Round up of today's market news *

US Stock Market Experiences Another Dip in Trading

S&P and NASDAQ indices down for the fourth consecutive day

The major US stock indices have another down day. The S&P and NASDAQ indices are now down for four consecutive days. A snapshot of the closing levels shows:

Dow Industrial Average down -45.66 points or -0.12% at 37753.32
S&P index down -29.18 points or -0.58% at 5022.22
NASDAQ index down -181.88 points or -1.15% at 15683.37

The small-cap Russell 2000 also fell with a decline of -19.52 or -0.99% at 1947.94.

For the current week:

Dow Industrial Average is down -0.61%
S&P index is down -1.97%
NASDAQ index is down -3.04%

The small-cap Russell 2000 is down -2.757%

US sells 20-year bonds 4.818% vs 4.843% WI

Results of the $13 billion bond sale
Bid to cover 2.82 vs 2.79 prior

US MBA mortgage applications W.E. 12 April +3.3% vs +0.1% prior

Latest data from the Mortgage Bankers Association for the week ending 12 April 2024

Prior +0.1%
Market index 202.1 vs 195.7 prior
Purchase index 145.6 vs 138.7 prior
Refinance index 500.7 vs 498.3 prior
30-year mortgage rate 7.13% vs 7.01% prior

Feds beige book: Contacts expect inflation would hold steady at a slow pace

Feds Beige book for April 2024

The Fed’s Beige book for April has been released:

Economic Expansion: Activity expanded slightly overall since late February, with 10 out of 12 Districts reporting slight to modest growth.
Consumer Spending: There was a minimal overall increase in consumer spending, though the results were mixed across different districts and categories.
Discretionary Spending Weakness: Several reports highlighted a weakness in discretionary spending due to high price sensitivity among consumers.
Auto Spending: Improved inventories and dealer incentives notably boosted auto spending in some Districts, while sales remained sluggish elsewhere.
Tourism: Tourism activity modestly increased on average, though the extent varied significantly across reports.
Manufacturing: There was a slight decline in manufacturing activity, with only three Districts reporting growth.
Nonfinancial Services and Bank Lending: Nonfinancial services saw slight increases on average, while bank lending was roughly flat.
Construction and Real Estate: Residential construction and home sales showed some improvement on average, whereas nonresidential construction was flat and commercial real estate leasing declined slightly.
Economic Outlook: Contacts were cautiously optimistic about the future, on balance.

Below are the summarized highlights of employment from the report:

Overall Employment Growth: Employment grew at a slight pace, with nine Districts experiencing very slow to modest increases, while the remaining three reported no changes.
Labor Supply and Quality: Most Districts observed increases in labor supply and the quality of job applicants, improving the overall employment landscape.
Employee Retention and Reductions: Several Districts noted improved employee retention, though some also reported staff reductions at certain firms.
Persistent Shortages: Many Districts faced ongoing shortages of qualified applicants for specific roles such as machinists, trades workers, and hospitality workers.
Wage Growth: Wages grew moderately in eight Districts, while the others saw only slight to modest increases. It was noted that annual wage growth rates have returned to historical averages in multiple districts.
Future Expectations: The general expectation is that labor demand and supply will remain relatively stable, with modest job gains continuing and wage growth moderating back to pre-pandemic levels.

Below are the summarized highlights regarding prices from the report:

Modest Price Increases: Overall, price increases remained modest and consistent with the pace observed in the previous report.
Impact of Disruptions: Despite shipping delays caused by disruptions in the Red Sea and the collapse of Baltimore’s Key Bridge, these incidents have not led to widespread price increases.
Energy Prices: Six Districts reported moderate increases in energy prices, indicating some upward pressure in this sector.
Insurance Rate Hikes: Contacts in several Districts observed sharp increases in insurance rates for both businesses and homeowners.
Weaker Pricing Power: Many firms noted a significant weakening in their ability to pass on cost increases to consumers, which has led to reduced profit margins.
Strain on Nonprofits: Inflation has also strained nonprofit entities, with some reporting service reductions as a result.
Inflation Expectations: On balance, contacts expect inflation to remain steady at a slow pace, although some manufacturers in a few Districts see potential upside risks to near-term inflation, both in input and output prices.

Japan finance Minister Suzuki held bilateral meetings with Yellen

Two leaders discussed exchange-rate

Japan’s finance Minister Suzuki held bilateral meetings with us Treasury Secretary Yellen. At the meeting the two leaders:

agreed to communicate closely on FX
Discussed Ukraine a MDB and global taxation.
Will respond appropriately to excessive FX moves

Canada house prices climbed 5.6% in the past year – Teranet

Results of the Teranet-National Bank Canadian house price report

Prices up 0.2% m/m
Second consecutive monthly rise
Up 1.6% non-seasonally adjusted
Year-over-year prices rises in all 11 cities in the index, led by Calgary up 14.3% y/y

Gold price rises as investors digest Fed Powell’s hawkish guidance

Gold price edges higher even though the Fed’s “higher for longer” interest-rates stance offsets safe-haven demand.
Fed Powell supports keeping interest rates at high levels until there is confidence that inflation will ease to 2%.
The US warns about sanctions on Iran in response to their attack on Israel.

Gold rebounds to $2,400 in Wednesday’s early American session. The precious metal aims to recapture new all-time highs around $2,430 even though Federal Reserve Chair Jerome Powell emphasised maintaining the restrictive policy framework for a longer period. Powell and his colleagues seem to be leaning towards keeping interest rates higher for longer as inflation has remained stubborn and the labor demand remained strong.

Deutsche Bank hiked their forecast for gold as high as $2,600

Deutsche Bank announced revised forecasts for gold on Tuesday:

to reach $2,400 per ounce by the end of 2024
to reach $2,600 by the end of 2025

DB cite:

heightened investment inflows
escalating geopolitical tensions, particularly in the Middle East
central banks’ significant buying

Earlier this week Goldman Sachs upped their forecasts:

Goldman Sachs raises its year-end gold forecast to $2,700, from $2,300 previously

None of thee traditional factors adequately explain the velocity and scale of the gold price move so far this year

Goldman Sachs has updated its gold price forecast to $2,700 per ounce by year’s end.

GS says recent price rises are unrelated to the usual macroeconomic factors linked to gold, “real rates, growth expectations, and the dollar”

“None of those traditional factors adequately explain the velocity and scale of the gold price move so far this year.”

GS cite:

constant demand of central banks, including the People’s Bank of China (PBOC)
increase in retail demand from Chinese investors
uptick in the US gold demand, Wells Fargo estimating that Costco’s gold business was generating sales of up to $200 million monthly
gold’s demand as a safe haven might grow depending on the fed rate cuts that might happen, and the results of the US elections.

Crude oil futures settle at $82.69

Down $2.67 or -3.13%

The price of crude oil futures are settling at $82.69. The low price reached $82.55. The high price was $85.51.

Inventory data today showed a bigger build of 2.735M vs 1.373M estimate.

Weekly crude oil inventories rise 2.735M vs 1.373M build estimate

The weekly EIA oil inventory data

Crude oil matures 2.735M versus 1.373M estimate
Distilates -2.760M versus -0.283M estimate
Gasoline -1.154M versus -0.89M estimate
Cushing 0.033 million versus last week’s -0.17 million
refining utilization -0.2% versus expectations of +0.6%. Last week -0.3%
Weekly crude production 13.1 million versus 31 million last week

HSBC Brent crude oil forecasts remain at $82.5 per barrel for 2024, $76.50 for 2025

HSBC note the impact an escalation may not have

HSBC analysts in a note on oil, restating their Brent crude forecasts:

lack of supply disruptions and significant OPEC+ spare capacity is helping contain oil prices
“In our view, the muted price response shows that there was a fair degree of geopolitical risk already priced in”
market believes an escalation into a broader regional conflict is unlikely
but add the caveat: “Regional escalation cannot be ruled out, and as such we expect the current geopolitical risk premium from the Middle East conflict – around the mid-single digits – to persist”
if the crisis does escalate, it may not necessarily lead to supply disruptions
there is a high likelihood that OPEC+ dials back its supply cuts in Q3 this year given high prices

EU News

European major indices rebound higher in trading today

Spain’s Ibex rises 1%

A day after sharp declines of 1.4% or more, the major European indices have rebounded in trading today. A summary of the closing levels shows:

German DAX, +0.12%
France CAC, +0.62%
UK FTSE 100, +0.35%
Spain’s Ibex, +1.05%
Italy’s FTSE MIB, +0.72%

Eurozone March final CPI +2.4% vs +2.4% y/y prelim

Latest data released by Eurostat – 17 April 2024

Prior +2.6%
Core CPI +2.9% vs +2.9% y/y prelim
Prior +3.1%

UK March CPI +3.2% vs +3.1% y/y expected

Latest data released by ONS – 17 April 2024

Prior +3.4%
Core CPI +4.2% vs +4.1% y/y expected
Prior +4.5%

BOEs Bailey: I expect next month’s inflation number will show quite a strong drop

BOEs Bailey speaking

We are pretty much on track for where we thought we would be in February on inflation.
I expect next month’s inflation number will show quite a strong drop
The effect of the Mideast conflict is less than feared

BOE’s Greeene: We’re closer to target than just a few months ago

Comments from Greene

News has been encouraging
Achieving inflation target has been a bumpy ride, it was always going to be and that last mile is the hardest work
What’s going on in the Middle East does pose a risk

ECBs Nagel: Price pressure in the euro zone could continue for some time

ECBs Nagel is speaking

ECBs Nagel is speaking and says:

Price pressure in euro zone could continue for some time.
Is not completely clear if inflation rate will reach 4% target next year and stay at that level.
Expect slight growth in the German economy in 2024

ECBs Cipollone: Sees some signs of an economic recovery citing PMI data

ECB Cipollone speaking

We see some signs of economic recovery citing PMI data.
Expects for rest of year inflation at this level more or less.
Base effects are due to unwinding of cost-of-living measures.
We expect inflation resuming path to 2% next year, at target by mid-2025.
If incoming data in June and July confirm that confidence it will be appropriate to remove some restrictive measures imposed in 2023.
Middle East conflict’s impact on energy costs is a major risk.
As recovery unfolds we expect productivity to go up.

ICYMI – Deutsche Bank forecast 3 European Central Bank rate cuts in 2024

ECB interest rate projection from Deutsche Bank

Deutsche Bank has scaled back its expectations for ECB interest rate cuts in 2024 to three, from previously projecting five:

expect 3 25bp rate cuts this year
“We are updating our ECB baseline to a more gradual – and uncertain – easing cycle”

DB do expect 5 cuts in total, just later for the final 2:

“We retain the same baseline terminal rate, but three quarters later than in our previous view.”

Asia-Pacific-World News

PBOC sets USD/ CNY central rate at 7.1025 (vs. estimate at 7.2404)

PBOC CNY reference rate setting for the trading session ahead

PBOC injects 2bn via 7-day RR, sets rate at an unchanged 1.8%

2bn yuan of RRs mature today
thus net neutral on the day in OMOs

NZ statistics office owns up to inflation data release error

Some clarification to the hiccup earlier in the day

“This error is the responsibility of Stats NZ, there was no fault of the wire agencies. We apologize to all affected customers. The issue was caused by human error and Stats NZ is reviewing its processes to ensure it doesn’t happen again.”

RBNZ’s own inflation measure for Q1 2024 is +4.3% y/y (vs. prior +4.7%)

The sectoral factor model is the Reserve Bank of New Zealand’s own preferred inflation measure

The Bank on its own model:

We created the sectoral factor model. It estimates the common component of inflation in the CPI basket, the tradable basket, and the non-tradable basket, based upon separate factors for the tradable and non-tradable sectors. The data excludes GST.

New Zealand CPI response: ASB forecast first RBNZ rate cut in February 2025, from Nov 2024

Reserve Bank of New Zealand forecast rate cut

ASB response to the data earlier:

The RBNZ are likely to continue to hold higher for longer, as indeed ASB expect.

“Tradable” and “Non-tradable” inflation are terms used to describe different aspects of inflation based on the nature of the goods and services involved.

Tradable Inflation:
- Definition: Tradable inflation refers to inflation in goods and services that are traded internationally.
- Examples: Commodities like oil, metals, agricultural products, and manufactured goods like electronics and automobiles.
- Characteristics: Prices of tradable goods are often influenced by global market conditions, exchange rates, and international supply and demand dynamics. For instance, if the price of oil increases globally, it will lead to tradable inflation in countries that import oil.
- Impact: The inflation of tradable goods can be significant for countries that rely heavily on imports or exports. Changes in exchange rates can also have a substantial impact on tradable inflation.
Non-tradable Inflation:
- Definition: Non-tradable inflation refers to inflation in goods and services that are not internationally traded.
- Examples: Services like healthcare, education, and local utilities, as well as goods with high transportation costs relative to their value, or those that are typically consumed where they are produced.
- Characteristics: Prices of non-tradable goods and services are primarily influenced by domestic factors such as local wage levels, property rents, and domestic policies. These prices tend to be more stable compared to tradable goods, but can vary significantly from country to country.
- Impact: Non-tradable inflation is more directly controlled by domestic monetary and fiscal policies. It is less subject to external shocks but can be influenced by domestic factors like labor market conditions and local regulatory changes.

New Zealand Q1 CPI comes in at +4.0% y/y (vs. 4.0% expected)

New Zealand inflation data for the January – March quarter of 2024

New Zealand inflation data for the January – March quarter of 2024

New Zealand CPI

+0.6% q/q

expected 0.6%, prior +0.5%

4.0% y/y, lowest since 2021 and still way above RBNZ target

expected 4.0%, prior 4.7%

The non-tradeable component is +1.6% q/q and +5.8% y/y

Japan monthly visitors hit a record high in March, crosses 3 million for first time ever

Nothing like a weak yen and cherry blossom season to spur an influx of tourists

According to the Japan National Tourism Organisation, the number of foreign visitors for business and leisure rose to 3.08 million in March – up from 2.79 million in February. That saw the monthly visitors into the country exceed the 3 million mark for the first time. The figure also exceeds the previous high of 2.99 million set in July 2019, setting a record high.

Japan chief Cabinet secretary says closely watching FX moves, prepared for full measures

Remarks by Japan chief Cabinet secretary, Yoshimasa Hayashi

Important for currencies to move in a stable manner, reflecting fundamentals
Rapid FX moves are undesirable

Japan March exports +7.3% y/y (expected +7.0%)

A beat for exports, miss for imports

Japan trade data for March 2024

Exports to Asia +6.6% y/y
Exports to China +12.6% y/y
Exports to the US +8.5% y/y
Exports to the EU +3% y/y

Reuters April Tankan: Manufacturer’s Index fell to +9, from +10 in March

Reuters April Tankan report

Reuters April 2024 Tankan:

Manufacturer’s Index fell to +9, from +10 in March
Non-Manufacturer’s Index fell to 25, from +32 in March

Reuters report on the results highlights:

dragged down by cost-of-living pressures and shaky economic conditions in major market China
yen’s weakening to levels unseen since 1990 is lifting the cost of imports in a blow to household consumption,
the fall in the currency has boosted the value of exports, but the volume of shipments have not benefited as much

Bank of Korea Gov Rhee says ready to deploy measures to counter excessive FX moves

South Korean concern about the sliding KRW

The Bank of Korea is South Korea’s central bank. Governor Rhee:

recent FX moves excessive
ready to deploy measures to stabilize if volatility continues

Singapore Non-oil Domestic Exports (NODX) (March) -8.4% m/m (expected +4.5%)

A big miss for Singapore exports in March 2024

A big miss for Singapore exports in March 2024

-8.4% m/m
expected +4.5%
-20.7% y/y
expected -7.0%

Cryptocurrency News

Ethereum continues sideways move as long liquidations slow down

Ethereum validator queue increase shows that restaking boom may be attracting more investors.
Ethereum shows deflationary signs as its burn rate outpaces emissions.
Ethereum may continue trading sideways as bears seem to be running out of steam.

Ethereum continued a sideways movement on Wednesday as investors seemed to be waiting for an upward or downward price catalyst. Despite the price stagnancy, the ETH validator queue possibly fueled by the DeFi restaking boom rose sharply.

Daily digest market movers: validator queue, token burns, whale deposits

Ethereum’s price is yet to show signs of appreciation on Wednesday as the market is moving slowly. Here are key market movers for the number one altcoin:

Ethereum’s validator queue saw a sharp increase in April, growing more than 150% in the past month to reach 21,551 – its highest level since September 2023 – according to data from Validator Queue. Active validators within the network are also approaching the one million mark, growing from around 902,884 validators on January 1 to 984,375 on April 17.
The surge in validator interest can be attributed to the popularity of maximizing yields through Ethereum restaking. Made possible by Eigenlayer, users can earn additional rewards by using their staked ETH tokens to provide security to other protocols like bridges, oracles or rollups. In Q1, total restaked ETH grew by 36%, with over 4.3 million tokens restaked on Eigenlayer, according to CoinGecko. Liquid restaking protocols accounted for 2.28 million restaked ETH.
ETH burn rate is outpacing its emissions as more than 113,000 ETH were taken out of circulation in Q1, according to CoinGecko. The total number of ETH burned in Q1 was about 333,600 ETH compared to an emission of 270,500 ETH. This indicates that token burns are gradually making ETH deflationary despite not having a supply cap.

Bitcoin trades below the $60,000 level for the first time since March 5

Trades to a low of $59,672 so far

The price of bitcoin has moved below the 38.2% retracement of the 2024 trading range at $60,314 and has also moved below the $60,000 level for the first time since March 5. The low price has reached $59,672. The low price from March 5 came in at $59,313. That is the next target on the downside.

Looking at the daily chart, the 100-day moving average currently comes in at $56,618. The 50% midpoint of the 2024 trading range comes in at $56,150. Both of those levels would be targeted if the price can get below the March 5 low at $59,313.

Bitcoin price hangs in balance as bulls await hype involving BTC halving

Bitcoin price has tested $60,364 to $62,412 range, a crucial support zone, one too many times.
FOMO and hype about BTC halving remains down amid enhanced market risk linked to geopolitical tensions.
Bernstein report says ETF inflows will resume and Bitcoin bull market will continue after BTC halving.

Bitcoin is showing weakness despite the halving event being only three days out. The dismal BTC price action comes amid elevated risk levels in the market, causing traders to flee to the more traditional assets for safety.

Daily digest market movers: Bulls await hype involving Bitcoin halving

Bitcoin halving is expected on Saturday, April 20, a much-anticipated event that will cut miners’ block rewards to 3.125 BTC. Historically, prices soared about 1,000%, 200% and 600% in the first three post-halving periods. The events have also been associated with significant fluctuations in the BTC price. Although not a direct cause-and-effect relationship, these individual slashes have often preceded substantial bull runs in the Bitcoin market.

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Round up of today’s market news

ByBilals Tech

North American News