Posted By: Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
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Keep an Eye on . . . . Everything
By Mark O’Brien, Cannon Trading Senior Broker
Last Friday’s monthly unemployment report caught nearly every economist off guard, showing a gain of 467,000 new jobs in Jan. compared to the median estimate of 150,000 and a massive upward revision in the November and December totals: November was revised up to 647,000 from 249,000 and December was revised up to 510,000 from a previously reported 199,000. Those changes brought the 2021 total to 6.665 million, easily the biggest single-year gain in U.S. history.
Inflation-sensitive commodities markets including metals
, equity indexes
have been anticipating an increasingly hawkish inflation-fighting Fed to hike interest rates at least five times in 2022. The current resiliency in the jobs market against the pandemic generally and the Omicron variant surge in recent months is likely to keep the Fed on this schedule. In the commodity sectors referenced above, look for expanded volatility ahead.
Already apparent and not to be ignored, Chicago Board of Trade soybean
and corn futures
set eight-month highs today on concerns that more unfavorable crop conditions due to drought are in store in growing areas of South America. Cattle, Hogs
all hit life-of-contract highs in their respective front month futures contracts within the last week (not to be confused with all-time highs). Notable mention: March cotton
traded through $1.28 intraday and made its highest weekly close since July 2011.
Lastly, crude oil
traded in the neighborhood of $90/barrel – an 8-year high – as global consumption remains strong and oil stockpiles have plummeted in the past year with many major producers – OPEC + and the U.S. among them – struggling to pump more.
We’re just one month into this calendar year with more developments ahead – geopolitically, weather-related and monetary policy related – all set to cause commodity prices across a range of asset classes to exhibit potentially rugged price action. Keep an eye out.
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