North American News
US indices close lower ahead of CPI data tomorrow
- Dow Industrial Average down 6 of the last 7 trading days. S&P and NASDAQ down 5 of the last 7
The major US indices are all closing lower. For the month of May, the Dow industrial average is down 6 of 7 trading days. The S&P and NASDAQ index are down 5 of 7 trading days.
A snapshot of the closing levels shows:
- Dow industrial average -56.90 points or -0.17% at 33561.80
- S&P index -18.95 points or -0.46% at 4119.18
- NASDAQ index -77.37 points or -0.63% at 12179.54
- Russell 2000 -4.792 points or -0.27% at 1749.67
Feds Jefferson: Inflation will come down while economy continues to grow
- FOMC member Jefferson speaking
- The banking system is sound and resilient
- Banks have started to raise lending standards
- That is typical for where the US is in the economic cycle
- Inflation started to come down, economy has started to slow in a orderly fashion
- Inflation will come down while economy continues to grow
IBD/TIPP Economic Optimism index falls to 41.6. from 47.4 last month
- Investors Business Day (IBD)/TIPP optimism index for May 2023
- Prior month 47.4
- IBD/TIPP optimism index falls to 41.6 from 47.4 last month
- Six-month outlook falls to 34.6 from 41.6. This is the lowest level in 6 months
- Personal financial index 50.1 versus 55.3 last month
- Confidence in the federal economic policies falls to 40.0 from 45.3 last month. This is the lowest level since November
Feds Williams: Confident that the US central bank is on the right path to lower inflation
- NY Fed President Williams speaks at the New York Economic Club
- He is confident US central bank is on right path to lower inflation to 2% target
- Williams acknowledges the issue of high inflation, which disproportionately affects those who can least afford higher prices for food, shelter, and transportation.
- The Federal Reserve is committed to bringing inflation down, with price stability being essential for the economy to reach its full potential and sustain maximum employment over the long term.
- Imbalances between demand and supply persist, leading to high inflation and a tight labor market; some signs of gradual cooling in demand for labor and goods/commodities are present.
- Job growth has been robust, with unemployment rate at a historically low level of 3.4%; labor force participation has rebounded, helping to alleviate some labor market imbalances. Projects unemployment rate to rise to 4% – 4.5% this year
- Inflation remains too high, but has moderated from a 40-year high of 7% to 4.2%; various measures of longer-run inflation expectations remain well anchored at levels consistent with the Fed’s 2% longer-run goal.
- Core services excluding housing still show persistent inflation due to imbalances in overall supply and demand; it will take the longest to bring down.
- it will take time for the Fed rate hike’s to bring economy back into balance
- Williams expects inflation to decline to around 3-1/4% this year before returning to the longer-run goal of 2% over the next two years; real GDP growth is expected to be modest this year, picking up somewhat next year.
- Monitoring the totality of the data and its implications for the achievement of the Fed’s goals is crucial.
Q&A
- The Fed has not said it’s done raising rates
- Fed estimating incredible progress on monetary policy
- Fed needs to be data dependent with monetary policy
- Fed will raise rates if needed
- Does not see any reason to cut rates this year
- We are not seeing a wage price spiral today
- Fully confident US can get inflation back down to 2%
- Structural shifts will not impair Fed work to hit inflation target
- Recession not in baseline forecast
- Economy has risks to both the up and down side
- Sees signs of further tightening of credit; expects it to affect economic growth
- Tighter credit may blunt how far Fed goes with rate hike’s
- Does not see tighter credit knocking economy totally off course
- Wage growth has stabilized at a high level. Wage data suggests labor market is still very strong.
- Banks are sound and resilient and quite strong. Acute phase of stress is about over
Boeing lands a massive Ryanair order
- Shares are up 2.22%
Ryanair has announced that it has made an $40 billion order for 300 Boeing 737’s with 150 firm orders and 150 options to purchase. Boeing shares are trading up 2.57% at $202.23 in premarket trading. Of note technically, Boeings 100 and 200 bar moving moving averages on 4 hour chart are near converged at $205.00 area. It’s 100 day moving average is also near that level at $204.81
Commodities
Gold climbs amidst US debt ceiling uncertainty, falling US bond yields
- XAU/USD rallies, benefiting from concerns over the US debt ceiling and slowing Chinese manufacturing activity.
- Falling US Treasury bond yields support gold prices despite strong US Dollar.
- Eyes on upcoming US CPI data, which has the potential to impact gold prices.
Gold price is printing back-to-back bullish days as the XAU/USD meanders nearby Monday’s high of $2029.40, bolstered by falling US Treasury bond yields despite a strong US Dollar (USD). The XAU/USD is underpinned by uncertainty around the US debt ceiling and a US inflation report looming. At the time of writing, the XAU/USD is trading at $2030.68, above its opening price by 0.48%.
XAU/USD bolstered by risk aversion, lower US bond yields
The negative tone is being reflected by Wall Street registering losses. Worries about politics, namely the debt ceiling, weighed on market sentiment. Credit conditions in the United States (US) began to tighten, as shown by the Fed’s Senior Loan Officer Opinion Survey (SLOOS), though “not as disastrous as many doomsayers had feared,” Analysts at Brown Brothers Harriman noted.
Another reason that bolstered appetite for XAU/USD was that China’s revealed that manufacturing activity slowed down. At the same time, its Trade Balance showed that Exports and Imports dropped from 14.8% to 8.5% in April and from -1.4% to -7.9%, respectively.
On Tuesday, US President Joe Biden will host US Congress officials to lay the ground around getting a consensus on the US debt ceiling.
In the meantime, the US Dollar Index (DXY), a gauge that tracks the performance of six currencies against the US Dollar, climbs 0.29%, up at 101.680, capping XAU/USD’s rally. US Treasury bond yields are mixed, though the short term, the most sensitive to interest rates, the 2-year note gains one bps, at 4.024%.
In the meantime, the Fed parade has begun, led by Fed Governor Philip Jefferson, who said the banking system was sound and resilient and that institutions had begun to raise lending standards. Regarding inflation, it has started to slow in an “orderly fashion” and will come down as the economy continues to grow.
Of late, the New York Fed President John Williams stated, “We haven’t said we are done,” adding that it would be data dependent and could raise rates if needed.
Silver hovers around mid-$25.00s, bulls not ready to give up
- Silver remains on the defensive for the third straight day, albeit lacks follow-through selling.
- The technical setup still favours bulls and supports the prospects for further near-term gains.
- A convincing break below the $24.50-40 area is needed to negate the constructive outlook.
Silver recovers a part of its modest intraday losses, albeit struggles to capitalize on the move and trades with a mild negative bias for the third successive day on Tuesday, around mid-$25.00s.
From a technical perspective, the lack of any follow-through selling warrants some caution before confirming that the XAG/USD has formed a near-term top and positioning for any meaningful pullback from over a one-year high touched last Friday. Moreover, the recent repeated rebounds from the $24.50-$24.40 strong horizontal resistance breakpoint, now turned support, favours bullish traders.
This, along with positive oscillators on the daily chart, suggest that the path of least resistance for the white metal is to the upside. That said, the XAG/USD has been struggling to find acceptance above the $26.00 mark, warranting caution for bulls. The XAG/USD, nevertheless, seems poised to surpass the $26.25-$26.30 hurdle and climb to the $27.00 neighbourhood, or the March 2022 high.
On the flip side, Friday’s swing low, around the $25.15 region, might now act as a support and protect the immediate downside. This is closely followed by the $25.00 psychological mark, below which the XAG/USD could extend the corrective slide towards testing the $24.50-$24.40 resistance-turned-support. A convincing break below the latter is needed to negate the near-term positive outlook.
The XAG/USD might then turn vulnerable to weaken further below the $24.00 mark and drop to the next relevant support near the $23.50-$23.30 confluence. The latter comprises the 50-day and the 100-day SMAs and is followed by support near the $23.00 round-figure mark.
EU News
European shares close unchanged/lower
- German Dax unchanged on the day
The major European indices are ending the session lower/unchanged. The German Dax has remained more or less unchanged on the day while the other indices are lower:
- German Dax rose 2.67 points or 0.02% at 15955.49
- Frances CAC felt -43.74 points or -0.59% at 7397.18
- UK’s FTSE 100 fell -14.27 points or -0.18% at 7764.10
- Spain’s Ibex felt -28.08 points or -0.30% at 9183.21
- Italy’s FTSE MIB -42.7 points or -0.16% at 27383.53
ECBs Nagel: Interest rates should rise further
- ECB’s Nagel speaking on interest-rate view
ECBs Nagel is on the wires saying:
- Interest rates should rise further
- He could’ve imagined a 50 basis point hike at the last meeting but is okay with the 25
- Will address at G7 talks need for new global precautions to offer banks some protection if affected by rumors of distress
- The market is not always right about the ECB’s terminal rate
Early today ECBs Kazimir said:
- Slowing hikes lets the ECB to go higher for longer.
- There’s plenty of ground left to cover.
- Core inflation, wage pressures and high-profit margins call for vigilance.
ECB’s Vulcic said:
- More hikes will be required to return inflation to target
ECBs Kazaks said:
- Ray taking may not be finished in July
- Doing too little remains the greater danger
- Not impossible for the ECB to hike/pause in the scenario Fed is cutting
Other News
Meta is updating and expanding Ads on Reels so creators can earn money
- and Meta can earn money too
Matter is announcing that it is updating and expanding its “Ads on Reels” tests so creators can earn money from their reels (videos).
A summary:
Facebook is expanding its Ads on Reels tests to enable more creators to monetize their engaging public reels. Thousands of creators are being invited to join the updated tests, and a similar program will be launched on Instagram in the coming weeks. Payouts will be determined by the performance of creators’ reels, rather than the earnings of ads on their reels, allowing creators to focus on making engaging content while optimizing ad experiences for advertisers and users. To participate in the program, creators must live in one of the 52 eligible countries and meet minimum requirements. Once onboarded, creators can earn by producing engaging reels, and they can check their invitation status through the Monetization Tools section on the Professional Dashboard.
Turkey hikes state worker employee wages by 45%, Erdogan says
- Turkey hikes state worker employee wages by 45%, Erdogan says
Turkey hikes state worker employee wages by 45%, Erdogan says.
Chinese Foreign Minister: China and Germany agreed to step up coordination in the multilateral field
- Chinese Foreign Minister Qin Gang: China and Germany have agreed to step up coordination in the multilateral field.
China and Germany have agreed to step up coordination in the multilateral field.
Underscores the importance of Germany-China ties.
To undermine the one-China principle is to undermine the international system with the United Nations at its core.
On the Ukraine crisis, creating conditions for a political solution is the way out of the crisis.
Cryptocurrency News
Litecoin network adds 300,000 addresses in a week, ahead of halving, Litecoin price to rally too?
- Litecoin price is trading below the $80 mark, on the verge of being oversold.
- The network has gained more than 300,000 new addresses in the first week of May.
- The next Litecoin halving is scheduled for August 12 tentatively, and such events have been synonymous with price rises.
Despite having a major event coming up in about three months, is still mostly following the broader market cues. However, the altcoin’s investors have been growing bullish by the day, and the same is visible in their participation, which is currently far higher than the average.
Litecoin price declines, but investors grow
Litecoin price in the last three days has noted a decrease of more than 12%, which pushed the altcoin below the $80 mark to bring LTC to $78 at the time of writing. Following Bitcoin’s lead, the altcoin has hit a monthly low, but its investors seem to be motivated not by the price action but by something else.
In the first week of May, the Litecoin network noted the addition of nearly 300,000 new addresses that hold some amount of LTC. This is a nearly 300% jump from the average weekly rate, as throughout the last month, the network only added a total of 300,000 addresses, bringing the weekly average to 75,000.
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