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“The older I get, the better I used to be.” – John McEnroe
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Futures had a positive bias heading into this morning’s PPI and housing data. With Housing Starts and Building Permits both coming in weaker than expected and PPI coming in higher than expected, they have given up all those gains and are now in the red. Treasury yields are higher, and the 10-year is back above 4.3%. For anyone on the rate cuts sooner rather than later bandwagon, this is a week they’d prefer to forget.
The phrase “somebody call 9-1-1” is a well-worn part of the vernacular these days, but it was only 56 years ago today that the first call on the system was made in Alabama. While it is an invaluable number in an emergency, there have been some “interesting” emergencies in its 50+ years of existence. Someone in Georgia once called to report her car stolen, only to later realize that the grass had grown so tall that she couldn’t see it anymore. Or how about the woman in California who called 911 to report that the special sauce on her Western Whopper at Burger King was left off? While the Whopper wasn’t up to her standards, the stoned guy who called 911 with the munchies would have taken it in a heartbeat. Even more surprising was the guy in Oregon who broke into a house to shower. When the owner got home and heard him, they called 911… but so did the intruder who feared he would be shot. We could go on, but again, these stories are the exception to what has been an invaluable resource over the last several decades.
While there aren’t many emergencies in the market these days (although this week’s inflation data has raised some concern), natural gas traders may be looking for a phone. The commodity has been in absolute free fall over the last several weeks. After prices gapped sharply lower in the last week of January, they have been in a free fall ever since. In the last week of January, futures prices fell below $2 MMBtu, and then yesterday, they fell below $1.60 to the lowest level since June 2020. There’s no inflation here!
Prices are slightly higher today, but heading into the session, natural gas prices were down for eight straight days. While there was a similar losing streak in October, the only streak that has been longer in the last decade was a 12-day streak in October 2019. Going back to 1990, there have been only 12 streaks of eight or more besides the current one.
The losing streak for natural gas has been bad enough, but the magnitude of the decline has been crushing. From its five-week high of 3.313 MMBtu on January 12th, front-month natural gas futures were down 52.3% through Thursday’s close. In the entire history of natural gas futures trading since 1990, the only other time that it traded down more than 50% in the span of five weeks or less was in January of last year, and before that, the record decline in five weeks or less was 47% in March 2003. Whether you want to blame it on weather, regulatory policy, or something else, natural gas has rarely been more out of favor than it is today.
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