news flow to support the reversal and traders would likely draw similarities in flow to the days which followed both the UK referendum and Trump’s election victory (albeit with a much lower magnitude).

The USD reversed its losses against all of the majors excluding the EUR and CHF, and even managed to post relatively solid gains against the JPY, with the DXY finishing slightly higher on the day.

Stocks ground higher throughout the US afternoon mirroring the reversal in bonds and tracking the dollar higher. The S&P 500 lagged the Dow and Nasdaq, but once S&P futures closed the weekend gap lower we did see further follow through to the upside. The S&P 500 closed up 0.08% at 2,446.31, the NASDAQ 100 closed up 0.41% at 5,862.14 and the Dow closed up 0.26% at 21,865.24.

US Treasuries unwound the bulk of their gains throughout the US session, although an uptick was seen in the wake of a stellar 7-year auction, the second such result coming from supply in the belly of the US curve over the last two sessions. US Sep’17 10y T-note futures settled at 127.06, up 6 ticks.

Gold followed Treasuries and the dollar, ending the day shy of USD 1,310/oz.

Oil ended the day lower but well-off of its worst levels, with the focus falling on disruption from Hurricane Harvey. Reuters estimated that the total refinery shut in is circa 3.0mln bpd while the BSEE pointed to around 18% of current oil production in Gulf of Mexico being shut-in, which equates to 319,523 barrels of oil per day. As a result Wood Mackenzie estimate that Harvey will lower the Gulf of Mexico’s oil production will by 100,000 bpd in August (in terms of a monthly average). We also heard from the Iranian oil minister Zanganeh who noted that the country has reached its pre-sanctions production levels. He also noted that in the month ending 22nd August Iranian production topped 3.8mln bpd, while exports topped 2.6mln bpd. WTI crude futures settled at USD 46.44/bbl, down USD 0.13.

29 Aug 2017 - 21:00- EnergyResearch Sheet- Source: RANsquawk

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