North American News
Dow and S&P extend losing streak to 5 days
- Nasdaq ekes out a small gain
The major US indices are closing mixed with the Dow and S&P down on the day, the Russell 2000 also lower, but the NASDAQ index eked out a small 0.03% gain.
For the Dow and S&P, they extended their losing streaks to 5 straight down days. Although lower today things could have been worse. At the lows the Dow was down -628.86 points or -2.04%. The S&P was down -81.53 points or -2.14%
The final numbers are showing:
- Dow industrial average -142.62 points or -0.46% The low price reached 30141.93. The high reached 30680.12
- S&P index fell -11.4 points or -0.30% to 3790.37. The low reached 3721.56. The high reached 3796.41
- Nasdaq index rose 3.61 points or +0.03% at 11251.20. The low reached 11005.93. The high reached 11279.97
- Russell 2000 fell -18.53 points or -1.07% at 1707.50. The low reached 1684.85. The high reached 1712.28.
US June PPI +11.3% y/y vs +10.7% expected
- US June 2022 producer price index data
- Prior was +10.8% y/y
- PPI +1.1% m/m vs +0.8% expected
- Ex food and energy +8.2% y/y vs +8.1% expected
- Ex food and energy +0.4% m/m vs +0.5% expected
- Ex food, energy and trade +6.4% y/y vs +6.8% prior
Nikkei interview: Bullard in favor of 75 basis point hike
- Interview on Wednesday after the higher than expected CPI
The Fed’s Bullard in an interview with Nikkei yesterday after the higher than expected CPI data, said:
- High CPI ratifies the Fed strategy of moving expeditiously to neutral beyond neutral as we move through the year
- I think we have mapped out a strategy that will contain inflation and was back toward 2% but we have to move quickly
- I think 75 basis point is a lot of virtue to it
- if we raise by 75 basis point we will get us to the neutral rate
- I think it is a good idea to get to 3.5% this year
- A lot of my 3.5% projection has been priced into the market already
- I suppose it is possible that the Fed rate could reach 4% by the end of the year
- my expectations is that inflation will be declining in 2023
- we may not have to do much or anything in 2023
- I do think that we are going to start a disinflationary process soon partly because of supply factors are going to fade, and because the Fed has switch policies rather abruptly here and start a downward pressure on inflation
- I don’t think the payroll numbers are consistent with any kind of interpretation that the US is in a recession
- I have never seen a recession where we created 2.7 million jobs in a six-month period
Commodities
Gold Price Forecast: Bears are not done as the global crisis is just starting
- Exacerbated recession fears put markets in risk-off mode.
- US Federal Reserve’s Waller cooled down expectations for a 100 bps hike.
- XAU/USD bounced from below $1,700 but maintains the downward bias.
Gold Price remains on the bearish path, with the bright metal trading at $1,708.00 a troy ounce. It touched an intraday low of $1,697.56, its lowest since August 2021. Risk aversion dominated financial markets for most of the day, pushing the greenback higher against most of its major rivals.
The dismal market mood faltered after Wall Street’s opening, helping US indexes to bounce a bit which helped XAU/USD recover from the mentioned 2022 low. The catalyst came from Federal Reserve Governor Christopher Waller, who argued that markets may have gotten ahead of themselves by pricing a 100 basis points rate hike in July. Nevertheless, stocks remain in the red, with the three major indexes down roughly 1% each.
Silver Price Forecast: XAG/USD plunges below $18.50 on high US bond yields
- Silver plummets during the week, extending its losses by almost 5%.
- Risk-aversion, rising US Treasury yields, and a buoyant US dollar weighed on XAGUSD.
- Fed’s Waller and Bullard backed a 75 bps rate hike; money market futures expectations for 100 bps fall.
Silver (XAGUSD) is tumbling on Thursday during the North American session as US Treasury yields rise, led by 2s and 5s, keeping the US 2s-10s yield curve inverted for the eighth consecutive day, meaning traders’ recession fears are increasing. However, high US inflation readings on the consumer and producer side continued their upward trajectory, making the Fed’s job even harder. At the time of writing, the XAGUSD is trading at $18.35, losing more than 4% in the day.
Pessimism surrounds the markets; cheered by US dollar bulls
Global equities remain under pressure, extending their fall as investors seek safety. Weighed by a hot US Producer Price Index for June, topping above 11% YoY, added fuel to higher inflation expectations, following Wednesday’s CPI at 41-year highs above the 9% YoY threshold.
Investors’ reaction to that can be seen in the greenback’s strength. The US Dollar Index, a gauge of the buck’s value vs. six currencies, reached a 20-year high around 109.200s, though, at the time of writing, it sits at 108.765, up 0.69%. US T-bond yields are also rising, exerting further downward pressure on precious metals, with the US 10-year T-note coupon at 2.959%, up two bps.
In the meantime, the Fed parade continues with Fed’s Waller, Collins, and Bullard crossing wires. Fed’s Waller and Bullard still back a 75 bps rate hike. Waller added that if retail sales and housing data come stronger than expected, he would lean toward a higher July hike. In the meantime, the newest Boston Fed President, Susan Collins, said that inflation is too high and addressing it is her priority. Traders should notice that Collins is a voter in 2022 and will participate in the July FOMC meeting.
EU News
Germany June wholesale price index +0.1% vs +1.0% m/m prior
- Latest data released by Destatis – 14 July 2022
- Prior +1.0%
- Wholesale price index +21.2% y/y
- Prior +22.9%
Other News
JP Morgan says it’s not seeing cracks in credit but has buffers are shrinking
- The world according to JP Morgan
The JPM conference call is ongoing and here’s an interesting nugget:
Says not seeing cracks in credit but maybe an early warning sign is that cash buffers are shrinking for low-income segments
Cryptocurrency News
Bitcoin fights key trendline near $20K as US Dollar Index hits new 20-year high
Bitcoin (BTC) found a new focus just under $20,000 on July 14 as U.S. dollar strength hammered out yet another two-decade high.
Crypto – Celsius death throes – files for Chapter 11 Bankruptcy in New York
Pretty much a formality, the writing has been on the wall. Just noting this.