Round up of today's market news *

North American News

US major indices make a push higher into the close

Dow Industrial Average leads the way for the major indices

It wasn’t a huge day but the major indices are closed near their session highs. The gains were led by the Dow industrial average which saw an increase by 0.63%.

The final numbers show:

Dow industrial average rose 211.35 points or 0.63% at 33946.24
S&P index rose 10.75 points or 0.24% at 4409.71
NASDAQ index rose 24.76 points or 0.18% at 13685.47
Russell 2000 outpaced the top3 with a gain of 30.58 points or 1.64% at 1895.25

Yields moving lower helped to limit the declines.

2 year yields fell -6.1 basis points
5 year yields fell -9.0 basis points
10 year yields fell 4.0 basis points

Atlanta Fed GDPNow see Q2 growth at 2.3% up from 2.1%

The Atlanta Fed GDP model sees higher growth

The Atlanta Fed GDPNow estimate for Q2 growth seen at 2.3% in their latest estimate.That is up from 2.1% on July 6. In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2023 is 2.3 percent on July 10, up from 2.1 percent on July 6.After recent releases from the US Bureau of Economic Analysis, the US Bureau of Labor Statistics, and the US Census Bureau, the nowcast of second-quarter real gross private domestic investment growth increased from 9.6 percent to 10.5 percent.

New York Fed one year ahead expected inflation at the lowest level since April 2021

New York Fed inflation for June

One year ahead inflation at 3.8% in June versus 4.1% in May. The lowest level since April 2021
3 year ahead expected inflation unchanged at 3% in June
5 year ahead expected inflation at 3% in June versus 2.7% in May
June home price expectations rise to 2.9% in June versus 2.6% in May. This is the highest since July 2022
expectations for gasoline prices fell in June
perceptions of credit Access improved in June
households view on personal financial situations improved in June

US wholesale inventories for May 0.0% versus -0.1% expected

Wholesale inventories and wholesale sales for May 2023

Wholesale sales:

Prior month inventories -0.1%
May 2023 wholesale sales, excluding manufacturers’ sales branches and offices, were $650.2 billion.
Wholesale sales decreased 0.2% from the revised April 2023 level.
Sales were down 4.0% from the revised May 2022 level.
The sales change from March 2023 to April 2023 was virtually unchanged, revised from a preliminary estimate of a 0.2% increase.

Inventories:

Total inventories of merchant wholesalers (excluding manufacturers’ sales branches and offices) were $913.7 billion at the end of May 2023, virtually unchanged from the revised April 2023 level.
Total inventories were up 3.7% from the revised May 2022 level.
The inventories change from April 2023 to May 2023 was virtually unchanged, revised from a preliminary estimate of a 0.1% decrease.

Inventory/Sales Ratio:

The May 2023 inventories/sales ratio for merchant wholesalers (excluding manufacturers’ sales branches and offices) was 1.41.
The May 2022 ratio was 1.30, indicating a higher amount of inventory relative to sales in May 2023.

Mannheim June used car price index falls by 4.2%.

The decline is one of the largest in history, and the largest since the start of their pandemic
The Mannheim June used-vehicle price index drops:
Wholesale used-vehicle prices decreased 4.2% in June from May, making the Manheim Used Vehicle Value Index (MUVVI) decline to 215.1, down 10.3% from a year ago.
The 4.2% drop in the MUVVI is among the largest declines in the index’s history and the largest since the start of the pandemic.
Year-over-year decline in June was 2.7% drop from May’s annualized 7.6% decline.
The non-adjusted price change in June decreased by 3.8% compared to May, moving the unadjusted average price down 10.1% year over year.
Over the last four weeks, the Three-Year-Old Index declined an aggregate 3.8%.
The average daily sales conversion rate declined to 52.2%, which was below normal for the time of year. For context, the daily sales conversion rate averaged 60.7% in June 2019.
Major market segments saw seasonally adjusted prices that remained lower year over year in June.
Pickups and vans lost less than the industry, at 6.6% and 8.5%, respectively, while sports cars fared the worst at 14.8% year-over-year.
Used-vehicle retail sales in June were down 4.0% compared to May but saw the year-over-year comparison with 2022 improve.
Used retail sales are estimated to be down 6.0% year over year in June.
June’s total new-light-vehicle sales were up 19.9% year over year, with the same number of selling days as June 2022.
By volume, June new-vehicle sales were up 0.5% month over month.
Combined sales into large rental, commercial, and government fleets increased 45% year over year again in June.
The average price for rental risk units sold at auction in June was down 2.5% year over year. Rental risk prices were off by 4.5% compared to May.

Feds Mester: Fed will need to tighten somewhat further to lower inflation

Cleveland Fed Pres. Loretta Mester speaking
Fed will need to tighten somewhat further to lower inflation
Fed policy less restrictive compared to history.
Raising rates again will reduce risk of more action in future
Fed rate hike’s have been moderating economic activity
economy has proved stronger-than-expected.
Supply chain disruptions have eased.
Inflation stubbornly high. Installed progress on core prices.
Fed closer to end of tightening campaign and then it’s a start.
Core inflation gains to high, and to broad-based.
Wages pressures remain too high to get inflation back to 2%.
Demand for labor still outstripping supply.
Business leaders fears of a recession have declined
There’s no decision yet on the need for a July rate hike, more data is needed.
The outlook for the terminal federal funds rate matches, or is just above, June’s median forecast.
Housing inflation is expected to ease, but it’s still an upside rise for price pressures.
There was a preference for a rate hike in June, but there’s an understanding as to why there wasn’t any action taken.
There’s full awareness that the economy’s performance could surprise officials.
The economy would be better off if the federal funds rate goes higher.
There aren’t signs of excessive credit tightening.

Feds Barr: Inflation is far too high

Vice Chair Barr adds comments on the economy

Fed’s Barr spoke earlier about banking regulation and is now making comments about the economy:

Inflation is far too high
We are quite attentive to bringing inflation down to target.
We have made a lot of progress on inflation.
Recent moves on rates are part of process to move in a careful way.
We are close, but still have a bit of work to do

Feds Daly: US economic momentum continues to surprise

San Francisco Fed Pres. Daly
US economic momentum continues to surprise
There is more we need to do to raise rates
We need to be data dependent to make policy
Risks have become more balanced

US CPI the main event this week

There will also be two key central bank decisions coming up

There has not been any bigger data than CPI releases in the past few months and the mother of all of that is the US CPI. That will be released later this week on Wednesday, 12 July. The estimates are showing that headline annual inflation is expected to decline further in June to 3.1% from 4.0% in May:

However, core annual inflation is estimated to keep on the higher side at 5.0% in June – down slightly from the 5.3% in the month before.

US employment trends for June 114.31 versus 116.15 last month

US employment trends for June 2023
Prior month 116.15 revised to 115.53
US employment trends for June 2023 comes in at 114.31

Fed’s Barr: Plans to propose several changes to bank capital rules

Fed’s Vice Chair and head of banking supervision at the Fed speaking in Washington

Fed’s Barr (who is in charge of banking supervision at the Fed) is on the wires speaking about regulation

The existing capital framework is sound, but there are plans to build on those requirements.
In the coming months, plans to propose several changes to bank capital rules.
The need for regulators to focus on bank resilience broadly has been reinforced by recent bank failures.
There is a recommendation that enhanced capital rules should apply to banks with $100 billion or more assets.
Consistency with standards adopted by the International Basel Committee should be maintained in risk-based capital rules.
The proposed changes would increase capital requirements overall, but principally for the largest, most complex banks.
Fundamental changes to the global systemic bank surcharge or countercyclical capital buffer are not being considered.
Banks needing to raise capital could do so in less than two years with retained earnings, while still maintaining dividends.
It is stated that most banks currently have enough capital to meet proposed new requirements.

US consumer credit increases by $7.24 billion versus estimate of $20.25 billion

Consumer credit for May 2023
Total consumer credit in the US rose by $7.24 billion in May 2023, a figure considerably below market expectations of a $20.25 billion increase.
This was the smallest monthly gain in consumer credit since November 2020.
Revolving credit, typically credit cards, increased by 8.2%, which is a drop from the 13.8% increase in the previous month.
Non-revolving credit, generally auto and student loans, fell by 0.4%, following a downwardly revised 2% increase in the prior month.

Feds Bostic: inflation is too high, not sustainable

Feds Bostic speaks at Chamber of Commerce event in Georgia
In many regards, US is still in a pandemic economy
A lot of the strength is due to pandemic support.
Inflation is too high, not sustainable.
Current inflation is not due to excessive risk-taking, but the pandemic response.
Trajectory on inflation right now is “in the right direction”, and Fed will ensure that continues
Recession is not the baseline outlook
The biggest risk is not moving inflation back to target; all Fed is in consensus on that view
Right now policy is clearly in restrictive territory. Fed can be patient
The economy is starting to slow down with job growth slowing down and inflation coming down, among other signs
Fed still is time to let restrictiveness play out, but would not be comfortable if inflation stalls or expectations rise
Right now expectations are pretty well anchored
This is a hard judgment call.
There is no expectation of needing to rise rates any further from here.
The path forward is no longer obvious, and inflation reduction will take longer than expected.
Even with a 25 BP move at the next meeting, it will still require patience from there; there are no expectations for dramatic sea changes in inflation.
The underlying data on inflation is telling a very positive story.
It’s a “pretty straightforward story” that inflation could return to 2% without rates rising further.
Businesses are expecting wage growth to normalize; wages are considered a lagging indicator of price setting.
There is a lot of evidence that services spending has peaked.

Canada building permits for May up 10.5% versus 7.0% expected

Canada building permits for May 2023
Prior month -21.0% revised from -18.8%
The total monthly value of building permits in Canada increased by 10.5% to $10.5 billion in May.
On a constant dollar basis (2012=100), the total value of building permits increased by 10.0% to $6.2 billion.
Residential permits rose by 8.5% to $6.8 billion in May, with Ontario contributing 45.8% of Canada’s residential permit values.
Ontario’s residential permits increased by 16.3% month over month to $3.1 billion, led by multi-dwelling permits issued in urban areas.
Other provinces, including New Brunswick, Quebec, Alberta, and British Columbia, also saw growth in residential permits.
Permits for 3,800 new residential units were issued for single-family homes in May, compared with permits for 17,700 new dwellings in multi-unit buildings.
Non-residential permits increased by 14.2% to $3.7 billion in May, primarily driven by commercial projects.
Commercial permits surged by 45.8% or $703.4 million, offsetting losses in the institutional component.

Commodities

Gold juggles above $1,920 as focus shifts to US Inflation

Gold price is consolidating above $1,920.00 ahead of US inflation data.
The overall risk profile is still negative as the Fed is going to resume its policy-tightening spell.
Gold price is auctioning in an Ascending Triangle chart pattern.

Gold is demonstrating a non-directional performance after correcting from a weekly high of $1,935.00 in the London session. The precious metal has turned topsy-turvy as investors are shifting their focus towards the United States Consumer Price Index (CPI) after the impact of the Nonfarm Payrolls (NFP) report.

Analysts at Well Fargo expect a surprisingly resilient labor market has helped to keep the United States economy expanding at a moderate pace despite continued fears about a recession. However, even amid more forthcoming labor supply and gradually cooling labor demand, the weight of the evidence still suggests that the labor market remains too tight to be consistent with 2% inflation.

Silver struggles for a firm intraday direction, holds steady above $23.00

Silver oscillates in a narrow trading range above the $23.00 mark on Monday.
Mixed oscillators on hourly/daily charts warrant caution for aggressive traders.
A sustained break below the $22.65-70 area might negate any positive outlook.

Silver kicks off the new week on a subdued note, albeit manages to hold its neck above the $23.00 round-figure mark through the early European session. The mixed technical setup, meanwhile, warrants some caution before placing aggressive directional bets.

The recent recovery from the vicinity of the $22.00 mark, or the multi-month low touched in June, has been along an upward-sloping channel. Furthermore, last week’s pullback from the $23.30 confluence – comprising the 50% Fibonacci retracement level of the downfall from the June peak and the 200-period Simple Moving Average (SMA) on the 4-hour chart – stalled near the lower end of the said channel. Moreover, positive oscillators on hourly charts favour bullish traders.

US crude oil futures settle at $72.99

Down $0.87 or 1.18%

US crude futures settle at $72.99. That’s down $0.87 or -1.18%. The high for the day reached $74.15. The low was at $72.67. Looking at the daily chart, the price high did extend above its 100-day moving average at $73.78, but could not sustain momentum. Closing back below the 100 day moving average tilts the blast back to the downside.

EU News

Major European indices close higher on the day

Gains are led by the German DAX and France’s CAC

The major European indices closed higher on the day.

German DAX, +0.45%
Frances CAC, +0.45%
UK’s FTSE 100, +0.23%
Spain’s Ibex, +0.04%
Italy’s FTSE MIB, +0.28%

Eurozone July Sentix investor confidence -22.5 vs -18.0 expected

Latest data released by Sentix – 10 July 2023
Prior -17.0

SNB total sight deposits w.e. 7 July CHF 486.6 bn vs CHF 491.9 bn prior

Latest data released by the SNB – 10 July 2023
Domestic sight deposits CHF 476.0 bn vs CHF 480.2 bn prior

BOE’s Bailey: UK inflation is unacceptably high, but expected to decrease significantly

BOE’s Bailey comments ahead of his Mansion Speech later today
The current preoccupation is inflation.
Inflation is unacceptably high.
The aim is to bring inflation down to the 2% target.
Headline inflation is expected to decrease significantly over the rest of the year.
Enhanced digitalization should not be used significantly to shift the mix of commercial bank and central bank retail money towards the latter.
The level of economic activity has not managed to grow beyond its pre-pandemic level on a consistent basis.
The UK economy has shown unexpected resilience in other ways.
Commitment to physical cash is not altered by work on retail Central Bank Digital Currency (CBDC).
Both price and wage increases at current rates are inconsistent with the inflation target.
It’s crucial to see the job through.
The Monetary Policy Committee (MPC) is monitoring developments in the labour market, wage growth, and services price inflation.
The main motivation for a retail CBDC would be to ensure the public has central bank money for everyday use.
It’s important to see the job through.
Bitcoin-type cryptocurrency is best seen as extremely speculative assets.
Bank resolution strategies must avoid uncertainty over what will happen to customers’ money.

Other News

China’s Xi pledges to continue working with Russia to develop strategic partnership

This comes after his meeting with Russian upper house speaker, Valentina Matviyenko, in Beijing

This comes just days after Yellen’s meeting with top Chinese officials and for Xi to make such a pledge, is basically a bit of a slap in the face to the US. Xi is saying that China will continue working with Russia to develop a “comprehensive strategic partnership of cooperation”.

BOJ raises economic assessment for 3 of Japan’s 9 regions in latest Sakura report

The other 6 regions see their previous economic assessment maintained

Here’s the breakdown:

China says agrees to keep high-level exchanges with US after Yellen visit

Some remarks by China’s finance ministry after US Treasury secretary Yellen’s visit to Beijing last week
Calls on US to take practical actions in response to China’s major concerns
This relates to economic sanctions and crackdowns
Reiterates concerns on lifting of tariffs on China and suppression of Chinese companies
Says China’s development is an opportunity, not a threat to the US
Agrees to keep high-level exchanges, all-level communications on economic matters

Cryptocurrency News

Hong Kong Monetary Authority former President compares virtual asset purchase to entering a casino

Ren Zhigang of the HKMA questioned whether the Hong Kong government is promoting virtual assets too actively.
Ren said that if retail traders buy cryptocurrencies because of the rising prices, it is akin to entering a casino.
The Hong Kong government works on the introduction of stablecoin regulation in 2024.

Ren Zhigang, former president of the Hong Kong Monetary Authority (HKMA), compared investing in virtual assets to entering a casino, striking a cautious note at a moment when the city is working on the development or a regulation framework for stablecoins.

In response to the former president’s thoughts on virtual assets and their promotion in Hong Kong, the Secretary for Financial Services and the Treasury explained that work on the introduction of stablecoin regulation is ongoing and will likely be completed next year.

Hong Kong to set policy for stablecoin

The Hong Kong government is working on the development of the stablecoin regulation, as reported by financial news site Anue.com. Hong Kong’s government has been working on welcoming cryptocurrency exchanges and business to the city, whose government has taken a pro-crypto stance and has introduced legislation that allows retail investors to trade crypto assets.

In this context, Ren said that the government’s promotion of virtual assets may be going too far. He said,

“If you buy virtual assets because of rising prices, you might as well enter a casino.”

In response, Xu Zhengyu, Secretary for Financial Services and the Treasury said that the financial industry needs to take the lead in cryptocurrency regulation and development in the future.

Dogecoin price levitates around 26.5% Fib as court deliberates potency of evidence in Elon Musk $258B case

Dogecoin price continues to consolidate around the $0.065 range, with momentum indicators suggesting a relaxed market.
It comes amid an ongoing $258 billion lawsuit against Elon Musk on racketeering charges around the king meme coin.
As Musk’s camp deems the case a “waste of time,” DOGE hovers around the 23.6% Fibonacci retracement level, odds favor a return to the 50% Fib at $0.0793.

Dogecoin (DOGE) price has displayed a lack of volatility through the weekend, consolidating within a tight range over the past three days. The subtleness comes amid an ongoing lawsuit against the DOGE founder and Twitter CEO Elon Musk.

Dogecoin price relaxed as DOGE father faces lawsuit

Dogecoin (DOGE) price remains steady around $0.065, the same range where the price has stagnated since Friday, July 7.Meanwhile, the DOGE camp continues to observe developments in the lawsuit against Elon Musk, who allegedly ran an extortion scheme using the DOGE token.

Evan Spencer, the plaintiff representing the DOGE community, accuses Musk of owning most of the token’s supply, Musk’s legal representatives contest for a dismissal of the case, citing frivolity.

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Round up of today’s market news

ByBilals Tech