Imagine expecting a survey of current economic conditions to come in flat -- and then it comes in -3.6.
That's what happened in Germany today. The leading indicator of the German economic powerhouse, the ZEW, fell through the floor.
And because I am a faithful follower of Erica Blomgren (@SEK_bonds) I know that there was a big downside surprise in Swedish inflation figures today as well. Inflation there was expected to rise. Instead it fell well below the Riksbank's estimate and increased pressure for another cut. Problem is, interest rates are currently .25%. That's not a lot of room.
Blomgren also noted, "Low inflation rather broadly based among components. Food prices, air fares and clothes main contributors to the downside surprise."
This is great news for consumers. Bad news for governments.
Whenever your government posts its inflation targets, it's openly telling you exactly how much of each dollar it wants to steal from you.
Then they leave it to economists and professors and news anchors to tell you it's all good.
Futures, while up nicely, are trading in a shallow band overnight. They would have to climb above 1906 to get out of the hole they're in. Right now, they're suggesting a possible new marginal low in the cash market at some point.
Yesterday saw strong selling in the afternoon with a washout -1374 ticks. So it should not be surprising to see a bounce. But the S&P cash would have to rally above 1970.36 to break the down trend.
There are two lower targets to be aware of: a 161.8% Fib extension target at 1826.99 and the February lows of 1737.92. The latter is significant because oil is significant : the XLE (Energy Select Sector SPDR® Fund) just smashed through its Feb lows (energy is at least 20% of S&P 500 earnings).
In the meantime, let the poor kitty bounce.
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