Crude Oil Breakout; PTJ and Bitcoin; the Fed versus Inflation Fears – The Macro Setup

The Macro Setup Overview:

• Bitcoin and PTJ – 0:55, 11:00
• US stocks and US Treasuries – 2:25
• US Dollar & FX, Gold – 8:30, 17:30
• Lumber, inflation, Fed – 13:20

Inflation Fears! Or, Inflation Fears?

This week’s The Macro Setup, featuring Dan Nathan and Guy Adami, focused on inflation, the housing bubble, Bitcoin and Paul Tudor Jones, as well as what to expect heading into the June Federal Reserve policy meeting.

With Bitcoin acting like ‘digital gold’ and rallying around commentary from Elon Musk and Paul Tudor Jones, ‘traditional gold’ – gold itself – has been struggling. Gold prices may be experiencing a classic technical development known as a “back and fill,” which results in a bullish breakout retesting its breakout level before continuing higher.

Meanwhile, after the blowout May US inflation report, commodity prices have continued to sag. Lumber prices have fallen below the key 1000 level after running up towards 1700 at the start of the quarter, which in turn has dragged down XHB, the S&P homebuilders ETF. It’s not just lumber: corn, wheat, and even copper prices have been aggressively offered lower over the past few weeks. The exception? Crude oil prices, which continue their slow, steady climb higher.

Elsewhere, with measures of volatility down across the board, markets may be complacent heading into the June Fed meeting on Wednesday, June 16. Although equity markets continue to stretch to fresh highs (the Nasdaq 100 has already achieved a new record high while the Russell 2000 isn’t far behind), the Fed and its dot plot could see that even the best laid plans of mice and men go awry.

*For commentary from Dan Nathan, Guy Adami, and myself on EUR/USD, USD/JPY, gold prices, among others, please watch the video embedded at the top of this article.

Charts of the Week

Gold Price Technical Analysis: Daily Chart (March 2020 to June 2021) (Chart 1)

EUR/USD Rate Technical Analysis: Daily Chart (March 2020 to June 2021) (Chart 2)

USD/JPY Rate Technical Analysis: Daily Chart (March 2020 to June 2021) (Chart 3)

— Written by Christopher Vecchio, CFA, Senior Currency Strategist