Morning Minutes

Crude Oil Climbs Between Inventory Reports; ADP Payrolls Come In Strong




Amid mixed economic signals, the New Year’s Rally appears to be fading this morning. On Tuesday, the Dow finished at a new all-time high with a 0.6% gain, but a 1.3% decline for the NASDAQ suggested investor enthusiasm for growth/momentum/risk may be quickly fading. This morning, NASDAQ futures are down another 0.5%, while Dow futures are flat.

Economic news out of the US over the last 24 hours has been mixed. ADP payrolls announced this morning were stellar, coming in at more than double what investors were expecting (807K vs street 400K and previous 505K). This news offsets yesterday’s soft ISM US Manufacturing PMI report (58.7 vs street 60.0). All of the current economic news is being viewed through the lens of investors speculating on how fast the Fed could start raising interest rates after its asset purchase program ends in March. Minutes from the last FOMC meeting are due at 2:00 pm EST today, which could add to the discussion. The 10-year US treasury note yield is holding steady near 1.65% this morning.

Energy prices are climbing again today led by Brent Crude which has regained $80.00/bbl with a 0.9% gain. Meanwhile WTI crude oil is up 0.8% and natural gas is up 2.5%. Yesterday, OPEC+ maintained its program of restoring 400,000 bbl/d per month as expected. US weekly API crude oil inventories showed drawdowns accelerating (-6.4 mmbbls ve previous -3.0 mmbbls).  Weekly DOE US oil inventories are due at 10:30 am EST (street -3.2 mmbbls vs previous -3.5 mmbbls).

The Canadian housing market remains strong with building permits beating expectations (6.8% vs street 2.3%) and new house price inflation continuing to rise (11.7% over year vs previous 11.5%).

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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