Round up of today's market news *

North American News

Dow Drops 411 Points as US Stocks Close Lower

NASDAQ index back below the 17,000 level

US Stock Indices Close Lower as Dow Plummets and NASDAQ Slips Below Milestone

Major US stock indices ended the day in the red, continuing a downward trend. The Dow Industrial Average, which closed at 40,003 on March 17, fell sharply over the past week, closing at 38,441 today. The NASDAQ, after reaching a record high above 17,000 yesterday, declined nearly 100 points (-0.58%), slipping below this significant milestone.

A summary of the closing levels shows:

Dow Industrial Average average -411.24 or -1.06% at 38441.83
S&P index -39.07 points or -0.74% at 5266.96
NASDAQ index -99.30 points or -0.58% at 16920.58.

The small-cap Russell 2000 fell -30.66 points or -1.48% at 2036.18

US treasury auctions $44B of 7-year notes at high yield of 4.65%

High-yield is above/below the WI level at the time of the auction

The U.S. Treasury 7 year note auction showed:

High-yield 4.65%
WI level at the time of the auction 4.637%
Tail: 1.3 basis points versus 6-auction average 0.5bps
Bid-to-cover: 2.43X versus 6-auction average 2.53x
Dealers: 17% versus 6-auction average 21.3%
Directs (a measure of domestic demand): 16.13% versus 6-auction average 17.6%
Indirects (a measure of international demand): 66.88% versus 6-auction average 66.9%

US May Dallas Fed services sector outlook -12.1 vs -10.6 prior

Survey results from the Dallas Fed

Prior was -10.6
Services sector revenue outlook +6.7 vs +0.3 prior
Wages +16.1 vs +14.2 prior

Truck transportation

Trucking is definitely in recession. Truck freight in both volume and price per mile is way down. Our business won’t recover until the industry recovers.

Warehousing and storage

We are seeing a little slowdown, and inflation doesn’t seem to moderate as much as we expected, so we are still seeing increases in input costs and services.

Publishing industries (except internet)

We see the impact of the high-interest-rate environment starting to impact our customers and customer prospects. Growth is declining, and new business inquiries have waned for key products and services.

Data processing, hosting and related services

Interest rates and inflation continue to dominate company decisions—our company and our clients and prospects. Costs are high, and budgets are super tight. Therefore, confident decision-making is more challenging for all. Our hiring is on hold while most of our clients continue with layoffs. We believe purchasing decisions will resume after the elections, but a lot depends on the geopolitical climate and unexpected events.

Credit intermediation and related activities

The rural economy and the regional economies are maintaining a steady pace. Sales tax rebates are down slightly for the month but up year to date. Prices for goods, supplies and services remain elevated, restraining consumer purchases and construction projects.
There’s continued uncertainty in general economic conditions andwith the Federal Reserve’s position on interest rates in light ofinflation and labor data.
Investment sales are remaining sticky, with a gap between seller expectations—the combination of buyer requirements and lender underwriting for new loans. On the refinancing side, loans that were 10 years in term can be refinanced if there was appreciable amortization. There are no delinquencies in our servicing portfolio of life insurance company loans.

Securities, commodity contracts, and other financial investments and related activities

Rain has helped, but job growth has slowed.
As a commercial real estate development company, our ability to raise capital for new projects has been greatly impacted by the current interest rate environment, and the value of existing assets has been significantly impaired. Currently, all levers are in the wrong direction for our underwriting of existing and operating assets and future developments. Rents are softening. Overall capital and financing costs have substantially increased. Materials and labor costs have stabilized but remained high.Operating expenses are up (including insurance,property taxes, property management, etc.), and cap rates have increased(due to interest rate increases). Equity returns have not decreased, unfortunately. Therefore, we are currently very far off from economically being able to make developments work. We have tried very hard to hold on to employees throughout the last two years of challenging times, but we are on the brink of having to make major staffing cuts if we are unable to find some relief from some or all of the above metrics. We have several (eight in total) development pipeline assets, which include fully entitled, fully designed (shovel-ready)multifamily and mixed-use projects that are permitted and ready to go.However, the carry cost is substantial, and the reality is that we will likely have to sell some to all of our pipeline assets at a discount, reduce staff and wait to start over once the economic environment improves and can support new development. Our outlook is that the current economic environment will cause many developers to shut down, and only those who can manage to scale back their businesses will survive to this point.Even though (in Texas) there is a still a largesupply-demand deficit for housing, there were many new starts in 2021–22 that are now completing and beginning to lease. Due to the unusual amount of supply coming online all at the same time, lease-up is slower than normal, and even though all the units will get absorbed (i.e., because the demand is still strong), it will be at a slower rate until all of the competing units are leased up. Once that happens, we believe there will be a two-to-three-year period of little to no new project starts, followed by a lack of supply in 2026–28 that will cause rents to spike and likely support the economics of new developments to resume. We hope that during the next two-to-three-year period, when the economics do not work for development, that materials and labor pricing will also fall, further helping the economics for development.

Real estate

Interest rates remain a concern for my clients.

Rental and leasing services

A sharp decrease in labor supply from immigrants would be a disaster for Texas businesses.
It’s an election year, so we would assume no one is going to allow the economy to go down. However, signs are mounting. After four months, we are flat compared to last year.

Professional, scientific and technical services

We have seen an increase in sales prospects, primarily through increased investment in marketing.
It seems the job market is under less pressure. We’re seeing a slight increase in the quantity and quality of candidates applying for jobs. We’re expecting a short downturn in business as we get close to the election. But hopefully that won’t last long. We’re excited about having some new people. They are much needed and will take some stress off the system.
This is the worst we’ve seen in the real estate market since the Great Recession.
Most investors are sitting on the sidelines until after the election or interest rates decrease.
Availability of financing for growth remains a concern. We expect there will be no change in rates until the fall. We are reworking several loans as well to help free up cash for the upcoming end of the federal contract award season.
We are getting the business, actually more of it than we can handle, but finding the right consultant with the appropriate experience and expertise has been the issue.
Our sales have been on the rise, and we’re thrilled that more organizations, both nonprofit and for-profit, are turning to us for their hiring needs. We recently introduced a new offering to work as an outsourced recruiting partner for teams needing extra support. This model has been popular because it saves companies money compared to the traditional per-position payment method. As long as unemployment remains fairly low and companies have a hard time finding really good talent, we will do well.
We have been in a rolling 15-month recession that is starting to brighten up slightly. Our real estate orders have continued to decrease this year, and that is an indicator that the market is pulling back dueto the unknown of where interest rates are headed.There is still a lot of money on the sidelines waiting to be deployed, but until the market can determine where the economy is headed, it will stay there.

Management of companies and enterprises

The pipeline for sales and upcoming transactions is low.

Administrative and support services

We are fairly certain that we will be closing our doors and releasing as many as 60 employees in the next few months.
Election-year unknowns are creating instability and disruption in our primary markets.
Interest rates and higher input costs seem to be the key drivers currently.
We shifted our real estate appraisal and consulting business strategy from lender-based clients due to a 50 percent decline inrevenue in 2023 due to the adverse impact of higher interest rates onlending. Now we are focused on public sector valuation projects such as airport lands, roadway extensions, etc. Also, we shifted our marketingfocus to private sector expert witness consulting.Both strategies are increasing revenue and the bottom line.

Ambulatory health care services

The business environment feels quite unstable currently. Service prices for support vendors and supplies continue to increase, while our ability to negotiate higher reimbursement rates from insurance companies continues to stall. Our urgent-care volume also continues to be softer than expected going back to March, which includes an earlier departureof seasonal flu and a reduction of overall COVID-19 testing.

Texas Retail Outlook Survey

Accommodation

It is difficult to determine where our business is headed. The month of May is softer, but it may be an isolated issue to us. We have significant construction in our area, which may be impacting our business levels. However, our information indicates that downtown in general is performing below last year.
We are steadily getting busier as business travel is increasing, though not as fast as we would like. The cost of doing business is still on the rise, and we have increased our pricing to match the cost, and we see that this will happen again within the next six months as well. We have had to increase wages moving forward to keep good personnel on staff.

Food services and drinking places

Our cost of goods is stable; however, wages continue to have upward pressures because employees are struggling to keep up with rising rents, rising groceries and rising interest rates.
Higher prices are frustrating our guests. Customer counts are down for that reason and because of the shift of office workers to their home offices. This has caused our lunches to soften and our happy hours to almost disappear. The discussion of eliminating tipping is worrying us. With prices already impacting guests’ wallets and psyche, it will really hurt if we eliminate tipping and raise prices even more.
Our struggle with back-to-office and business travel continues.The cost of goods sold continues to increase, albeit at a slightlyslower pace. Labor cost might be improving, but it’s too soon to know.

Merchant wholesalers, durable goods

The availability of long-term contracts and projects seems to be reducing as we move through 2024. Six months ago, we had many requests for quotes for large projects, which offered security for our growth. Currently, we are only seeing bids for small projects or single-service events.

Merchant wholesalers, nondurable goods

We have added some new business, so our company outlook has improved.However, the food-service market continues to be ambiguous.Industry discussions center on consumer spending. People like to eat out, and they are willing to eat out, but at a lower pace (fewer visits per month). Our customer sales volumes are unchanged, but I believe it’s because of higher sales prices (adjusted for inflated protein costs), not more meals served. That said, the industry believes frequency will increase as people make budget decisions to sacrifice in other areas.

Motor vehicle and parts dealers

Business just continues to remain very volatile, and it’s not just related to issues with the weather. We’ll have one day when it’s dead, and then the next day we can barely keep up. There are storms on the horizon. Margins are under attack. Used-vehicle departments are experiencing major challenges and significant declines in selling gross. New-vehicle inventories are too high, and the cost to carry is excessive, resulting in a negative impact to overall profitability.
We continue to be concerned about interest rates.
The major concern is the low margin on sales of new vehicles. We are becoming concerned about the ability to arrange financing for our customers on purchases of both new and used vehicles.
Vehicle demand continues to be strong at retail.

Non-store retailers

Inflation is getting pretty scary. We can’t make enough interest on our deposits to cover inflation. We are worried about how to keep increasing pay to our employees to offset inflation.

Richmond Fed May manufacturing index 0 versus -7 prior

May services and manufacturing data from the Richmond Fed

Prior month -7
Services index +3 vs -13 for last month
Manufacturing shipments +13 vs -10 last month

Other details:

Employment -6 versus -2 last month
Wages +11 versus +16 last month (lowest since 2020)
Prices paid 2.92 versus 2.79 last month
Prices received 1.63 versus 2.73 last month
New orders -6 versus -9 last month
Backlog of orders -19 versus -17 last month
Capacity utilization -7 versus -5 last month
Capital expenditures -3 versus 0 last month
Services expenditure -18 versus -8 last month

US MBA mortgage applications w.e. 24 May -5.7% vs +1.9% prior

Latest data from the Mortgage Bankers Association for the week ending 24 May 2024

Prior +1.9%
Market index 190.3 vs 201.9 prior
Purchase index 138.4 vs 140.0 prior
Refinance index 463.8 vs 536.9 prior
30-year mortgage rate 7.05% vs 7.01% prior

Highlights of the National trends from the Fed’s beige book for May 2024

Fed’s Beige Book from May 2024

The Fed’s Beige Book is an anecdotal review of the US economy.This month’s beige book was paid by the Dallas Fed. Perusing the comments, the overall view is indicative of a slowing in the economy. Price rises are starting to see come pushback from consumers, with some discounting. Labor is growing slightly.

Overall Economic Activity

National economic activity expanded from early April to mid-May, with varying conditions across industries and Districts.
Most Districts reported slight or modest growth; two noted no change.
Retail spending was flat to slightly up, with lower discretionary spending and heightened price sensitivity.
Auto sales were roughly flat, with some manufacturers offering incentives.
Travel and tourism strengthened, but hospitality outlooks for summer were mixed.
Nonfinancial services demand rose; transportation services varied.
Solid demand for nonprofit and community services; manufacturing was flat to up, with two Districts reporting declines.
Tight credit standards and high interest rates constrained lending growth.
Housing demand rose modestly; single-family construction increased despite rising rates impacting sales.
Commercial real estate conditions softened.
Stable energy activity; mixed agricultural reports with easing drought conditions but concerns over farm finances.
Overall outlooks grew more pessimistic due to rising uncertainty and greater downside risks.

Labor Markets

Employment rose slightly overall, with eight Districts reporting modest job gains and four reporting no change.
Improved labor availability, though some shortages remained in select industries.
Decreased employee turnover; increased employer bargaining power.
Mixed hiring plans, with some Districts expecting modest job gains and others noting a pullback due to weaker business demand and economic uncertainty.
Wage growth remained moderate, with some Districts reporting modest increases and normalization to pre-pandemic levels.

Prices

Prices increased modestly.economic activity expanded from early April to mid-May, with varying conditions across industries and Districts.
Consumer pushback against price increases led to smaller profit margins.
Retailers offered discounts to entice customers.discretionary spending and heightened price sensitivity.
Continued increase in input costs, particularly insurance; some noted price declines in certain construction materials and manufacturing raw materials.
Expected modest price growth in the near term.

Highlights by Federal Reserve District

Boston: Flat economic activity; modest price increases; slow-to-moderate wage growth; weakened real estate activity; cautious optimism.
New York: Slight economic growth; solid labor market; slight consumer spending increase; solid housing market with low inventory; modest selling price increases.
Philadelphia: Slight business activity growth; slight employment increase; modest wage and price inflation; slight growth in existing home sales; positive overall outlook.
Cleveland: Slight business activity increase; slower growth due to higher interest rates; modest decline in consumer spending; stabilized wages, input costs, and selling prices.
Richmond: Modest economic growth; moderate consumer spending; increased import activity; no change in manufacturing and nonfinancial services demand.
Atlanta: Slight economic growth; stabilized labor markets; eased wage pressures; healthy consumer demand; strong tourism; mixed commercial real estate conditions.
Chicago: Slight economic growth; modest employment and construction activity; slight increase in business and consumer spending; moderate price and wage increases; tightened financial conditions.
St. Louis: Slight economic growth; slightly pessimistic outlook.
Minneapolis: Slight economic growth; softened labor demand; eased wage pressures; increased consumer spending; slightly improved commercial and residential construction.
Kansas City: Moderate economic expansion; moderate household spending; modest job gains; slightly increased prices.
Dallas: Flat to slightly increased economic activity; growth in manufacturing, banking, and energy; flat nonfinancial services activity; slight decline in retail sales.
San Francisco: Largely unchanged economic activity and employment levels; slight price, wage, and retail sales growth; weakened services and residential real estate activity; stable commercial real estate and financial sector conditions; slight increase in demand for manufactured products; mixed agricultural conditions.

Former Goldman Sachs co-head of short-term macro trading lands in Cleveland Fed top job

Beth Hammack named as next Cleveland Fed President

The Cleveland Fed has named Beth Hammack as its next President. She comes from Goldman Sachs where she was the co-head of global financing. Previously she had a number of roles including global head of short-term macro trading.

The 52-year-old will take over from Loretta Mester in August and will immediately be a voter.

Jamie Dimon: ‘There Could Be Hell to Pay’ If Private Credit Sours

The JPMorgan CEO

Jamie Dimon has been steadily beating the negative drum lately and he continued today, saying the chance of stagflation is higher than most people think. Last week he said he wouldn’t rule out a hard landing for the US economy. The 68-year-old also hurt JPM shares saying he could retire sooner than people expected.

Jamie Dimon said he expects problems to emerge in private credit and warned that “there could be hell to pay,” particularly as retail clients gain access to the booming asset class.

The longtime CEO wrote in his annual letter to shareholders that the private-credit industry has not yet been tested by bad markets, which tend to expose the “weaknesses of new products.”

“I’ve seen a couple of these deals that were rated by a ratings agency, and I have to confess it shocked me what they got rated,” Dimon said on Wednesday. “It reminds me a little bit of mortgages.”

Artificial Intelligence has cracked the stock market

Outperforms humans.

ICYMI – Researchers at the University of Chicago Booth School of Business provided standardized and anonymous financial statements to GPT4 and instructed the model to analyze them to determine the direction of future earnings.

The results In brief:

Even without any narrative or industry specific information, the LLM outperforms financial analysts in its ability to predict earnings changes.
The LLM exhibits a relative advantage over human analysts in situations when the analysts tend to struggle.
we find that the LLM generates useful narrative insights about a company’s future performance

S&P 500 could drop back under 5000 if there are no US Federal Reserve rate cuts this year

Stress test scenario

A snippet via RBC on the Fed and the US equity benchmark S&P 500 index.

RBC cite their base model, which eyes consensus forecasts of economic variables, which indicates that the S&P 500 should trade at around 21.5x earnings by the end of 2024.

this would place the index around 5100 to 5300 if their earnings per share forecast of $237 for 2024 plays out

RBC though also examine the case where there are no Fed rate cuts during 2024 due to higher-than-expected inflation, and 10-year Treasury yields not rising above 5%:

P/E ratio could drop to 20.8x
resulting in the S&P 500 dropping to a range of 4900-5100

Banxico: Sees average headline inflation at end of 2024 at 4% vs 3.5% previous

Bank of Mexico (Banxico) forecasts average annual headline inflation in Q4 2024 at 4.0% from prior estimate of 3.5%
Bank of Mexico forecasts average annual core inflation in Q4 2024 at 3.8% from prior estimate of 3.5%
Bank of Mexico forecasts average annual headline inflation in Q4 2025 at 3.0% from prior estimate of 3.1%
Bank of Mexico forecasts average annual core inflation in Q4 2025 at 3.0% from prior estimate of 3.1%
Bank of Mexico forecasts annual GDP growth in 2024 at 2.4% from prior estimate of 2.8%
Bank of Mexico forecasts annual GDP growth in 2025 at 1.5% from prior estimate of 1.5%
Headline inflation seen converging to 3% target in Q4 2025

Commodities

Gold Prices Decline Amid A Strengthening Dollar

Gold falls 0.87%.
Fed Governor Neel Kashkari’s hawkish remarks underpin US yields, US Dollar.
Upcoming PCE inflation data will play a critical role in shaping future price movements.

Gold slumped on Wednesday, boosting demand for the Greenback due to hawkish comments by a Fed official.Consequently, sentiment shifted sour, the US Dollar climbed, and gold is down some 0.87%, trading at $2,339.

Wall Street trades in the red, while US yields from the belly to the long end of the curve rise between four and six basis points. Meanwhile, a scarce economic docket on Wednesday keeps traders digesting Minnesota Fed President Neel Kashkari’s hawkish comments from Tuesday.

He said that Fed officials hadn’t disregarded rate hikes while adding that if they cut borrowing costs, it would be twice toward the end of 2024.

Data-wise, the US Conference Board revealed that May’s consumer confidence improved, yet Americans began to worry about a possible recession in the next 12 to 18 months, wrote Dana Paterson, The Conference Board’s Chief Economist.

Ahead in the week, traders are bracing for the expected release of April’s PCE inflation data – the Federal Reserve’s preferred measure of inflation.The core figure is expected to be 2.8% YoY, while headline PCE is projected to increase by 0.3% MoM.

Crude oil futures settle at $79.23

Down $0.60 or -0.75%

Crude futures settle the day at $79.23. That is down -$0.60 or -0.75%.

Looking at the daily chart, the price fell back below its 200-day moving average at $79.82, but did a good job of holding support against the 100-day moving average at $79.08. The low price reached $79.05 today.

OPEC+ delegates say rising global inventories could strengthen the case for keeping cuts

OPEC+ meets on Sunday

Oil prices jumped by the most since February yesterday on speculation that OPEC+ would leave voluntary cuts in place when they meet on Sunday.

Just out is a report from Reuters citing OPEC+ delegates that says rising global inventories may strengthen the case to continue cuts. Preliminary data showes OECD inventories up 20 million million barrels in the month and 34 million barrels year over year.

“This is a concern” said a delegate.

Goldman Sachs raise their global oil demand forecast, see significant demand acceleration

ICYMI from a Goldman Sachs note issued Sunday

Analysts at Goldman Sachs raised their global oil demand forecast

said peak petroleum demand is at least a decade away
sees significant demand acceleration until 2034
estimate for 2030 demand increased by 2.5 million b/d to 108.5 million b/d
most of the global oil demand growth should come from Asian emerging markets

EU News

European equity close: Most of the monthly gains are gone

Closing changes

Stoxx 600 -1.1%
German DAX -1.1%
Francis CAC –1.5%
UK’s FTSE 100 –0.9%
Spain’s Ibex -1.1%
Italy’s FTSE MIB -1.5%

Eurozone Money Supply M3 Y/Y 1.3% vs. 1.3% expected

The latest data on the money supply from the ECB.

Money Supply M3 Y/Y 1.3% vs. 1.3% expected and 0.9% prior.
Loans to Households Y/Y 0.2% vs. 0.4% expected and 0.2% prior.
Loans to Companies Y/Y 0.3% vs. 0.4% prior.

Germany May preliminary CPI +2.4% vs +2.4% y/y expected

Latest data released by Destatis – 29 May 2024

Prior +2.2%
CPI +0.1% vs +0.2% m/m expected
Prior +0.5%
HICP +2.8% vs +2.7% y/y expected
Prior +2.4%
HICP +0.2% vs +0.2% m/m expected
Prior +0.6%

Germany May Bavaria CPI +2.7% vs +2.5% y/y prior

The latest German state inflation numbers from Destatis – 29 May 2024

Hesse CPI +1.9% vs +1.9% y/y prior
Brandenburg CPI +2.9% vs +3.0% y/y prior
North Rhine Westphalia CPI +2.5% vs +2.3% y/y prior
Baden Wuerttemberg CPI +2.1% vs +2.1% y/y prior
Saxony CPI +3.1% vs +2.7% y/y prior

Germany June GfK consumer sentiment -20.9 vs -22.5 expected

Latest data released by GfK – 29 May 2024
Prior -24.2; revised to -24.0

France May consumer confidence 90 vs 91 expected

Latest data released by INSEE – 29 May 2024
Prior 90

Switzerland May UBS investor sentiment 18.2 vs 17.6 prior

Latest data released by UBS – 29 May 2024
Prior 17.6

UBS on forthcoming ECB rate cuts – due to narrative

UBS argues that inflation in the EU is not a lot different to the rate in the US or UK

Interesting snippet from UBS on the European Central Bank and the rate cut outlook:

Europe has (on a like-for-like basis) the same inflation as the US or the UK, and the ECB is not known for the speed of its decision-making.
That the ECB looks to be first to cut rates may be due to the narrative around European growth, rather than the substance of economic data.

Asia-Pacific-World News

PBOC sets USD/ CNY central rate at 7.1106 (vs. estimate at 7.2528)

PBOC CNY reference rate setting for the trading session ahead

PBOC injects 250bn via 7-day RR, sets rate at an unchanged 1.8%

2bn mature today
net adding 248bn to banking system, the most since April 30

IMF Deputy Managing Director sees scope for more policy to address China property sector

Speaking in Beijing

IMF Deputy Managing Director Gita Gopinath speaking from Beijing:

We see scope for a more comprehensive policy package to address property sector issues
Central government resources should be deployed to help buyers of pre-sold unfinished homes
Macroeconomic policies should support domestic demand and mitigate outside risks
Policy should prioritise providing central government support to the real estate sector
Welcomes monetary policy measures implemented in 2024 to date
China should continue with economic reforms to boost productivity, level the playing field among all types of firms
Create a good business environment that is market orientated and law-based
IMF research showsover a 15 year period, with good reforms, China’s GDP could be 18% higher
Continue to see need for re-orientating fiscal policy towards more consumption

The IMF has upgraded China’s economic growth target to 5%, from 4.6%

International Monetary Fund (IMF) citing a strong Q1

The International Monetary Fund (IMF) says China’s economy is set to grow 5% this year, after a “strong” first quarter

upgrading its earlier forecast of 4.6%

For 2025 it forecasts 4.5%

from 4.1% previously

“Strong Q1 GDP data and recent policy measures” drove the upgrades says the IMF.

It forecasts growth to slow to 3.3% by 2029, citing aging and slower productivity growth.

Australian data: Q1 Construction work completed -2.9% q/q vs. +0.5% expected

Q1 Construction work completed -2.9% q/q

+0.5% expected, +0.7% prior

Residential building -1.2% q/q

Non-residential -7%
Engineering -2.1%

Australian April CPI 3.6% y/y (expected 3.4%)

This is the monthly CPI data from Australia, not the official quarterly reading – treat is as a stopgap update

Australian April CPI 3.6% y/y, wel above the consensus estimate

expected 3.4%, prior 3.5%
for the m/m +0.76%

Trimmed mean: 4.1% y/y

prior: 4.0%

CPI excluding volatile items & holiday travel 4.1% y/y

prior: 4.1%

Australian data: Westpac Leading Index for April -0.03% m/m (prior -0.05%)

Via Westpac summary comments:

The six-month annualised growth rate in the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, improved slightly to -0.01% in April from -0.08% in March.

Leading Index growth rate steadies to –0.01%.
Growth drags dissipating but momentum to remain soft in 2024.
Improving signal mainly coming from equities, hours worked.
Brief ‘tailwind’ from commodity prices has disappeared.

New Zealand May business confidence 11.2% (prior 14.9%)

ANZ New Zealand Business Survey for May 2024

Business confidence 11.2% vs. 14.9 in April

Activity Outlook 11.8% vs. 14.3 in April

Japan May consumer confidence index 36.2 vs 38.3 prior

Latest data released by the Japanese Cabinet Office – 29 May 2024

The breakdown shows that:

Overall livelihood: 33.9 (down 2.2 from the previous month)
Income growth: 39.9 (down 1.2 from the previous month)
Employment: 42.0 (down 2.2 from the previous month)
Willingness to buy durable goods: 29.0 (down 2.8 from the previous month)

BOJ’s Adachi says if excessive yen falls impact inflation, policy response becomes option

Bank of Japan board member Seiji Adachi

Changing monetary policy frequently to stablise fx moves would lead to big changes in rate moves
If interest rate moves are too big, that would cause disruptions in household and corporate investment
Responding to short-term fx moves with monetary policy would affect price stability
If excessive yen falls are prolonged and expected to affect achievement of our price target, responding with monetary policy becomes an option
It is possible to consider responding with monetary policy if fx moves cause big changes in inflation expectations
Japan’s economy is recovering moderately, although there are some weak signs
Consumption holding steady as a whole mainly for service spending
Japan’s economy not slumping but not in strong shape either with various uncertainties remaining
BOJ must maintain accommodative financial conditions until price goal achieved

We are not yet at stage where we are convinced that there is sustained achievement of price target, so must maintain accommodative conditions
We must absolutely avoid raising interest rates prematurely
If we focus too muchon downside risks, inflation may accelerate and might force us totighten monetary rapidly as a result

By fixing interest rates at current zero levels until inflation isdurably at our price target, we might be forced to hike rates rapidly later and therefore risk hurting economy
We must look notjust at downside but upside risks in guiding monetary policy
Important to adjustdegree of monetary support in several stages, as long as underlying inflation continues to head toward 2%

Desirable to reduce BOJ’s bond buying in several stages, taking into account bond market supply and demand, function, liquidity
Reducing BOJ’s JGB bond buying at a sharp pace could cause damage to economy
Consumer inflation slowing now but likely to re-accelerate from summer through autumn this year
If yen declines accelerate or become prolonged, inflation could re-accelerate fasterthan expected and may require boj to quicken interest rate hike
If current FX moves persist, that will certainly have impact on economy, prices
We will of course respond with monetary policy if those moves are material
Can’t say now whether yen moves would affect economy, prices though
No strong view on whether BOJ bond buying reduction should come sooner or later
BOJ needs a long time in deciding what to do with ETF holdings

Cryptocurrency News

Bitcoin Outlook: Sustained Bullish Momentum Above $66K Expected

Bitcoin remains under pressure after failing to break the psychological $70,000 barrier multiple times. Despite this, the cryptocurrency continues to trade within a defined range ($66,915 – $71,933), indicating a phase of consolidation below its recent record high.

Current Market Dynamics:

Technical Weakness: Daily technical studies show weakening momentum, with the price closing below the 10-day moving average.
Support Levels: The $66,000 zone, bolstered by the rising 20-day moving average, is crucial for maintaining the broader bullish trend.
Bullish Indicators: Despite the near-term softness, the overall outlook remains bullish. A successful defense of the $66,000 support could pave the way for a renewed attempt to break through the $70,000 pivot.

Potential Upside:

Bullish Pattern: A sustained break above $70,000 would complete a cup-and-handle pattern on the daily chart, signaling a strong bullish trend.
Target Levels: Such a breakout could accelerate gains towards targets at $71,933 and $72,750, with the all-time high at $73,839 within reach.

Summary:

While Bitcoin faces short-term challenges below $70K, the overall trend remains bullish, provided it holds above the critical $66K support zone. A breakout above $70K could trigger significant upward momentum.

Bitcoin and Ethereum (ETNs) begin trading on the London Stock Exchange

Exchange Traded Notes (ETNs) are similar to ETFs

Cryptocurrency products from three companies listed on the London Stock Exchange on Tuesday:

the first UK cryptocurrency exchange traded notes (ETNs)
only ETNs that track bitcoin and ethereum are allowed on the exchange
instruments only available to professional investors

Ripple adds $25 million donation to political committee’s war chest

Ripple has added its second donation of $25 million to the crypto Super PAC.
Ripple’s donation makes it the highest contributor to the crypto Super PAC.
XRP is currently down 0.38%.

Ripple (XRP) CEO Brad Garlingson revealed on Wednesday that the company donated another $25 million to the Fairshake Super PAC to support more pro-crypto candidates as the US elections draw closer.

Ripple continues heavy donations to crypto PAC

Ripple continued to show commitment to the fight for a pro-crypto government in the United States, with its second donation of $25 million to the Fairshake Super Political Action Committee (PAC) on Wednesday. As a result, the company is now the largest contributor among crypto organizations supporting the crypto PAC.

This follows Ripple’s previous donation of $25 million to the Super PAC in 2023, bringing its total contributions to $50 million.Ripple’s donation accounts for half of the contributions key crypto industry players made to Fairshake, which currently stands at $110 million.

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Round up of today’s market news

ByBilals Tech