Traders have mixed views on the SP500 | 10 June 2022

#SP500:

The Federal Reserve may need to continue raising rates at the current clip through September unless there is "compelling" evidence that inflation has peaked based on a range of data, Cleveland Federal Reserve Bank President Loretta Mester said. There's no reason the Fed needs to make that decision yet, she added, though so far, she does not feel she's seen enough data to convince her that inflation is beginning to decline. Traders of interest rate futures are pricing in expectations for the Fed to raise the policy rate to a range of 2.75%-3% at year end, two full percentage points higher than it is today. Investors and chief executives are increasingly voicing concern that those rate hikes, coupled with inflation running at 40-year highs. This is a negative signal for the U.S. stock market.

Trading recommendation: sell 4180 and take profit 4010.

#WTI:

OPEC+ decision to increase production targets by slightly more than planned will not add that much to global supply which should tighten as China eases COVID restrictions. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, agreed to boost output by 648,000 barrels per day a month in July and August rather than 432,000 bpd as previously agreed. OPEC+ decision and the ongoing acceleration in SPR releases is maintaining crude availability at an ample level especially with demand from the refiners appreciably downsized from a few years ago. The output hike could undershoot the pledged amount since OPEC+ divided the hike across its members and still included Russia, whose output is falling as sanctions have prompted some countries to avoid buying its oil.

Trading recommendation: buy 115.64 and take profit 119.13.

XAUUSD:

The Fed is trying to dampen labor demand to tame inflation, with annual consumer prices increasing at rates last seen 40 years ago. There were 11.4 million job openings at the end of April, with nearly two positions for every unemployed person. Average hourly earnings increased 0.3%, matching April's gain. That lowered the annual increase to a still-strong 5.2% from 5.5% in April. Some economists viewed this as a sign that wage inflation had peaked and was cooling. Earnings were held back by a slowdown in growth in wages for supervisory workers. Average hourly earnings for production and non-supervisory workers rose 0.6% and were up 6.5% year-on-year. This is a positive signal for inflation and gold, since the indicators correlate with each other.

Trading recommendation: buy 1837 and take profit 1881.