North American News
US stock trading gets off to a positive start this week. Dow Jones snaps five-day slide
- NASDAQ index leads away
The major US stock indices have gotten off to a positive start this week. The Dow industrial average snapped a 5-day slide with a modest gain. The NASDAQ index leads the way.
The final numbers for the 3 major indices are showing:
- Dow industrial average rose 47.90 points or 0.14% at 33348.61
- S&P index rose 12.20.00.30 percent at 4136.27.
- NASDAQ index was 80.46 points or 0.65% at 12365.20
The Russell 2000 of small-cap stocks faired the best:
- Russell 2000 rose 20.69 points or 1.19% at 1761.54
NY Fed: Credit card and auto loan deliquency rates rose on Q1
- NY Fed Q1 household debt survey
- Household debt rose by 0.9% in Q1 to $17.05 trillion
- Q1 mortgage originations were lowest since 2014
- Mortgage foreclosures were low in Q1
- Covid-era mortgage refinancing boom will provide ‘significant support’ for consumers
- End of low-rate period creates a roadblock for selling homes
Fed’s Goolsbee: There is still a lot of impact from prior hikes that’s still to come
- Comments from the Chicago Fed President
- The effect of banking stress isn’t small; we need to take it into account and ‘sit and watch it’
- Inflation is improving but it’s not improving that rapidly
- We need to monitor data
- Says his vote to hike at the last meeting was a ‘close call’
Fed’s Bostic: Rate cuts are not part of my baseline
- Remarks by Fed policymaker, Raphael Bostic
- Does not see inflation coming down quickly
- There is still a long way to go in battle against inflation
- We may have to go up further on rates
- Thinks the math (on inflation, economy) will work in Fed’s favour in months ahead
He does not expect any interest-rate cuts this year because he does not see inflation going down as fast as market participants believe, and if anything “we may have to go up”. There is still a long way to go to bring inflation down to the Fed’s 2% goal, Bostic told CNBC, though there has been progress. “If there is going to be a bias to action, for me there would be a bias to increase a little further, as opposed to cut,” Bostic said.
Fed’s Barkin: I’m not yet convinced inflation is on a steady path downward
- Comments from Barkin in a Reuters interview
- Barkin says he’s very comfortable with data dependency but not yet convinced inflation is on a steady path downward
- Says he sees demand moderating but it may need to cool even more for inflation to come back to 2% inflation target
- Jobs market has moved from ‘red hot to hot’, though some secondary indicators point to some easing
- He is withholding June decision given the data still to come
US May Empire Fed manufacturing index -31.8 vs -3.75 expected
- New York area manufacturing survey
Details
- New orders -28.0 versus +25.1 last month
- Shipments versus +23.9 last month
- Prices paid +34.9 versus +33.0 last month
- Employment -3.3 versus -8.0 last month
- prices received versus +23.7 last month
- Inventories versus +8.2 last month
- Six month outlook+9.8 vs +6.6 last month
Fed’s Kashkari: Inflation is much too high but starting to come down
- Comments from the Fed dove
- Fed has more work to do, we should not be fooled by a few months of good data
- Labor market is still hot, we have a long way to go before reaching inflation goal
- Inflation is much, much too high, though starting to come down
- Labor market is not as frothy as 9 months ago but still strong overall
Commodities
Appetite for Gold is whetting – ANZ
Macroeconomic developments continue to present a bullish backdrop for the Gold market, strategists at ANZ Bank report.
Gold to ride on safe-haven demand
“US banking sector issues, elevated interest rates and uncertainty around the debt ceiling are dampening the economic outlook and boosting safe-haven demand for Gold.”
“We expect gold to reach $2,100 (previous forecast $2,050) by the end of this year, with price dips presenting buying opportunities.”
Gold refreshes daily top near $2,020 on weaker US Dollar, risk-off
- Gold price attracts fresh buying on Monday and snaps a three-day losing streak.
- A modest US Dollar weakness is seen as a key factor that benefits the XAU/USD.
- A combination of factors warrants caution before placing aggressive bullish bets.
Gold price regains some positive traction on the first day of a new week and sticks to its modest intraday gains through the early North American session. The XAU/USD currently trades around the $2,020 region, up nearly 0.30% for the day, and for now, seems to have snapped a three-day losing streak.
Modest US Dollar weakness underpins Gold price
The US Dollar (USD) pulls back from a five-week high touched this Monday as investors remained wary of the US debt ceiling standoff. This, in turn, is seen as a key factor lending support to the US Dollar-denominated Gold price. It is worth mentioning that US President Joe Biden said he expects to meet with congressional leaders on Tuesday for talks on a plan to raise the debt limit and avoid a catastrophic default. This, in turn, prompts the USD bulls to take some profits off the table following the strong move-up witnessed over the past two trading days.
WTI crude oil settles at $71.11
- Up $1.07 or 1.53%
The price of WTI crude oil futures is settling at $71.11. That’s up $1.07 or 1.53%. The high price reached $71.69. The low price was $69.41
Crude oil futures have closed down for 4 consecutive weeks. Last week the price fell -1.82%. Since the high on April 13 at $83.53. The price has moved down -14.74%. The extreme low came in on May 4 at $63.64.
EU News
ECB reaffirms lagging impact of rate hikes in latest bulletin
- The ECB says that rate hikes have had a small impact on inflation so far
However, they retain the view that its policy will have more and a bigger impact to come. Adding that much of it is only to be expected in 2024. Some notes from the latest ECB bulletin:
- Most of the impact on inflation is expected from 2023 onward
- The impact is expected to peak in 2024
- Policy tightening is estimated to have lowered inflation by around 50 bps last year
- Downward impact on inflation is expected to average around 2% over 2023-25
- Transmission of rate hikes to economic activity is faster
- Impact on GDP growth expected to peak in 2023
Eurozone March industrial production -4.1% vs -2.5% m/m expected
- Latest data released by Eurostat – 15 May 2023
- Prior +1.5%
- Industrial production -1.4% vs +0.9% y/y expected
- Prior +2.0%
EU bumps up 2023, 2024 growth and inflation forecasts
- The latest projections released by the European Commission – 15 May 2023
- 2023 GDP growth seen at 1.1% (previously 0.9%)
- 2024 GDP growth seen at 1.6% (previously 1.5%)
- 2023 inflation seen at 5.8% (previously 5.6%)
- 2024 inflation seen at 2.8% (previously 2.5%)
BOEs Pill: BOE raise rates last week because too much momentum in the economy
- Still concerned about inflation from too much growth
- BOE raise rates last week because we thought there was too much momentum in economy
- Too much demand for inflation to return to 2%
- Trying to keep spending power will risk higher and persistent inflation
- Sees risk of inflation getting stuck at 4 – 5%. We need to avoid this.
- Risk is a 2nd round effect keeps inflation above the target
- The challenge is finding the right balance on rates
Other News
McCarthy: White House isn’t talking anything serious on debt ceiling
- Comments from the House majority leader
- It seems like they want a default more than a deal
- Says they need a deal by the weekend based on timelines
There’s only one trade on the debt ceiling: Buy after the market freaks out because at the end of the day, the US is going to pay its debts.
Argentina’s central bank hikes rates by 600 bps to 97%
- Another 600 bps should fix it
Whatever is ailing Argentina will surely be fixed by hiking rates to 97% from 91%.
This is obviously headed for yet-another ugly episode in Argentina, which has seen just about everything in the last 60 years.
Cryptocurrency News
Dogecoin daily transactions hit record high surpassing Bitcoin, DOGE gears up for recovery
- Dogecoin daily transactions climbed to an all-time high of 650,000 and surpassed Bitcoin and Litecoin on May 15.
- Bitcoin network’s BRC20 and Litecoin’s LTC20 inspired Dogecoin’s DRC20 standard, fueling on-chain activity in the meme coin.
- DOGE price started its recovery from the recent pullback, climbing to the $0.0728 level.
Dogecoin, the largest meme coin in the crypto ecosystem, witnessed a peak in daily transactions, which climbed to a record high of 650,000. On May 15, DOGE network transactions surpassed Bitcoin and Litecoin, setting a new record.
The meme coin’s price started recovering from the recent lows, climbing to $0.0728.
Dogecoin transactions skyrocket, surpass Bitcoin and Litecoin
Dogecoin transactions surpassed Bitcoin and Litecoin on May 15, hitting a peak of 650,000. Inspired by Bitcoin Ordinals’ BRC20 and Litecoin’s LTC20 token standard, Dogecoin network got its DRC20 standard fueling activity on the blockchain.
The spike in on-chain activity on the Dogecoin network since May 13 has fueled a recovery in the meme coin price. The DOGE price climbed to $0.07360 earlier on Monday.
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