North American News
US equities ring up another gain
- Closing changes for the main North American markets
US equities opened strongly, then sagged midway through the day on banking worries, then finished about where they opened.
Closing changes:
- S&P 500 up 24 points, or 0.6%, to 4081
- Nasdaq +0.7%
- Russell 2000 -0.1%
- DJIA +0.4%
Regional banks bleed lower, threatening risk sentiment
- Eyes on Metropolitan Bank
The US regional bank ETF is now down 1.0% after opening modestly higher. The weakness in banks is spreading into broad indexes and is pulling down USD/JPY and other risk trades in FX.
The problem child today is Metropolitan Bank ($MCB) after shots targeted the bank and its relationships with Skrill. It also has ties to crypto firms and is the issuer of choice for prepaid debit cards from crypto firms, though in January it said it was moving away from crypto after getting caught up in Voyager losses.
Tomorrow the core PCE data will be released at 8:30 AM with the expectations of a rise of 0.4% for the month of February. That is still too high given the Fed’s target of 2.0%. However with bank credit tightening, that will have an additional effect on the economy and potentially inflation.
US initial jobless claims 198K vs 196k estimate
- The weekly US initial and continuing claim for the current week
- prior week 191K (unrevised)
- Initial jobless claims 198K vs 196K estimate
- 4 week MA 198.25K vs 196.25K last week
- Continuing claims 1.689M vs 1.697M estimate. Prior week revised to 1.685M from 1.694M previous
- 4 week MA of continuing claims 1.692M vs 1681.75M
- The largest increases in initial claims for the week ending March 18 were in Massachusetts (+1,293), Mississippi (+729), Georgia (+627), District of Columbia (+607), and Tennessee (+513),
- The largest decreases were in California (-2,813), Illinois (-1,085), New York (-1,056), New Jersey (-678), and Michigan (-644).
US final Q4 GDP +2.6% vs +2.7% expected
- The third reading on US fourth quarter GDP
- Q3 was +3.2% annualized
- Personal consumption +1.0% vs +1.4% 2nd reading
- Core PCE prices +4.4% vs +4.3% expected
- PCE prices +3.7% vs +3.7% 2nd reading
- GDP final sales +3.7% vs +1.2% 2nd reading
- Corporate profits after tax -2.7% vs +0.8% in Q4
- Consumer spending on durables -1.3% vs -1.8% 2nd reading
Fed’s Collins: My economic views are close to FOMC forecasts
- Comments from the Fed’s Collins
- Risks to the outlook have increased with banking stress
- Inflation expectations data show confidence Fed will control inflation
- Jobs market may be lagging indicator right now
- Banking stress will make some firms more conservative in activities
- Prior to banking stress, I had expected the Fed to raise rates more than the prior projection
- It’s hard to lower inflation without some rise in unemployment
- Getting inflation down argues for no rate cuts this year
- It’s premature to say what the Fed should do at the next meeting
Fed’s Kashkari: We have very high inflation but it’s not being driven by wages
- Comments from the Fed’s Kashkari
- Once we get inflation down, we can get back to the pre-pandemic economy with low inflation, low unemployment and decent wage growth
- The vast majority of banks have taken interest-rate risk seriously
- I’m prepared this could take longer than we expect
Fed’s Barkin declines to offer a view on whether to hike at the upcoming FOMC meeting
- More from Barkin
- A lot of data still to come before the next meeting
- Hard to imagine inflation falling without demand falling
- I’m tracking things like weekly credit card spending to see if demand is beginning to settle
- When you raise rates there is always a risk of the economy slowing faster than you want
- Sees risks in commercial real estate
- Looking at how expiration of SNAP and other benefits may put pressure on household spending
- Still a lot of money among households available to be spent
- Comfortable with a trajectory now of evaluating meeting by meeting if a quarter point hike is needed or not
- Deposit flows among US banks relatively stable
- Encouraged by evidence of resilience
- Important to remember not every bank failure becomes a Lehman Brothers
- supported a 25 basis point hike at the last meeting given substantial inflation pressure and banking resilience
- Still too soon to know impact of bank stress on credit, inflation, or with pretty wide range of possible outcomes
- Reasons to think inflation battle will take time
- Fed will need to stay nimble in weighing fallout from a bank stress against incoming data on inflation
Commodities
Silver breaks two-month resistance trendline, pierced $23.90
- XAG/USD is upward biased from a daily chart perspective, and it might test the YTD high at $24.63.
- XAG/USD is in a solid uptrend, supported by oscillators at bullish territory.
- XAG/USD may experience a downside if it falls below $23.50, as it could drop toward the S1 pivot point.
Silver price broke a two-month resistance trendline, reaching a new 8-week high of $23.92 due to overall US Dollar (USD) weakness and falling US Treasury bond yields. Therefore, the XAG/USD is trading at $23.74, up more than 2%, after hitting a low of $23.24.
XAG/USD Price action
From a daily chart perspective, the XAG/USD is upward biased and might soon test the YTD high at $24.63 once it reclaimed the $23.50 figure. But firstly, Silver buyers need to reclaim the $24.00 figure, ahead of challenging YTD highs. The Relative Strength Index (RSI) at overbought conditions continues to aim higher, while the Rate of Change (RoC) portrays buyers in charge. If XAG/USD fails to break $24.00, that could pave the way for a pullback.
In the short term, the XAG/USD 4-hour chart portrays the white metal in a solid uptrend, testing the R3 daily pivot point at $23.83 after hitting a daily high of $23.92. If the XAG/USD conquers $24.00, that will expose the YTD high. The Relative Strength Index (RSI) justifies an upward continuation at bullish territory, while the Rate of Change (RoC) does it too.
On the flip side, if the XAG/USD stumbles beneath the R2’s daily pivot at $23.62, it would pave the way for further downside. Hence, the XAG/USD first support would be the R1 pivot point at $23.47, followed by the intersection of the 20-EMA and the daily pivot point at $23.30, before diving towards the S1 pivot point at $23.11.
OPEC unlikely to tweak oil output policy on Monday – report
- No surprise
OPEC+ is unlikely to tweak oil policy at Monday’s meeting, according to five OPEC+ delegates cited by Reuters.
This is no surprise at all as it’s a monitoring meeting and members have repeatedly pledged to keep output unchanged through year end.
US weekly EIA natural gas inventories -47B vs -54B expected
- Weekly US natural gas storage data
- Prior was -72B
EU News
European equity close: Onto the Breach
- Another day of big gains
Closing changes for the main European bourses:
- Stoxx 600 +1.1%
- UK FTSE 100 +0.8%
- German DAX +1.3%
- French CAC +1.2%
- Italy MIB +1.1%
- Spain IBEX +1.6%
Germany March preliminary CPI +7.4% vs +7.3% y/y expected
- Latest data released by Destatis – 30 March 2023
- Prior +8.7%
- CPI +0.8% vs +0.7% m/m expected
- Prior +0.8%
- HICP +7.8% vs +7.5% y/y expected
- Prior +9.3%
- HICP +1.1% vs +0.8% m/m expected
- Prior +1.0%
Other News
ECB and SNB both tapped into the Fed for funds in the past week, chunky amounts
The European Central Bank tapped the Fed USD swap lines for US$487.5mn in the week to March 29
- SNB did the same for US$100mn
The ECB were all over the place telling us (in a nutshell) ‘no banking stress here’ … yeah, right.
South Africa central bank sees 2023 CPI at 6.0% vs 5.4% prior
- Risk to the inflation outlook seen to the upside
- The rise in South Africa’s headline inflation rate has been shaped primarily by fuel, electricity and fuel
- GDP growth this year seen at 0.2% vs 0.3% prior
- 2020 core CPI seen at 5.1% vs 5.2% prior forecast
- Risks to the medium-term domestic growth outlook are assessed to be balanced
South African central bank raises repo rate by 50 bps to 7.75%
- ZAR rallies after SARB hikes
The higher inflation forecasts were a clue and now the South African Reserve Bank has hiked its main repo rate by 50 bps to 7.75%.
Cryptocurrency News
Avalanche price could confirm a bullish reversal if this key level holds
- Avalanche price is up 5% in three days amid Cortina Upgrade-related hype.
- AVAX could soar 4% to tag the immediate resistance level at $17.77.
- A daily candlestick close below the 100-day EMA at $16.93 will invalidate the bullish thesis.
Avalanche price (AVAX) has been trading horizontally since March 18, as the altcoin waited for the right catalysts to resume its uptrend. The altcoin has remained afloat, ramping upon the alt season and the Bitcoin (BTC) dominance that saw altcoins rallying. It appears the anticipated trigger has come in the form of the Cortina Upgrade, but the success or failure of the uptrend depends on whether AVAX will hold above a key level.
Avalanche price could soar amid Cortina Upgrade-related hype
Avalanche price could soar around the news of the release of the Cortina Upgrade on Fuji. The event marks the latest version of AvalancheGo, which will be migrating the X-Chain to run Snowman++ consensus. Upon implementation, it would make the X-Chain compatible with Avalanche Warp Messaging and make it easier for exchanges to support the X-Chain.
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