North American News
US major indices closes higher. S&P and Nasdaq up 3 of the last 4 days. Dow up 4 straight
- Major indices up for the week with 1 day to go
The major indices US indices are closing higher. The Dow industrial average is on a 4 day winning streak. The NASDAQ and S&P are up 3 of the last 4 trading days. For the week, all the major currencies are higher and looking to snap multiweek losing streaks. The Dow has been down 8 straight weeks. The NASDAQ and the S&P have been down 7 straight weeks.
The final numbers are showing:
- Dow industrial average up 516.91 points or 1.61% at 32637.20
- S&P index is up 79.11 points or 1.99% at 4057.85
- NASDAQ index is up 305.92 points or 2.68% at 11740.66
- Russell 2000 is up 39.07 points or 2.17% at 1838.23
Nvidia which fell over 11% after announcing earnings last night closed higher by $8.76 or 5.16%.
Other big winners today:
- Dollar Tree rose 21.87%
- AliBaba rose 14.68%
- GameStop rose 11.64%
- DoorDash rose 7.52%
- Tesla rose 7.43%
- Block rose 7.0%
- United Airlines rose 6.94%
- American Airlines rose 6.88%
Losers today included:
- Snowflake, -4.63%
- Merck, -1.53%
- Gilead, -0.83%
- Palo Alto networks -0.68%
- Phillip Morris -0.42%
- Verizon -0.39%
US April pending home sales -3.9% vs -2.0% m/m expected
- US April 2022 pending home sales data
- Prior was -1.2%
- Index at 99.3 vs 103.7 prior
New home sales fell far short of estimates earlier this week.
What happens next for US housing is a lively debate. If you look at home builder stocks, the message from the market is that house price are going to fall but I’m not so sure. The latest mortgage numbers from Freddie Mac are out and a 30-year fixed is down to 5.10% from 5.25%. I expect more downward pressure as the spread between mortgages and the 30-year narrows.
I envision a year or so of flat prices and some cooling in some hot markets but I don’t see largescale price declines. Canada, on the other hand, is going to see at least a 20% decline in prices.
Currently, we’re seeing declines in everything with leverage , and that includes housing.
“If mortgage rates stabilize roughly at the current level of 5.3% and job gains continue, home sales could also stabilize in the coming months,” said Lawrence Yun, NAR’s chief economist. “Home sales in 2022 are expected to be down about 9%, and if mortgage rates climb to 6%, then the sales activity could fall by 15%.
“Home prices in the meantime appear in no danger of any meaningful decline,” he continued. “There is an ongoing housing shortage, and properly listed homes are still selling swiftly – generally seeing a contract signed within a month.”
US treasury auctions off $42 billion of 7 year notes at a high yield of 2.777%
- WI level at the time of the auction was 2.801%
Below are the auction results for the sale of $42 billion of 7 year notes:
- High yield 2.777%. The high yield at the last auction came in at 2.908
- WI level at the top of the auction 2.801%
- Tail -2.4 basis points vs six-month average of 0.5 basis points
- Bid to cover 2.69Xvs. six-month average of 2.37 times
- Directs 15.76% vs. six-month average of 23.0%.
- Indirects 77.9% vs. six-month average of 61.8%
- Dealers 6.38% vs. six-month average of 15.2%
Commodities
Gold Price Analysis: XAU/USD holds above 200DMA near $1850 as focus turns to Friday’s US inflation data
- Gold is holding above its 200DMA in the $1850 area and is back to nearly flat on the week.
- Traders are weighing the tailwinds of a softer USD/US yields versus strong US equities as key Friday inflation data looms.
Spot gold (XAU/USD) is for now holding just above its 200-Day Moving Average at $1839 and trading near the $1850 level, though still with a slight downside bias on the day, despite Thursday’s worse than expected US GDP figures and Wednesday’s not as hawkish as feared Fed minutes release. Indeed, in wake of the weak data and modest paring back of hawkish Fed bets, the US dollar is a tad weaker and US yields are nudging lower, a combination that would normally be a tailwind for gold.
But US equities are rallying, with the S&P 500 last trading up around 1.4% on the day and eyeing a test of its 21-Day Moving Average for the first time since mid-April. On the week, the index is trading with gains of more than 3.0% and this appears to be weighing on the safe-haven precious metal. Traders are attributing stock market gains to weak GDP data reducing the need for aggressive Fed tightening and to strong earnings from a few US companies, including retail giant Macy’s.
Either way, the better tone to risk appetite is for now keeping XAU/USD on the back foot. Having been as high as the $1870 level earlier in the week, spot gold’s gains on the week have been eroded back to only about 0.2% from around 1.2%. But the recent pullback towards the 200DMA might prove a good opportunity for the gold bulls to add to long positions if they think that hawkish Fed bets will continue to be pared in the weeks ahead and, as a result, the buck and US yields continue softening.
Silver Price Forecast: XAG/USD battles at $22.00 but fails and retraces towards $21.90s
- Silver prices remains under pressure and falls 0.23% on Thursday.
- An upbeat sentiment and elevated US Treasury yields a headwind for XAG/USD.
- Silver Price Forecast (XAG/USD): To remain sideways amid the lack of a catalyst.
Silver (XAG/USD) retraces for the second straight day on rising US Treasury yields led by the 10-year benchmark note, which was parked around 2.750% for the last two days, but shows signs of life advancing two-basis points, a headwind for precious metals. At $21.94, XAG/USD retraces from weekly highs at around $22.00 and remains range-bound, with just one day left in the week.
The rise of US Treasury yields begins to weigh on the bright metal after being stationary for two days. At the same time, European and US equities are recording solid gains, reflecting an increase for riskier assets, another factor influencing the fall of precious metals.
The US Dollar Index, which measures the greenback’s value vs. a basket of six currencies, loses 0.22% and sits at 101.843.
The awaited Federal Reserve’s last meeting minutes were revealed and reinforced what Fed policymakers have said since May 5. The minutes showed that all the board members agreed to 50 bps increases for the next couple of meetings and emphasized the need to move “expeditiously.” Officials stated that moving to a neutral stance was appropriate and added that they are focused on inflationary pressures.
Meanwhile, the US docket featured preliminary readings of the US GDP Q1 for 2022 reported a contraction of 1.5% YoY. The report blamed the drop on trade dynamics, with US Exports falling at an annual pace of 5.4% in the first quarter while imports increased 18.3%. However, estimates showed healthy growth in consumer spending of 3.1% vs. forecasts of 2.7% YoY. Additionally, the US Department of Labor reported that Initial Jobless Claims for the week ending on May 20 fell to 210K against a 215K expectations.
On Friday, the US docket would unveil the Fed’s favorite measurement for Inflation, the Personal Consumption Expenditure (PCE), foreseen at 6.4%, triple the US central bank objective.
Silver Price Forecast (XAG/USD): Technical outlook
XAG/USD remails downward biased after failing to trade above the February 3 swing low-turned-resistance at $22.00. Nonetheless, Silver prices are range-bound and would keep trading within the $21.28-$22.00 area unless a catalyst triggers a break above/below the boundaries.
Upwards, the XAG/USD first supply level would be $22.00. Once cleared, the following resistance would be the May 24 weekly high at $22.20, followed by the February 11 cycle low-turned-resistance at 22.86. On the other hand, the XAG/USD first support would be the weekly low at $21.67. Break below would expose the May 19 swing low at $21.28, followed by the $21.00 barrier.
WTI crude oil futures settle at $114.09
- Up $3.76 or 3.14%
The price of WTI crude oil futures are settling at $114.09. That’s up $3.76 or 3.41%
The high price for the day reached $114.83. The low price extended to $110.27. Looking at the hourly chart, the contract moved above a swing area between $111.37 and $111.96. That opened the door for further upside momentum. The high price from the month comes in at $115.56.
EU News
European indices close higher on the day and near highs for the day
- Spain’s Ibex trades the highest level since February 10
The major European stock indices closed near high levels and up solidly on the day.
The Spain’s Ibex traded to the highest level since February 10 and move within a few points of the high for 2022 in the process.
The closing levels are showing:
- German DAX, +1.59% at 14231
- France’s CAC +1.78% at 6410.50
- UK’s FTSE 100 +0.56% at 7564.92
- Spain’s Ibex +1.47% at 8888.81
- Italy’s FTSE MIB +1.22% at 24546
Other News
OPEC+ will maintain its production schedule next week, according to a report
- Six sources cited in the report
OPEC+ meets June 2 and will continue with its plan to gradually raise production, according to six sources cited by Reuters. The plan calls for an output increase of 432k barrels per day.
The issue with OPEC+ is that they’re falling short of quotas already, so increasing them won’t add as much oil as touted.
Cryptocurrency News
Poor day for crypto’s despite risk rebound – ETH set to close at lowest since July 2021
- Bitcoin lower despite positive day in tech. Ethereum -5%
Lately crypto has been trading like a leveraged bet on the Nasdaq. Given the rout in tech stocks, it hasn’t been a great trade lately. Both the Nasdaq and bitcoin are down more than 30% this year.
Today though, tech has rebounded. The Nasdaq is up 2.8% and even meme stocks like GME are up big (10.7% now).
You would expect that to mean a good day for crypto but that hasn’t been the case. Bitcoin is down $278 to $29,491 and ethereum is down $106 or 5.4%.
If there’s a silver lining to the poor performance today, it’s that bitcoin has rebounded from an early loss. It briefly ticked below $28,000 in European trade and found some support.
In the bigger picture, the consolidation around $30,000 continues. After the huge move at the start of the month, bitcoin has traded in an unusually narrow range. The trade will ultimately be to go with a break.
Ethereum is an interesting place to watch. It also rebounded today but the close is likely to be the worst since July 2021.
Fed’s Brainard: I see potential for a complementary digital dollar
- Comments from the Fed vice chair
- I see potential for a digital dollar as being complementary to a more efficient system that would include stablecoins
- Fragmentation of the payments system is costly
Either the US will eventually launch its own stablecoin and regulate Tether out of existence or it will regulate Tether so strongly that it’s virtually the same. Ultimately, the US government will want control of payments and technology.