North American News
US major stock indices close lower on the day and lower on the week
- Major indices down 3 of a 4 trading days this week
The major US stock indices are ending the day lower led by the NASDAQ index which declined by 2.4%
For the shortened trading week, the indices were down 3 of the 4 trading days. After snapping a 7 week decline in the S&P and NASDAQ index ended 8 week decline in the Dow industrial average, the major indices all were lower this week.
The final numbers are showing:
- Dow industrial average fell -348.58 points or -1.05% to 32899.71
- S&P index fell -68.26 points or -1.63% to 4108.55
- NASDAQ index fell -304.15 points or -2.47% to 12012.74
- Russell 2000 fell -14.62 points or -0.77% to 1883.05
For the trading week
- Dow industrial average fell -0.94%
- S&P index fell -1.19%
- NASDAQ index fell -0.98%
- Russell 2000 index fell -0.25%
US May nonfarm payrolls 390K vs 325K estimate
- May 2022 US employment data
- Prior report 428K (was expecting the 391K). Revised to 436K
- nonfarm payroll 390K vs 325K estimate. Estimated range 250K to 477K
- private payrolls 333 vs 325K estimate. Last month 406K.
- unemployment rate 3.6% vs. 3.5% estimate. Last month 3.6%
- average hourly earnings 0.3% vs. 0.4% estimate. Last month 0.3%
- average hourly earnings YoY 5.2% vs 5.2% estimate. Last month 5.5%
- manufacturing payrolls 18K vs 40K estimate. Last 55K
- participation rate 62.3% vs 62.2 percent last month
- average workweek 34.6 hours vs 34.6 hours last month
- U6 underemployment rate 7.1% vs 7.0% last month.
- Goods producing jobs plus 59K. Construction +30 6K
- private service providing jobs plus 274K led by retail jobs +60.7 K
- government jobs +57K vs. + 31K last month
- In May, 7.4 percent of employed persons teleworked because of the coronavirus pandemic, down from 7.7 percent in the prior month.
Job changes by sector:
- leisure and hospitality, 84K. Led by food services and drinking places +40 6K, and accommodation +21K
- professional business services, 75K
- transportation and warehousing, 47K
- wholesale trade +14.1 K
- retail trade -60.7 K
- information +16 K
- financial activity, 8K
- education and health services +74K
- government, +57K
- construction, 36K
- mining and logging +5K
- manufacturing +18 K
US yields:
- 2 year, 2.676%, +3 point basis points
- 5 year 2.971%, +6.2 basis points
- 10 year 2.975%, +6 basis points
- 30 year 3.146%, +7.1 basis points
Walmart CEO is working really hard on costs
- Says concerned about the inflation rate
The Walmart CEO Douglas McMillon is on the wires saying
- That he is working really hard on the costs
- Concerned about the inflation rate
- Seeks to limit price increases for basic foods
- It will take this quarter and next to work through inventory
- Supply chain snarls started to ease in February
- looking to drive volume by some price cuts on apparel
Commodities
Gold Price Forecast: XAU/USD plunges from weekly highs to $1840s as Fed’s Mester crosses wires
- The yellow metal would finish the week on the defensive, losing 0.28%.
- Sentiment remains negative, as US equities fall between 1.02% and 2.57%.
- Fed’s Mester supports 50 bps hikes in June and July; September is still open for 50 or 25 bps increases.
- Gold Price Forecast (XAU/USD): Failure at $1889.91, exacerbates a fall towards $1800.
Gold spot (XAU/USD) slumps from three-week highs near $1874 towards the confluence of the 20 and the 200-day moving averages (DMAs) around the $1840s region after the US Labor Department revealed that the US economy added more jobs than expected. At the time of writing, XAU/USD is trading at $1848.43, falling 1.06%.
Fed speakers to keep Gold prices on the defensive
In the meantime, Cleveland’s Fed Loretta Mester (2022 voter) is crossing the wires. She said that the one problem that the Fed has is inflation, and contrarily to what JP Morgan’s CEO Jamie Dimon said about a hurricane ahead in a Bloomberg article, Mester does not see it. Nevertheless, added that risks of recession have gone up.
Loretta Mester added that she supports 50 bps increases in June and July while not ruling it out in the September meeting, but it would be data-dependent. She said that if she sees compelling evidence of lower inflation, then a 25 bps hike in September would be appropriate.
Earlier, the US Nonfarm Payrolls for May, illustrated that the economy added 390K new jobs, far more than the 318K foreseen. Nevertheless, financial analysts’ chatter about the US labor market still supports the view that the US Federal Reserve will tighten aggressively after receiving the green light.
Analysts at Commerzbank, in a note, wrote that “The labor market thus continues to be very robust. Due to the unchanged high demand for labor, there is still a risk of a wage-price spiral. Further sharp Fed rate hikes are likely.” They stated that they “maintain our forecast that the Fed will raise its key rate to 3.00% by the end of the year, i.e., by another 200 bps.”
In the US jobs report, Average Hourly Earnings on its YoY reading remained unchanged at 5.2%, reflecting the tight labor market though easing a little bit, worries of a wage-price spiral.
In the meantime, the US Dollar Index, a gauge of the greenback’s value vs. a basket of peers, is rising 0.42%, sitting at 102.187, a headwind for Gold prices. That, alongside the US 10-year Treasury yield aiming towards the 3% threshold, currently at 2.96%, will keep the non-yielding metal on the defensive.
In the week ahead, the US Federal Reserve board members begin their blackout period on preparations for the June meeting. However, the US economic docket would keep investors’ eyes on the May inflation report alongside the UoM June’s Consumer Sentiment.
Gold Price Forecast (XAU/USD): Technical outlook
XAU/USD remains under pressure after failing to break above March 29 swing low-turned-resistance at $1889.91. Hence, XAU/USD sellers entered the market and sent Gold prices sliding near the intersection of the 20 and 200-DMA near the $1841.65-$1842.51 area. Further exacerbating the pullback is the Relative Strength Index (RSI) in negative territory and aiming lower.
Therefore, XAU/USD’s first support would be the $1841-$1842 area. Break below would expose the June 1 cycle low at $1828.33, followed by the Bollinger band bottom line at $1809.93.
WTI crude oil futures settle at $118.87
- Up $2 or 1.71%
The price of WTI crude oil futures are settling at $118.87. That’s up $2 or 1.71%.
The high price today reached $119.42. The low price extended to $115.23.
One week ago today, the price closed at $115.07. That puts the gain for the week at $3.80 or 3.3%.
The high for the week reached $119.98 on Monday. The low for the week extended to $111.20. That was a yesterday after the OPEC+ decision.
Working in favor of the upside was China reopening along with continued low inventories. The weekly inventory data in the US this week showed a larger than expected to draw of -5.06 million barrels this week.
This despite record high prices at the pump in the US.
Iraq oil production to increase to 4.58 million barrels per day after OPEC+ decision
- Iraq oil production to increase
According to state n crude oil production crude oil production ews agency,
- Iraq oil production will increase to 4.58 million barrels per day as of July following the OPEC+ decision
Oil production is currently at 4.44 million barrels per day
Looking at the global crude oil production, below is the list of top 14 oil producers:
EU News
Major European indices close lower
- German DAX cannot sustain break above 100 day moving average
With the UK still on holiday, the other major European indices are closing lower.
A look at the closing levels shows:
- German DAX, -25.10 points or -0.17% at 14460.08
- France’s CAC -15.14 points or -0.23% at 6485.31
- Spain’s Ibex -19.3 points or -0.22% at 8724.81
- Italy’s FTSE MIB -259.84 points or -1.06% at 24166
For the trading week:
- German DAX fell -0.01%
- France’s CAC fell -0.47%
- Spain’s Ibex fell -2.34%
- FTSE MIB fell -1.98%
- UK’s FTSE 100 fell by -0.69% in its shortened trading week
Other News
Russia’s Putin: US decision to print money led to increase in global food prices
- Russia’s Putin speaking
Russia’s Putin is speaking and says:
- we see attempts to blame Russia for problems on global food market
- US decision to print money led to increasing global food prices
- unfavorable situation on global food market is linked to shortsighted policy of Europe in energy
- at the same time they diminished significance of hydrocarbons
- some European countries did not keep long-term contracts for shipments of Russia natural gas
- increased fertilizer prices have nothing to do with the Russia’s military operation in Ukraine
- our partners made a lot of mistakes and are now looking for a scapegoat
- situation will worsen due to sanctions on our fertilizers
- reports that Russia does not allow grain exports from Ukraine towards are a bluff
- our estimates show that Ukraine could export 5 million tons of wheat and 7 million tons of corn
- Russia will increase its grain export to 50 million tons
- We are not blocking exports of grain from Ukraine
- Ukraine can export grain from ports it control such as Odessa
Cryptocurrency News
New York state senate passes Bitcoin mining moratorium
The New York State Senate approved a controversial proof-of-work (PoW) mining ban bill that would prohibit any new Bitcoin (BTC) mining operations in the state.
The PoW mining ban bill was first passed by the state assembly in April last month. It aims to prohibit any new mining operations in the state for the next two years. Now, the bill is headed for the governor’s office, which once approved, would make New York the first state in the United States to place a moratorium on cryptocurrency mining.
PoW mining consensus is predominantly used by Bitcoin miners and is considered one of the safest and most decentralized ways of mining. However, the practice is controversial as it requires an incredibly high amount of energy.
The vote on the bill saw many senators flip from undecided to in favor, claiming they are concerned about carbon emissions.
The bill would not only prohibit new mining operations but also refuse the renewal of licenses to those who are already operating in the state. Any new PoW mining operation in the state could only operate if it uses 100% renewable energy.
Bitcoin’s mining consensus mechanism has been one of the hottest topics of debate among policymakers aided by environmentalist and billionaire lobbies supporting proof-of-stake mining consensus, which is far less energy intensive. Greenpeace, as well as Ripple co-founder Chris Larsen have been campaigning for a change of the Bitcoin code.
Policymakers often only focus on the high energy consumption by Bitcoin miners, ignoring the fact that a significant chunk of this energy comes from renewable sources, especially in New York where 50% of the energy is produced from renewable sources.
Criticism of PoW mining gained steam last year at the peak of the bull run. However, by the end of the last year, a MicroStrategy-led Bitcoin mining council report highlighted that more than 60% of the electricity consumption by the BTC network comes from clean sources.
The European Parliament proposed a similar PoW mining ban, however, it amended the proposal to remove the ban amid growing public scrutiny.
Experts believe New York’s decision to ban PoW mining would create a domino effect and other states might follow. The U.S is currently the world leader in Bitcoin mining hash rate, accounting for 38% of the network’s mining power.