Oil prices for the near (May) contract have tumbled. WTI sunk under $15 for the first time in 21 years, but the May contract is not really where the action is. All the volume has moved into the June contract as the May contract expires tomorrow.  This has created a super contango in the two closest months that is the largest I can recall. June is trading almost $10 higher at a little under $24.

No one wants to take delivery of oil now and the hope is that US regulators in states like Texas can agree on controlled production cuts. Brent is not quite going through the same dislocation as the market is hopeful OPEC+ cuts will start to have an effect and storage constraints are less than they are for US oil. But for now the OPEC+ cuts are not enough to rebalance the market when demand is evaporated.

European equities were tentatively higher early on Monday but really going nowhere fast right now without any new drivers. The FTSE 100 is attempting to secure the 5800 beachhead. Near-term support seen at 5600. The index is starting to look pretty range-bound after rallying hard off the lows. Direction will start to come as we get a clearer estimate of the economic damage, how quick the recover is and whether the stimulus efforts have prevented a 1930s-like depression.

Overnight, the Nikkei 225 closed down more than 1% in a mixed Asian session after data showed Japan’s exports fell 11.7% in March from a year earlier, while imports were down 5%.

US equities enjoyed their first back-to-back weekly gains since February. The S&P 500 rose 2.7% on Friday, securing a move through the 50-day moving average for the first since February 21st. The rally failed to test the resistance at 2885. The S&P 500 is now just 10% lower YTD and is 30% off the lows. It’s no longer looking that cheap. Earnings continue this week to tell us more about how fairly valued the market is.  Futures are pointing lower for Wall Street today. I think we could see some real volatility again, at least short-term, on earnings worries. But investors tend to be quite positive in general and may well look through the short-term damage to EPS as long as they think we get a fairly swift recovery.

In terms of the data, the broad picture is that the curve is flattening, but the economic damage is huge, though not surprising. Various additional stimulus packages are being worked on governments spot where the gaps were in their initial efforts.

Gold is holding the break below $1700 and is testing the 23.6% retracement around $1678.

Gold, 1-Day Chart, Marketsx – 08.16 UTC, April 20th, 2020

In FX, sterling is pretty steady against the dollar in the 1.24-1.25 range we’ve been in for 5 days. Near term suggests a potential push back to support at 1.2410, but price action is now at the lower Bollinger Band, suggesting possible bullish push back to the topside of the range.

GBP/USD, 1-Hour Chart, Marketsx – 08.41 UTC, April 20th, 2020