Outlook for the Stock Market-Dollar-Oil Triad
Market advanced on Monday after a reported showed consumer spending ticked higher last month. Boris Schlossberg, director of currency research at GFT Forex, Peter Beutel, president of Cameron Hanover, and Todd Colvin, vice president of MF Global, shared their outlooks on equities, currencies and commodities.
“As we saw last week, the Treasury market is very vulnerable to spikes higher in yields, based on the fact that we’re looking for very positive jobs report on Friday,” Colvin told CNBC.
“The stock market will ride that wave into Friday.”
Colvin said he expects to see some resistance at S&P 1,175 and it becomes a “free rise” into 1,200 by mid-April if the jobs number is positive.
“The biggest indicator in the next month or two is the bill market,” he added.
The euro rose on Monday, boosted by last week's Eurozone agreement on emergency financial aid for Greece, but retreated from a session high as markets awaited the outcome of that country's 7-year bond sale.
“All the focus last week was on euro, but the stealth story in currencies has been the rise in the dollar/yen,” Schlossberg said. “All eyes are on the payroll number…at this point, all indications point to a pretty strong number.”
Schlossberg said the dollar/yen has a “strong chance” of reaching 95 if the jobs number is positive.
“The dollar/yen is the most sensitive to the U.S. data and to interest rates,” he noted.
Oil prices rose near $82 on Monday, supported by a weaker dollar and economic optimism as strong data pushed U.S. equities higher.
“We saw a huge increase in the open interest up until about a week ago and then we saw it melt away completely and on Friday," said Beutel. "It seems that the big investment funds were out and we started paying attention to the fundamentals on Friday.”
“So maybe we are returning to the fundamentals, but the fundamentals don’t justify an $80 price.”
Beutel augured that oil prices could easily soar to $95 if they break $85.
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No immediate information was available for Beutel, Colvin or Schlossberg.