Business

It appears the weakness underlying the durable goods data is scaring the hawkish bid out of markets. 2Y yields are tumbling, the USD index is dropping, and gold is bid...

The markets are tracking the same pattern that played out in 2015.

Most market action (more than 80%) today is driven by computer algorithms. These programs look for an asset class that is moving, and then buy based on the momentum.

From March through May, the moving asset class is Oil, which historically tends to rally during this period. In 2015, Oil bottomed in March and rallied hard into June.

Core Durable Goods Orders tumbled 0.8% MoM and 6.7% YoY - down 15 of the last 18 months. However, following drastic revisions across the entire time series and thanks to a surge in military spending (+3.7%) and non-defense aircraft (+64.9% - bringing back memories of Boeing's aberration from a year or two back) the headline Durable Goods print rose 3.4% MoM. More worrying for GDP enthusiasts is the 0.2% decline in durable goods inventories in April for the 4th straight month.

WTI and Brent Crude oil prices have both broken above $50 for the first time since October 2015 this morning - almost doubling off its Feb 11th 26.05 lows. The immediate catalyst appears to be a combination of inventory drawdowns in US crude, continud US production cuts, and further supply disruptions (Nigeria specifically), none of which scream demand or growth is going to make a dent in the glut.

July WTI tops $50...

Recently we presented a profile of the latest scourge to haunt Africa's former oil producing powerhouse Nigeria, namely the Niger Delta Avengers, who not only maintained a regularly updated blog following the February launch of their Godaddy-hosted website which even includes a Contact Us section...