North American News
US treasury auctions off $45 billion of 5 year notes at a high yield of 3.230%
- WI level at the time the auction was 3.220%
- High yield 3.23%
- WI level 3.220%
- Tail 1.0 versus 6 month average of 0.4 basis points
- Bid to cover 2.3X versus 6 month average of 2.44X
- Dealers 20.61% versus 6-month average of 18.0%
- Direct 18.22% versus 6-month average of 19.0%
- Indirect 61.18% versus 6 month average of 63.0%
Atlanta Fed GDPNow growth estimate for Q3 falls to 1.4% from 1.6%
- Near lows of the estimate
The Atlanta Fed GDPNow estimate for third quarter growth up to 1.4% from 1.6% last.
In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2022 is 1.4 percent on August 24, down from 1.6 percent on August 17. After recent releases from the US Census Bureau and the National Association of Realtors, the nowcast of third-quarter real gross private domestic investment growth decreased from -3.5 percent to -4.7 percent.
The next report will be released on Friday, August 26
Commodities
Copper drops from two-month highs due to global economic slowdown, speculators’ shorts
- Copper prices are trading with losses of almost 1.50%.
- The Euro area energy crisis, China’s property and construction crisis, and a possible US recession are headwinds for copper.
- Copper Price Analysis: Could test the monthly lows around $3.4160 once it clears $3.5420.
Copper futures are dropping for the first time in the week, down by 1.53% on Wednesday, courtesy of an ongoing global economic slowdown, portrayed in part by released S&P Global PMIs in the week, painting a gloomy picture while worries about China’s economy had increased. At the time of writing, Copper futures are trading at $3.6390 after hitting a daily high of $3.6980 during the Asian session.
US equities are trading in the green, portraying a positive mood. Meanwhile, the ongoing energy crisis in Europe, China’s property and construction market crisis, and recession fears in the US, are posing downward pressure on the red metal
In the meantime, the investment house Goehring & Rozencwajg Associates, in their Q2 update, pointed out that after bottoming at 165,000 tonnes at the end of 2021, inventories rebounded to 300,000 by mid-May but pulled back to 240,000 tonnes. They commented that inventories, when adjusted for days of consumption, are almost as low as in 2005, just before copper prices more than doubled. 2005, copper exchange inventories covered consumption by only two days.”
Aside from this, China’s appetite for the red metal, from which it accounts for 55% of the world’s copper consumption, its imports are up almost 6%. However, according to Shanghai Metals Market, stocks of copper in the country are at year lows.
All that said, Dr. Copper should be headed to the upside. Nevertheless, the Commitment of Traders report shows that speculators are net short 16,000 lots for the past six weeks, so a further downside is expected before recovering some ground.
Copper Price Analysis: Technical outlook
The Copper daily chart illustrates the non-yielding metal as neutral biased. The red metal remains seesawing for nine consecutive days in the $3.5420-$3.7315 area. However, it’s worth noting that the Relative Strength Index (RSI) recorded a successive series of lower highs, contrary to price action, meaning that prices are about to edge lower.
US weekly crude oil inventories -3282K vs -933K expected
- Weekly US oil inventory data
- Prior was -7056K
- Gasoline -27K vs -1464K expected
- Distillates -661K vs +766K expected
- Refinery utilization +0.3% vs +0.0% expected
- Implied gasoline demand 8.43m vs 9.35m last week
- SPR draw of 8.1m vs 3.4m prior
- Exports hit a record 11.076 mbpd
API data released late yesterday:
- Crude -5632K
- Gasoline +268K
- Cushing +679K
- Distillates +1051K
EU News
European major indices close with mixed results
- France’s CAC bottoms near 100 day MA. UK FTSE 100 sniffs it’s key 100/200 day MAs
The major European indices are closing with mixed results. The gains and losses are showing:
- German DAX, +33.7 points or 0.26%
- France’s CAC, +30.09 points or +0.47%
- UK’s FTSE 100 -12.25 points or -0.16%
- Spain’s Ibex -13.10 points or -0.16%
- Italy’s FTSE MIB +68 points or 0.31%
Other News
We think a hard landing remains likely in the US – BofA
- Hard data and survey data diverging
Bank of America Global Research discusses the US economic outlook.
“We think a mild recession outcome is more likely than a soft landing. Our outlook calls for the economy to slip into recession later this year and for a combination of a short-lived decline in GDP and a period of below-trend growth to push the unemployment rate 1.0pp higher over the coming year,” BofA notes.
“Together with relief from global commodity prices and some reversal in the shock to relative goods prices, slower momentum in the domestic economy and labor markets would help restore price stability in 2024,” BofA adds.
US has rejected all the additional conditions requested by Iran
- Crude oil moves higher
- US has rejected all the additional conditions requested by Iran
- urged Iran to lift any restrictions on international inspections
- Iran should not be allowed to enrich uranium beyond purity level of 4%
Cryptocurrency News
Ethereum price: Chandler Guo, Justin Sun battle Vitalik Buterin to keep ETH POW alive
- Ethereum core developers led by Vitalik Buterin are prepared to transition to proof-of-stake, while miners announce a hard fork.
- Proof-of-work supporters led by Chandler Guo and Justin Sun are pushing to keep Ethereum’s chain alive, as it is now.
- Ethereum price outlook remains bullish as analysts predict ETH rally to the $1,700 level.
Ethereum price continues its uptrend despite a battle about consensus protocols between two groups in the ETH ecosystem. Chandler Guo is leading a group of miners in their fight to keep a parallel Ethereum proof-of-work chain alive, post the Merge. Despite differences between the two groups, and the resulting uncertainty, analysts remain bullish on Ethereum price.