North American News
S&P closes higher for the 5th week in a row. The NASDAQ index up for the 8th week
- Nasdaq string the longest since November 2019
Although the major indices are closing lower on the day, each enjoyed solid gains this week.
The S&P index is higher for the 5th consecutive week. The NASDAQ index is up for the 8th consecutive week. The Dow Industrial average is up for the 3rd consecutive week. The small-cap Russell index lagged, but still closed with a gain for the week.
For the day,
- Dow Industrial Average fell -107.05 points or -0.31% at 34300.75
- S&P index fell -16.17 points or -0.37% at 4409.68
- NASDAQ index felt -93.96 points or -0.68% at 13689.56
Looking at the small-cap Russell 2000 index, it fell -13.81 points or -0.73% at 1875.46
For the trading week:
- Dow Industrial Average rose 1.25%
- S&P index rose 2.58%. That gain was the largest since March 27 week
- NASDAQ index rose 3.25%. Like the S&P, the gain was the largest since March 27
Reminder: It’s a long weekend in the US
- Monday is the Juneteeth holiday
US stock and bond markets are closed on Monday.
April final UMich consumer sentiment 63.9 vs 60.0 expected
- UMich consumer sentiment data for June 2023
- Prior was 59.2
- Current conditions 68.0 vs 65.5 expected (64.9 prior)
- Expectations 61.3 vs 56.5 expected (55.4 prior)
- 1-year inflation 3.3% vs 4.2% prior — lowest since March 2021
- 5-10 year inflation 3.0% vs 3.1% prior
NY Fed underlying inflation gauge 3.5% vs 4.0% prior
- The New York Fed’s attempt to measure core inflation
- May underlying inflation 3.5% vs 4.0% prior
- Prices-only measure 3.0% vs 3.4% prior
- 12-month change 4.0% vs 4.9% prior
Fed monetary policy report: Bringing inflation down will require period of below-trend growth
- Comments in the Fed’s semi-annual monetary policy report
- Inflation well above target, labor market very tight
- Some indications of future business defaults are elevated
- Financial conditions have tightened since January
- Will adjust pace of balance sheet contraction if needed
- Outlook for Fed funds rate subject to ‘considerable uncertainty’
Fed’s Waller: US economy is still ‘ripping along’
- Comments from Waller
- Right now everything ‘seems to be calm’ in the banking system
- Global spillovers from expected from coordinated central bank tightening have to really materialized
- It’s still not clear that recent bank failures have had a material effect on credit conditions
- Monetary policy should not be altered due to ‘ineffectual management at a few banks’
- It’s the Fed’s job to use monetary policy to fight inflation; the job of bank leaders is to manager interest rate risk
- It’s disturbing that core inflation isn’t moving, will probably require more tightening
- Core inflation is not coming down ‘like I thought it would’
- So far it looks like the idea of labor market softening without much rise in unemployment is ‘holding up’
Fed Barkin: Comfortable doing more on interest rates if demand does not slow
- Richmond Fed Pres. Barkin speaking
- Is “comfortable doing more” on interest rates if the coming data doesn’t confirm a story that slowing demand is returning inflation to the 2% target.
- Believes higher rates may create the risk of a more significant slowdown, but the experience of the 70s shows the Fed should not back off its inflation fight too soon.
- The 2% target has served the Fed well for a generation.
- Inflation has proved “stubbornly persistent,” and he is still looking to be convinced that weakening demand will control it.
Commodities
Silver shifts above $24.00 as Fed’s interest rate peak uncertainty fades
- Silver price has comfortably shifted above $24.00 as the USD Index remains weak.
- The USD Index is facing pressure as investors are not agreeing that the Fed will hike rates two times more this year.
- Fed Barkin has commented that raising rates further could create the risk of a more significant slowdown in the economy.
Silver price (XAG/USD) has shifted its auction comfortably above the crucial resistance of $24.00 in the early New York session. The white metal has got strengthened as investors have found clarity about Federal Reserve’s (Fed) interest rate peak for now.
Platinum fundamentals look constructive due to the ongoing Palladium to Platinum substitution – ANZ
Economists at ANZ Bank discuss Platinum and Palladium outlooks.
Platinum over Palladium
Among PGMs, we reiterate our preference for Platinum over Palladium.Platinum mines supply recovery looks constrained due to power challenges in South Africa. Meanwhile, substitution and higher penetration of electric vehicles are likely to weigh on auto catalyst demand for Palladium.
We expect the Platinum price to move towards $1,150 and Palladium to hover near $1,420 by the end of this year.
Gold correction should now be largely finished – Commerzbank
Gold will only begin to recover once it becomes clear that US key rates have peaked
Participants in the Gold market are disappointed that the rate hike cycle may not be over after all: the Gold price meanwhile was trading more than $100 lower than it was in early May and found itself at a three-month low.
We had anticipated a correction but believe it should now be largely finished. Having said that, prices will probably only begin to recover once it becomes clear that US key rates have peaked.
WTI Crude Oil futures settles at $71.78
- Up $1.16 or 1.64%
The price of crude oil is settling at $71.78. That is up $1.16 or 1.64%. The high reached $72.01. The low price was at $70.18.
For the trading week, the price is up $1.76 or 2.52%.
Natural Gas price trades higher on storage data, European plant outages, hotter weather
- Natural Gas pares its early gains on Friday as the US Dollar finds a floor after its recent steep decline.
- The latest driver is the news that the Groningen Gas plant in the Netherlands will probably close in October 2023, a year earlier than previously thought.
- A weaker US Dollar following the ECB’s hawkish hike on Thursday adds further fuel to XNG/USD’s rally.
Natural Gas price has shot up over 14% so far this week, propelled by lower-than-expected storage data, hotter weather conditions (Gas is used for cooling as well as heating), reports of high-profile outages in Europe, a substantially weaker US Dollar, and expectations of keener demand from Asia.
Baker Hughes oil rig down -4 at 552
- Baker Hughes rig count for the current week
The weekly Baker Hughes rig count
- Total rigs, down -8 at 687
- Oil rigs -4 at 552
- Natural gas -5 at 130
EU News
European equity close: French stocks lead a strong finish to the week
- Closing changes for the main European bourses
On the day:
- Stoxx 600 +0.7%
- German DAX +0.5%
- FTSE 100 +0.2%
- French CAC +1.5%
- Italy MIB +0.7%
- Spain IBEX +0.9%
On the week:
- Stoxx 600 +1.6%
- German DAX +0.45%
- FTSE 100 +1.1%
- French CAC +2.6%
- Spain IBEX +2.7%
Eurozone May CPI +6.1% vs +6.1% y/y prelim
- Latest data released by Eurostat – 16 June 2023
- Prior +7.0%
- Core CPI +5.3% vs +5.3% y/y prelim
- Prior +5.6%
ECB’s Holzmann: If things continue as they are, further action will be needed beyond July
- Remarks by ECB policymaker, Robert Holzmann
- Has no view on what should happen with rates beyond July
- But if things continue as they are, then further action will be needed
- Key question will be how persistent core inflation is
Bundesbank: German economy to shrink by 0.3% in 2023
- Remarks by the German central bank
- Economy to expand by 1.2% in 2024 and 1.3% in 2025 respectively
- German inflation seen at 6.0% in 2023, 3.1% in 2024, 2.7% in 2025
- Inflation risks are tilted to the upside
- Economy is set to recover only arduously but inflation at last is easing
JP Morgan expects the European Central Bank to hike to 4% in September
JP Morgan expect further rate hikes from the European Central Bank. They had already been tipping a +25bp in July. Add in a +25bp in September now.
Goldman Sachs also now expects ECB to hike rates again in September
- The chorus continues to grow for one more rate hike beyond the summer
The new forecast by Goldman Sachs sees them expecting the ECB to lift rates to 4.00%
BNP Paribas now sees ECB hiking in September as well
- Everyone is adding the expectation of one more rate hike by the ECB
BNP Paribas now sees the terminal rate at 4.00%, up from its previous forecast of 3.75%, and that view is also shared by UniCredit as they also lift their peak rate forecast for the ECB to 4.00% as well.
ECB’s Wunsch: Could hike again in September unless core inflation drops substantially
- Remarks by ECB policymaker, Pierre Wunsch
- Core inflation holding around 5% could require rate hike in September, possibly beyond
- Not yet seeing beginning of slowdown in core inflation
ECB’s Centeno: We must act to control inflation
- Remarks by ECB policymaker, Mario Centeno
- Policy is on restrictive terrain, it isn’t a support to growth
- Rates should remain in restrictive territory for some more time after the summer
ECB’s Nagel: We may need to keep raising rates after the summer break
- Nagel hints at a September rate hike
- Still a long way to go to reach inflation target
Other News
NATO defence ministers’ meeting fails to approve first defense plans since Cold war
- The first failure to approve defence plans since the end of the Cold War
Reuters sources report on some friction at NATO.
Meanwhile, Stoltenberg said they’re working towards creating a Ukraine-NATO council.
At this point, it should be clear to everyone this is a proxy war between Russia and NATO, only using Ukrainian soldiers. There’s no telling how it ends.
UBS lowered its forecast for China’s 2023 economic growth to 5.2%, from 5.7% previously
The updated UBS forecasts for China GDP come via Bloomberg, gat5ed.
UBS lowered its forecast for China’s gross domestic product growth this year to 5.2%
- their previous projection was 5.7%
- lowered their 2024 forecast to 5% from 5.2%
Citing reasons including:
- “the weakening of property rebound, slowing momentum of consumption recovery, the falling of exports, and anemic industrial production” so far in Q2
- Analysts at the bank expect ongoing stimulus announcements which should include lowering some taxes and fees, entry barriers, transaction costs, and arrears for enterprises. Such steps are being urged by the State Council.
BOJ’s Ueda: we have not changed policy because Japan’s inflation is not sustainable
- Further remarks by Ueda
- It is true that the yen has weakened recently
- It is possible that inflation will fall under 2% in the future
- Expects inflation to slow towards the middle of fiscal year 2023
- Japan economy still faces very high uncertainty
- Will update progress of the review of past policies starting next month
- Need to pay attention to FX and financial markets
Cryptocurrency News
Binance withdraws from the Netherlands amidst SEC lawsuit
- Binance shut doors to new users living in the Netherlands and starting July 17, existing Dutch users will only be able to withdraw assets.
- Binance continues working towards full compliance with the EU’s MiCA for crypto regulation.
- The SEC vs. Binance lawsuit continues with a former SEC official predicting a settlement.
Binance, the largest crypto exchange by volume, withdrew from the Dutch market as it failed to get a license to operate in the Netherlands. The exchange is currently engaged in a legal battle with the US Securities and Exchange Commission (SEC).
As of July 17, Dutch residents will have access to withdrawals and no further services on Binance’s platform. The exchange explains that it is focused on the process of becoming fully compliant with the European Union’s rules on cryptocurrencies (MiCA).
Binance leaves Netherlands after failure to register
The crypto exchange is currently embroiled in a legal battle with the SEC, fighting allegations of securities laws violations. To find out more about the lawsuit’s update, check this post.
Upon its failure to register with the Dutch regulator, Binance announced its exit from the Netherlands.
The exchange needs a Virtual Asset Service Provider (VASP) license to attest that its platform meets Anti-Money Laundering (AML) guidelines. Binance’s announcement reveals that no new users residing in the Netherlands will be accepted to the exchange, effective June 16. Starting July 17, 2023, existing Dutch resident users will be able to withdraw their assets from the platform, without access to other services like deposits and trade.
Binance’s announcement reads:
We encourage those [who are waiting to withdraw assets] users to take appropriate action by withdrawing assets from their accounts.
Cardano, MATIC and Solana attempt to recover amidst exchange delisting and SEC crackdown
- Cardano, Polygon’s token MATIC and Solana were delisted by Bakkt crypto exchange on the grounds of unclear regulation.
- The exchange delisted these tokens amidst the SEC’s lawsuit against crypto exchange platforms, Binance and Coinbase.
- ADA, MATIC and SOL prices attempted to recover amidst the delisting and shifting sentiment among market participants.
Bakkt, a digital assets platform that runs an exchange and a crypto custodian service, delisted Cardano (ADA), Polygon (MATIC) and Solana (SOL) in light of recent events and the Securities and Exchange Commission’s (SEC) crackdown on cryptocurrencies.
The three altcoins are attempting recoveries from the recent decline in their prices.
Crypto exchange delists ADA, MATIC and SOL
The SEC’s regulatory clampdown on assets like ADA, MATIC and SOL resulted in the delisting of these tokens across exchanges and social trading platforms. Bakkt announced the delisting of ADA, MATIC and SOL on the grounds of unclear supervision.
The three tokens were delisted alongside Algorand (ALGO) and Decentraland (MANA). In the month of May, Bakkt delisted 25 cryptocurrencies and currently offers Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Shiba Inu (SHIB), Dogecoin (DOGE) and USDC (USD Coin).
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