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North American News

Major US stock indices close lower

  • NASDAQ index leads the way to the downside

The major US stock indices are closing lower on the day ahead of a slew of earnings after the close:

  • Dow industrial average fell -228.5 points or -0.71% at 31761.55
  • NASDAQ index fell -45.79 point -1.15% at 3921.04
  • NASDAQ index fell -220.08 points or -1.87% at 11562.58
  • Russell 2000 fell -12.52 points or is -0.69% at 1805.245

The best of the Dow 30 today:

  • 3M +4.94%
  • McDonald’s +2.68%
  • Coca-Cola +1.64%
  • Amgen +0.97%
  • Merck +0.84%

The losers of the Dow 30 today:

  • Walmart -7.6%
  • Salesforce -3.85%
  • Nike- 3.73%
  • Walt Disney -2.83%
  • Microsoft -2.68%

US treasury auctions off $46 billion of 5 year notes at a high yield of 2.86%

  • WI level at the time of the auction 2.87%
  • High yield 2.86%
  • WI level 2.87%
  • Tail -1.0 basis point vs six-month average of +0.4 basis points
  • Bid to cover 2.46X vs. the six-month average of 2.44X
  • Dealers 16.81% vs. six-month average of 17.7%
  • Directs 16.81% vs. the six-month average of 19.0%
  • In-directs 66.37% vs. six-month average of 63.4%

US June new home sales 590K vs 660K expected

  • US June 2022 new home sales data
  • Prior was 696K (revised to 642K)
  • Sales change -8.1% vs +10.7% prior
  • Single family -8.1% vs +6.3 prior
  • Prices +7.4% y/y

US July consumer confidence 95.7 vs 97.2 expected

  • US July consumer confidence data from The Conference Board
  • Prior was 98.7
  • Present situation 141.3 vs 147.1 prior
  • Expectations 65.3 vs 66.4 prior
  • Jobs hard-to-get 12.3% vs 11.6% prior
  • 1-year inflation % vs 8.0% prior

Commodities

Gold barely slides below $1720

  • Gold price remains in choppy trading conditions as investors await Fed’s 75 bps rate hike.
  • US corporate earnings weigh on mood as they complain about inflation as the main reason for cutting or missing profits.
  • Gold Price Forecast (XAUUSD): Downward biased but will remain sideways ahead of the FOMC meeting.

Gold price turned negative during the day, after hitting a daily high at around $1728, but so far slid amidst downbeat investors’ market mood as they brace for the July FOMC monetary policy meeting. At the time of writing, XAUUSD is trading at $1718.46, down 0.05%.

US companies complain about inflation and a higher US dollar, headwinds for gold

Several factors, like Walmart cutting its profit outlook, blamed on double-digit food prices and elevated energy prices, and the IMF cut its global growth outlook for 2022 and 2023, weighed on sentiment. Also, EU countries agreed to reduce their gas use by 15%, alongside reduced gas flows in the Nord Stream 1 pipeline, adding fuel to the already battered mood. Traders seeking safety propelled the greenback higher. The US Dollar Index, a gauge of the buck’s value vs. a basket of its peers, gains 0.54%, up at 107.060.

Global bond yields followed suit, edged higher, but pared some gains. The US 10-year benchmark note drops three bps and sits at 2.761%. Worth noting that the yield curve inversion between 2s and 10s had further deepened towards -0.253%. However, the US 3-month 10-year yield curve has bear flattened to 0.228%, about to flag recession.

In the meantime, a light US economic calendar ahead of Chair Powell and Co. meeting witnessed the release of the CB Consumer Confidence, which dropped to its lowest level since February 2021. Lyn Franco, senior director of economic indicators at the Conference Board, said American “Concerns about inflation — rising gas and food prices, in particular — continued to weigh on consumers.” Furthermore, she added, “looking ahead, inflation and additional rate hikes are likely to continue posing strong headwinds for consumer spending and economic growth over the next six months.”

At the same time, the S&P/Case-Shiller Home Price YoY for May missed expectation by  0.5%, while the US House Price Index for May, trailed April’s reading to 18.3%, lower than the 18.9%.

What to watch

On Wednesday, the US economic docket will feature the Durable Good Orders, Retail Inventories, and Pending Home Sales ahead of the FOMC monetary policy decision.

European natural gas prices are going supernova again

  • Prices up 20% today

Some Goldman Sachs comments on European natural gas are getting attention today but they’re obsolete almost as quickly as they’ve come out.

They say the 20% flows through Nord Stream 1 that are taking place now suggest near-term upside to TTG natural gas prices to €190/mWh.

Well that was certainly an undershoot because gas prices are up €35 to €211 today alone in the second day of large gains. The gains came after a report citing unnamed sources saying Russia would continue weaponizing gas flows and that a disappointing EU voluntary agreement on curbing use.

Looking further ahead, Goldman Sachs sees European gas prices ultimately driven higher next summer and that a sustained lower-price environment is not likely until 2025 when LNG supplies to begin increasing significantly.

As for the fallout for European growth, I would see prices around here as dire. European industry can’t compete with countries that are paying 10x less for energy and the political and government-budget fallout will be messy.


EU News

European equity close: Steady chop lower

  • Closing changes for European equity markets
  • Stoxx 600 – flat
  • German DAX -0.8%
  • French CAC -0.4%
  • UK FTSE 100 flat
  • Spain IBEX flat
  • Italy MIB -0.9%

Other News

Yellen will do her best at spinning the Q2 GDP report on Thursday

  • Yellen to host press conference

The Treasury just announced that Janet Yellen will be hosting a press conference on the economy on Thursday. That should be seen as a giveaway on soft Q2 GDP.

The consensus is still at +0.5% but it’s been sliding. The Fed would have likely gotten a preview of the number today and perhaps so did the Treasury.


Cryptocurrency News

Coinbase is facing a probe by the US SEC over crypto listings

Bloomberg with the headline, not further details as yet. US Securities and Exchange Commission to launch a probe.

  • Coinbase is facing a US probe into whether it improperly let Americans trade digital assets that should have been registered as securities