It's a Wednesday, meaning it's the first day of the new positioning week for funds, this time coinciding with the late stages of a Goldman Roll.
The Energies sector was lower across the board with futures spreads indicating pressure was coming from commercial traders as well.
The soybean market remained under pressure as the May-July futures spread has been indicating a growing confidence in Brazil's 2025 crop.
Morning Summary: A quick check of markets early Wednesday morning shows there isn’t much to talk about. Given the chaotic situation the world is in at this time, that isn’t necessarily a bad thing. Pre-dawn trade finds the US dollar index with a small gain while US stock index futures are showing small losses. US Treasury futures are also in the red to start the day, though not by much. Energies were a bit more active overnight with markets in the red across the board. What stands out to me here, at least as of this writing, is selling was tied to the commercial side, as indicated by futures spreads. The spot-month WTI crude oil contract (CLH25) lost as much as $0.92 while the backwardation (inverse) in the spot spread had weakened by about $0.06. We see deferred spreads are “synchronized”[i], meaning the backwardation is consistently weakening indicating commercial interests were selling overnight. Metals were also lower across the board with April gold slipping as much as $24.40 (0.8%) through early Wednesday morning. It’s interesting to note both steel and aluminum were in the red to start the day. Lastly, it is a Wednesday meaning it’s the first day of the new positioning week for Watson.
