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Futures Jump As Inflation Fears Fade On China’s Commodity Crackdown

Now that the inflation narrative has been crippled with Bloomberg picking up on what we said last week about China’s tumbling credit impulse

… and the deflationary consequences thereof, while an acceleration of China’s crackdown on commodities speculation weighed on raw-material prices with steel dropping more than 5% and iron ore tumbling by close to the daily limit, stocks are again free to roam about the stratosphere as the risk of runaway prices is fading and S&P futures rose to 2-week highs on Monday as higher oil prices lifted energy stocks ahead of key inflation readings later this week when the personal consumption data is released on Thursday, the Fed’s preferred inflation measure. At 7:30 a.m. ET, Dow e-minis were up 118 points, or 0.%, S&P 500 e-minis were up 21 points, or 0.51%, and Nasdaq 100 e-minis were up 87.5 points, or 0.65%.

After falling as much as 4.3% from its May 7 record high, the S&P 500 is now only 2% off that level as investors picked up technology stocks that were beaten down the most. Risk sentiment also improved as cryptocurrencies rebounded from a weekend rout fueled by further signs of a gathering Chinese crackdown on the emerging sector. The dollar and Treasuries were steady. Implied volatility for major global indexes remains subdued, suggesting investors aren’t pricing in a surprise from the Fed in the next six months.

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