Friday, May 22, 2015
EDZ5; Add A Pinch of Wage Pressure and Stir Lightly
Just a small up-tic in the 'Average Weekly Earning' report today may have been enough to encourage those looking for the 'missing puzzle piece' to Fed timing of 'normalization'. As it is, the EDZ5 contract is forming a 'bearish engulfing' into a long holiday weekend. More usually, we see a 'risk off'' trade into long weekends. To overcome that impulse takes some meaningful influence. For now, we remain very near to the contract high in an instrument that was more geared to rolling up the curve than pricing a series of Fed rate hikes on the back of wage pressure or recovering production data. Clearly more consistent and like data will be necessary to get standing a greater minority view of a nearby Fed firming. For now, we might emphasize that today's trade is the weakest since early March.