The US is blaming Iran for attacks on two oil tankers in the Strait of Hormuz. US Secretary of State Mike Pompeo said, “these unprovoked attacks present a clear threat to international peace and security, a blatant assault on the freedom of navigation and an unacceptable campaign of escalating tension by Iran.” Oil prices however are down this morning after the International Energy Agency report said oil demand is down for the second month in a row.
New industrial output numbers show China slowed to 5% in May, well below expectations of 5.5%. The US/China trade war is blamed. Public hearings will be held today to consider extending 25% tariffs on all Chinese imports that do not currently have tariffs.
Trump received a letter yesterday from a business coalition called “Tariffs Hurt the Heartland.” The coalition has more than 600 member companies including WalMart and Target. The letter asks Trump to remove the Chinese tariffs, that they will have “a significant negative long-term impact on American businesses, farmers, families, and the US economy… tariffs are taxes paid directly by US companies… not China.”
Semi-conductors are down this morning after Broadcom (AVGO) earnings missed expectations and they warned they may be cut off from their largest customer (Huawei). Uncertainty over the US/China trade war has them lowering future expectations.
The economic calendar focus is Retail Sales @ 8:30am EST and Consumer Sentiment @ 10:00am EST. Also on the calendar are Industrial Production @ 9:15am EST and Business Inventories @ 10:00am EST.
Volatility is starting to contract as the ES tries to push higher. Best chance of volatility increase is to the downside. No Size bias as Globex volume was both mixed, light, and split between the ES June and September contracts.