North American News
US used vehicle prices continued to fall in the first half of June
- Wholesale used vehicle prices fell 3.2% in the first 15 days of June, according to Manheim
US used cards have been a big source of inflation in the past two CPI reports but that is set to reverse in the months ahead. The official data trails wholesale data by about two months and you can see the bounce here, followed by a reversal lower.
The latest data shows a decrease of 3.2% in the first 15 days of June, compared to May. That takes the index to a level 9.4% below June 2022.
US June NAHB housing market index 55 vs 51 expected
- The latest survey from US home builders
- Prior was 50
- Current single family home sales 61 versus 56 in May
- home sales over next 6 months 62 versus 57 in May
- index of prospective buyers versus 33 in May
ICYMI – Fed’s Goolsbee say FOMC is pausing for now to go scope out economic developments
Federal Reserve Bank of Chicago President Austan Goolsbee spoke in an interview late on Friday in an interview on US National Public Radio.
Goolsbee tends towards the less hawkish of the Federal Open Market Committee (FOMC) spectrum. His comments were not overtly dovish, he leaned towards further rate hikes and data dependence. Remarks:
- “There are conflicting pieces of evidence coming in on the economy: are we too hot and need more, have we done enough by raising the interest rate five full percentage points over the last year?”
- “We just going to have play it by ear, I guess,”
- “For me, the forecast is pretty benign, and the question is, are we on that golden path, or not,” (re cooling inflation without starting a substantial recession).
More specifically on the FOMC on-hold rate decisions at the June meeting last week:
- “I think of it as a reconnaissance mission, pausing now to go scope it out before charging up the hill another time,”
Goldman Sachs says US inflation will not fall as quickly as markets are currently pricing
A note from the investment bank issued on Friday. In it GS says:
- “Although we expect further declines in inflation going forward, markets appear considerably more optimistic than we are about the pace of cooling,”
- says investors are not taking note of the potential for “delayed-onset inflation” in sectors such as healthcare
- says a sharp deceleration in US economic growth will only have a limited chance of more rapid easing of price pressures
Magnitude 6.1 earthquake hits Gulf of California region
- Gulf of California earthquake magnitude 6.1
Info on the quake via EMSC:
- 200 km ESE of La Paz, Mexico
- depth is 10km
No tsunami risk for US west coast issued.
Canada May producer price index -1.0% m/m vs -0.7% expected
- Canadian May pipeline price data
- Prior was -0.2% (revised to -0.6%)
- Canada IPPI year on year -6.3% versus -3.5% last month
- Raw material price index -4.9%% MoM versus +2.9% last month
- Raw material prices YoY -18.4% versus -10.8% last month
Commodities
Gold steady while US Dollar strengthens amidst closed US markets
- Gold price slips amid closed US markets and rising bond yields.
- US Dollar gains momentum ahead of potential July Fed rate hike.
- US-China diplomacy progresses; US housing index outperforms expectations.
Gold trades with minimal losses amidst a quiet US session due to a holiday in the United States (US). Therefore as US markets are closed, thin liquidity conditions drive price action. At the time of writing, XAU/USD is trading at $1952.52 after hitting a daily high of $1958.73.
Investors focus on yield performance and housing data while US-China diplomatic relations warm-up
European equities are trading negatively following a week that witnessed three major central banks delivering monetary policy decisions. The Federal Reserve (Fed) kept rates unchanged but foresaw peak rates at 5.6%, according to the dot-plot in the Summary of Economic Projections (SEP).Since then, officials have expressed the likelihood of raising rates at the July meeting, but the recent rally in US stocks portrays investors are not “buying” a more aggressive Fed.
Natural Gas price continues rising after 17% surge in the previous week
- Natural Gas continues its rally after one of the most positive weeks in 2023, in which it witnessed a 17% rally.
- Gas price rises as concerns linger regarding European supply adequately meeting demand after outages in Norway, the continent’s main Gas producer.
- Despite bullish fundamentals, the longer-term technical trend remains down as long as prices stay below $3.079.
Natural Gas price trades over 2% higher on Monday, building on last week’s strong rally. Despite US traders staying away from their desks for the Juneteenth national holiday, the bullish short-term uptrend extends.
Last week’s surge was one of the biggest of 2023, with Natural gas prices rising over 17%. The main catalyst was supply fears as several European Gas plants suffered longer-than-expected outages, leading to concerns of a repeat of last year’s supply crisis from Russia’s invasion of Ukraine – and unexpectedly hot weather increasing air-conditioning demand.
ICYMI – Russia close to striking long-term deals to sell substantial supplies of oil
The Wall Street Journal with the piece on Friday re Russia’s state energy giant Rosneft nearing securing agreements to long-term deals to sell substantial supplies of oil. locking in export revenue.
The Journal says that according to those acquainted with the sale, Rosneft Oil is organising the sales through a tender, a form of auction, to secure customers for millions of metric tonnes of crude and refined products over the upcoming year. The potential buyers are trading companies vying for the right to ship the oil to consumers in Russia’s top export destinations, including Turkey, China, and India. Some of the people claimed that there was a large demand for bids.
Head of Russian oil giant Rosneft says losing out on export share to other OPEC+ countries
Igor Sechin, heads up Russian energy major Rosneft. He spoke over the weekend at an economic forum.
Said that Russia only supplies half of its production to the world market, compared to several OPEC+ nations who were exporting up to 90% of their output:
- “That puts our country in a less advantageous position under the current mechanism for assessing the impact and access to key markets,”
- “In this regard, it seems appropriate to monitor not only production quotas, but also oil export volumes, given the different sizes of domestic markets.”
Iran is shipping the most crude in almost five years
A catch-up with this Bloomberg piece on Iranian oil exports:
- Exports have surged to the highest level since US sanctions were re-imposed in 2018
- vast majority is flowing to China
Bloomberg cite various analysts:
- Crude oil shipments have doubled since last autumn to reach 1.6 million barrels a day in May
- Production has hit 2.9 million barrels a day, the highest since late 2018
EU News
European shares stumble to start the week, falling 1%
- A bit of the air let out of the market
Closing changes:
- Stoxx 600 -1.1%
- German DAX -1.0%
- French CAC -1.1%
- Italy MIB -0.4%
- Spain IBEX -0.7%
There was a drop at the open and then steady selling into the close.
France targets 10 billion euros in budget savings – minister
- France targets 10 billion euros in budget savings – minister
A French government spending review has identified 10 billion euros in budget savings that will be targetted in the coming years, Finance Minister Bruno Le Maire said on Monday.
Savings would come from public sector spending in the health sector, housing, various quasi-public bodies tasked with carrying out public policies and employment support measures.
UK 2-year Gilt yields rise to 5% for first time since 2008, up 7 basis points on day
- UK 2-year Gilt yields rise to 5% for first time since 2008, up 7 basis points on day
The squeeze on UK yields continues.
UK data – Rightmove House Prices for June 0.0% m/m (prior + 1.8%)
Data from the UK. Rightmove House Prices for June 2023
- for the y/y +1.1%, prior +1.5%
ECB’s Stournaras: A further decrease in inflation is expected
- Comments from the ECB Governing Council member
- Cannot exclude a further hike but we are data driven
- Keeping rates at terminal level ‘might be six months or a year’ depends on the data
- We are definitely close to the end of interest rate hikes
Berlin to sign agreement with Intel after chip plant talks
- Berlin to sign agreement with Intel after chip plant talks
The German government scheduled the signing of an agreement with Intel for 1245 GMT on Monday, capping off talks over a new chip-making complex on German soil.
SNB to raise rates a final 25 bps to 1.75%, but risk of higher peak – Reuters Poll
- The Swiss National Bank will raise interest rates by 25 basis points on June 22, defying market expectations for a larger move, according to economists polled by Reuters who said the bigger risk was rates will peak higher than they expect.
The Swiss National Bank will raise interest rates by 25 basis points on June 22, defying market expectations for a larger move, according to economists polled by Reuters who said the bigger risk was rates will peak higher than they expect.
An overwhelming majority of economists, 30 of 33, polled June 15-19 said the SNB will raise its key policy rate by 25 basis points to 1.75%, less than the 50 basis points it delivered in March
“We think the SNB will deliver another 25bp hike in June, with a risk for 50bp…and, while still data dependent, this is probably the last hike in this cycle,” noted Ruben Segura-Cayuela, head of Europe economics research at BofA
Spanish central bank raises 2023 GDP estimate to +2.3% from +1.6%
- Decent bump in growth for Spain
- 2024 seen at 2.2%
- 2025 seen at 2.1%
- Cuts 2023 inflation forecast to 3.2% from 3.7%
- Sees 2023 budget deficit at 3.8% of GDP from 4.8% in 2022
- Sees debt-to-GDP at 109.7% and easing to 108.0% by 2025
EU countries fail to find common ground on power market reforms
- Coal is one of the sticking points
European leaders failed today to hammer out a deal on electricity market reform and regulation. On the weekend, France’s energy minister said energy ministers could strike a deal today but talks will have to go on.
The aim to to halt the kind of price spikes that roiled the European economy last year. Plans are to create a system of “contracts for difference” and well as long-term electricity contracts in order to create price stability. One of the issues is that not all countries want the CFD scheme to be mandatory. Another one of the problems is that Sweden wants to continue subsidizing coal.
Other News
Goldman Sachs – reasons for slashing their China growth forecast
More from Goldman Sachs, citing as reasoning for their downgraded forecast:
- upcoming policy easing is unlikely to exceed those implemented in previous downturns
- Property and infrastructure stimulus will probably be “targeted and moderate” (GS cites shrinking population, elevated debt levels and President Xi calling for curbing property speculation)
- government may accelerate the issuance of local government special bonds, which are mainly used for infrastructure construction
- may also continue to ease property policies including lowering down-payment requirements, cutting mortgage interest rates and removing purchase restrictions in top-tier cities
- supporting industries considered as new growth drivers of the economy, such as high-end manufacturing and new energy vehicles … he impact on GDP growth is likely limited because these plans have already been in place for years
Blinken meets Xi during pivotal China trip to salvage frosty ties
- U.S. Secretary of State Antony Blinken met with Chinese President Xi Jinping on Monday, wrapping up a rare and pivotal trip to Beijing that aimed at ensuring the many disputes between the superpowers do not spiral into conflict.
U.S. Secretary of State Antony Blinken met with Chinese President Xi Jinping on Monday, wrapping up a rare and pivotal trip to Beijing that aimed at ensuring the many disputes between the superpowers do not spiral into conflict.
McDonald’s Japan hikes prices in city centres as costs bite
- The Japanese operator of McDonald’s restaurants said on Monday it would raise prices at 184 city centre branches, equivalent to about 6% of its 3,000 stores, to help absorb higher rents and labour costs.
The Japanese operator of McDonald’s restaurants said on Monday it would raise prices at 184 city centre branches, equivalent to about 6% of its 3,000 stores, to help absorb higher rents and labour costs.
Berkshire Hathaway adds to Japan trading company holdings
- Billionaire investor Warren Buffett’s Berkshire Hathaway said it added to stakes in Japan’s five biggest trading houses to beyond 8% on Monday, a move likely to highlight and add to the momentum driving Japan’s stock market to new heights.
Billionaire investor Warren Buffett’s Berkshire Hathaway said it added to stakes in Japan’s five biggest trading houses to beyond 8% on Monday, a move likely to highlight and add to the momentum driving Japan’s stock market to new heights.
North Korea says it will be “increasing the production of powerful nuclear weapons”
North Korea state media, Korean Central News Agency (KCNA) with the report:
- The Political Bureau of the party’s Central Committee called on “the national defense field to consistently adhere to the orientation of developing nuclear weapons and the line of bolstering up the nuclear force…by increasing the production of powerful nuclear weapons,”
The statement in the outlet came after the Workers’ Party of Korea ended a key meeting over the weekend.
Cryptocurrency News
Binance cancels UK registration amidst mounting regulatory hurdles
- The Financial Conduct Authority of the UK completed Binance’s request to cancel Binance Markets Limited’s (BML) registration with the agency.
- Mounting regulatory hurdles pushed Binance out of the Netherlands and Cyprus recently, the exchange continues to battle the US SEC lawsuit.
- BNB price nosedived in response to the news, dropping 3.4% to $243.40 over the weekend.
The UK’s Financial Conduct Authority (FCA) deregistered Binance Markets Limited (BML) and green-flagged Binance’s cancellation request for the entity. BML is a Binance subsidiary, and while its deregistration does not have a direct impact on the exchange’s operations, it adds to the mounting regulatory woes of the exchange.
UK watchdog’s website confirms Binance subsidiary exit
UK FCA, United Kingdom’s financial regulatory body, confirmed that Binance Markets Limited is not longer authorized to undertake any regulated activity in the nation.The exchange has previously made two voluntary exits, from Cyprus and the Netherlands.
Hinman document release to intensify competition between Ethereum and altcoins: J.P.Morgan
- Hinman papers’ release is a boost to Ethereum and could favor decentralization among altcoins.
- In a research report, experts at J.P.Morgan say that sufficiently decentralized networks like Ethereum are not securities, creating a regulatory gap.
- Experts say that the Hinman documents are likely to influence the direction of US congressional efforts to regulate crypto.
Hinman papers, the documents that contain internal messages and email communication between the Securities and Exchange Commission’s executives, were released to the public last week. As the crypto community digested the contents of the Hinman release, J.P.Morgan’s strategists published a research report cited by Coindesk explaining how Ethereum and its competitors could benefit from the release.
More cryptocurrencies would be inclined to be “sufficiently decentralized” like Ether and thus escape the SEC’s regulatory crackdown, the analysts say.
Hinman release favors Ethereum and altcoins
Strategists at J.P.Morgan digested the contents of Hinman papers that were released last week and concluded that the SEC does not consider “sufficiently decentralized” altcoins like Ethereum as securities.This opens up a regulatory gap, meaning that cryptocurrencies that compete with Ethereum are likely to escape the US financial regulator’s clampdown.
Follow our recently launched pages. Join our community and never miss a beat in the dynamic world of trading.
https://www.facebook.com/BilalsTechLtd
https://www.linkedin.com/company/bilals-tech/
