Stocks and oil diverging
April 22, 2019
–Stocks are in retreat after a solid close on Friday, diverging from WTI crude this morning as the latter has surged $1.50/bbl to over 66.50 on news that the administration is tightening sanctions on global purchases of Iranian oil. Higher gasoline prices are likely to be a cloud over growth in the short term even as they help the Fed reach its all-important inflation objective.
–Yields are a bit higher this morning with tens pegging the 123 strike, currently 123-025, going into May option expiration on Friday. This week features 2.5 and 7 year auctions.
–Conditions should be thin due to Easter Monday, but news still includes the Chicago Fed National Activity index expected -0.15 which would mark the fourth consecutive month of a negative reading. Existing Home Sales are also released, expected -2.3% to 5.31 million. Housing Starts on Friday were soft at -0.3% with February revised down to -12.0%.
