North American News
Major indices slide as debt talks in Washington muddle along
- No progress in talks gives traders a reason to sell overbought levels
The major US stock indices are closing lower in trading today as debt talks muddle along without any progress. That gave traders a reason to sell overbought levels, and traders did just that.
A snapshot of the final levels is showing:
- Dow industrial average fell -231.09 points or -0.69% at 33055.50
- S&P index fell -47.05 points or -1.12% at 4145.57
- NASDAQ index fell -160.54 points or -1.26% at 12560.24
It was a big down day for the high flyers of late:
- Nvidia fell $-4.88 or -1.57% to $306.88. Nvidia will announce her earnings after the close tomorrow the recent price I extended to $318.28 the highest level since December 2021
- Alphabet fell $-2.49 or -1.99%
- Microsoft fell $-5.92 or -1.84%
- Apple fell $-2.73 or -1.57%
- Meta which was up earlier in the day fell $1.58 or -0.64%
US treasury auctions offer $42 billion of two-year notes at a high yield of 4.30%
- WI level at the time of the auction 4.315%
- High-yield 4.30%
- WI level 4.315%
- tail -1.5 basis points versus a 6-month average of -0.1 basis points
- Bid to cover 2.9X versus 6 month average of 2.67X
- Directs (a measure of domestic demand) 15.6% vs 6 month average of 21.1%
- Indirects (a measure of international demand) 68.2% vs 6-month average of 60.0%. Best since June 2009
- Dealers 16.2% vs 6-month average of 18.8%
Richmond Fed Composite Index for May -15 versus -10 last month
- Richmond Fed composite index for May 2023
- Richmond Fed composite index -15
- services index -10 versus -23 last month
- manufacturing shipments -13 versus -7 last month
- prices paid 4.95 versus 7.57 last month
- prices received 5.39 versus 5.63 last month
- employment 5 versus 0 last month
- wages 17 versus 25 last month
- availability of skills needed -7 versus -12 last month
- new orders -29 versus -20 last month
- backlog of orders -32 versus -31 last month
- capacity utilization -15 versus -14 last month
- vendor leadtime -15 versus -13 last month
- local business conditions -27 versus -19 last month
- capital expenditures -12 versus -2 last month
- finished goods inventory 11 versus 19 last month
- raw materials 18 versus 28 last month
- equipment and software spending 1 versus -2 last month
- service expenditures -5 versus -16 last month
US new-home sales for April 0.683M versus 0.665M estimate
- New home sales for the month of April 2023
- Prior month 0.656M (revised from 0.683M previously reported)
- Sales of new single-family houses in April 2023 were at a seasonally adjusted annual rate of 683,000 versus 655,000 expected
- This is a 4.1% increase from the revised March rate of 656,000 and an 11.8% increase from the April 2022 estimate of 611,000.
- The median sales price of new houses sold in April 2023 was $420,800, while the average sales price was $501,000. Last month the median sales price was $449,800.
- The seasonally-adjusted estimate of new houses for sale at the end of April 2023 was 433,000 versus 432,000 last month
- This inventory represents a supply of 7.6 months at the current sales rate.
Is the consumer spending spree running out of money?
- Fitch thinks so
Fitch is saying that consumer spending from savings will likely end by Q4 2023
- They cite tighter lending standards driven by regional banks’ stress is expected to contribute to the slowdown.
- Say that real income growth, excluding nominal wage gains, remain relatively weak as well.
S&P/Global manufacturing PMI May 48.5 versus 50.0 expected
- S&P Global manufacturing and services flash estimate for May 2023
- Manufacturing PMI flash 48.5 versus 50 expected.
- Services PMI 55.1 versus 52.6 estimate
- composite index 54.5 versus 53.5 last month
Commodities
Gold likely to be ultimate safe haven in event of US default – Commerzbank
Gold price slumped significantly last week. However, the growing risk of a US default is set to underpin the yellow metal, economists at Commerzbank report.
Both the Fed and the SNB would have considerable scope to lower interest rates in the event of a crisis
“Gold price is likely to profit more than any other investments if the US defaults. After all, one reason why Gold is suitable as a safe haven is the fact that it does not yield any interest itself and thus suffers no disadvantage in an environment in which monetary policy will in all likelihood be loosened and yields will fall accordingly. This gives Gold an advantage over other conventional safe havens such as the US Dollar, the Swiss Franc and the Japanese Yen – especially just now.”
“Both the Fed and the Swiss National Bank, following their recent rate hikes, would have considerable scope to lower interest rates in the event of a crisis – such as that which a US default could trigger.”
“The Bank of Japan, which was one of the few central banks to tighten its monetary policy hardly at all in response to the significantly increased inflation and is therefore still pursuing an ultra-expansionary monetary policy, is not very likely to loosen its monetary policy any further, however, it cannot be ruled out entirely either, which tends to put the Yen too at a disadvantage as compared to Gold, albeit to a lesser extent than the Dollar and the Franc.”
Gold slips and rebounds amid US debt ceiling uncertainty, US equities tumble
- Gold price dips slightly as uncertainty around US debt-ceiling discussions causes US Treasury bond yields to rise, negatively impacting XAU/USD’s recovery.
- Despite productive talks between President Biden and House Speaker Kevin McCarthy, an agreement on raising the debt ceiling is yet to be reached.
- US is set to run out of cash by June 1, according to Treasury Secretary Yellen.
Gold price is trimming some of its earlier losses, though stills trading negative in the day, down 0.06%, as US Treasury bond yields rise due to uncertainty around US debt-ceiling discussions. Hence, US Treasury bond yields rise, underpinning the US Dollar (USD), a headwind for XAU/USD’s prices.
US Treasury bond yields rise amid tense debt-ceiling discussions, dampening XAU/USD’s recovery
Wall Street portrays a sour sentiment, with equities trading lower. The economic data revealed in the United States (US) is overshadowed by discussions about raising the debt ceiling in the US. Although US President Joe Biden and US House Speaker Kevin McCarthy called Monday’s talks productive, an agreement remains far from being done. In the meantime, US Treasury Secretary Janet Yellen continued to pressure that the US will run out of cash by June 1.
Given the backdrop, US Treasury bond yields extended its gains, with the 10-year bond yielding 3.726%, a headwind for XAU/USD’s recovery. Therefore, US real yields, calculated using the nominal yield minus inflation expectations, taken from Treasury Inflation-Protected Securities (TIPS), sit at 1.49%, about to cross above 1.50%.
Data-wise, the US economic agenda features S&P Global PMIs for May on their final readings. The Manufacturing Index plunged to 48.5 below estimates and the prior reading above 50, while the Services Index rose to 55.1. The Composite Index stood at 54.5, dragged by the rise in services.
US New Home Sales rose to a 13-month high, expanded by 4.1% or 683K units in April, the highest figure reported since March 2022, according to the US Commerce Department. Given that housing data from the United States showed signs of a recovery, it should be interesting to hear from US Federal Reserve (Fed) officials, who remain split between skipping or lifting rates at the upcoming June meeting.
WTI crude futures settle $0.86 higher at $72.91
- Up $0.86 or +1.19%
Today, the WTI crude futures are closing at $72.91, marking an increase of $0.86 or 1.19%. The commodity hit a high of $73.76 and a low of $71.71. When examining the hourly chart, the peak price encountered resistance within the range of $73.50 and $73.89, identified as a key swing area.
Natural Gas Futures: A deeper correction is not favoured
Considering advanced figures from CME Group for natural gas futures markets, open interest retreated for the second session in a row on Monday, this time by nearly 12K contracts. Same path followed volume, which added almost 112K contracts to the previous daily drop.
Natural Gas: Upside looks limited around $2.70
Prices of the natural gas started the new trading week with a marked pullback amidst shrinking open interest and volume. Against that, the likeliness of a sustained decline in the very near term appears unconvincing for the time being. On the flip side, bouts of strength should meet a tough barrier around the $2.70 region per MMBtu.
EU News
European major indices close lower on the day
- Major European indices down for the 2nd consecutive day
The major European indices are closing lower for the 2nd consecutive day. After reaching a new all-time high on Friday, the German DAX index is down on both Monday and Tuesday. The Frances CAC tumbled the most in trading today:
- German DAX fell -71.13 points or -0.44% at 16152.85
- Frances CAC fell -99.46 points or -1.33% at 7378.71
- UK’s FTSE 100 fell -8.04 points or -0.10% at 7762.96
- Spain’s Ibex fell -38.02 points or -0.41% at 9266.99
- Italy’s FTSE MIB fell -135.73 points or -0.50% at 27174.97
Germany May flash manufacturing PMI 42.9 vs 45.0 expected
- Latest data released by HCOB – 23 May 2023
- Prior 44.5
- Services PMI 57.8 vs 55.3 expected
- Prior 56.0
- Composite PMI 54.3 vs 53.5 expected
- Prior 54.2
Eurozone May flash services PMI 55.9 vs 55.6 expected
- Latest data released by HCOB – 23 May 2023
- Prior 56.2
- Manufacturing PMI 44.6 vs 46.0 expected
- Prior 45.8
- Composite PMI 53.3 vs 53.5 expected
- Prior 54.1
HSBC expects ECB to hike rates three more times in the months ahead
- That will take the deposit rate to 4.00%
This is one of the more hawkish calls as the firm sees the ECB raising interest rates by 25 bps in June, July and then September. For some context, money markets are just pricing in a peak of 3.70% at the moment when it comes to ECB rates. That is just under two more rate hikes to go from the current level.
France May flash services PMI 52.8 vs 54.0 expected
- Latest data released by HCOB – 23 May 2023
- Prior 54.6
- Manufacturing PMI 46.1 vs 46.0 expected
- Prior 45.6
- Composite PMI 51.4 vs 52.0 expected
- Prior 52.4
Eurozone March current account balance €45.0 billion vs €21.3 billion prior
- Latest data released by the ECB – 23 May 2023
- Prior €21.3 billion
UK May flash services PMI 55.1 vs 55.5 expected
- Latest data released by S&P Global – 23 May 2023
- Prior 55.9
- Manufacturing PMI 46.9 vs 48.0 expected
- Prior 47.8
- Composite PMI 53.9 vs 54.6 expected
- Prior 54.9
BOE’s Bailey: Inflation has turned the corner
- Remarks by BOE governor, Andrew Bailey
- Services inflation is tracking more or less as we thought in February
- Will adjust bank rate as necessary to return inflation sustainably to medium-term target
- If evidence of more persistent pressures, then further tightening in policy would be required
Other News
IMF: UK economy expected to avoid a recession and maintain positive growth in 2023
The International Monetary Fund (IMF) is out with its latest outlook on the UK economy, projecting a slowdown in growth for this year.
Key takeaways
UK economy is expected to avoid a recession and maintain positive growth in 2023.
UK inflation remains stubbornly high following the severe terms-of-trade shock due to Russia’s war in Ukraine.
UK monetary policy will need to remain tight in order to keep inflation expectations well-anchored.
Fiscal policy should continue to be aligned with monetary policy in the fight against inflation, while protecting key public services and the vulnerable.
Realizing the UK’s full growth potential will require addressing the post-pandemic rise in labor inactivity, mainly due to long-term illness.
IMF staff forecasts UK GDP growth to slow to 0.4 percent in 2023.
This latest forecast represents a 0.7 percentage point upgrade to the IMF’s April forecast.
Growth is projected to rise gradually to 1 percent in 2024, and to average around 2 percent in 2025 and 2026.
Growth is projected to settle at 1.5 percent, staff estimate of trend growth.
GOP negotiator Graves: I don’t think things are going well over debt ceiling talks
- GOP Graves speaks negatively
GOP negotiator Graves says things are not going well over debt ceiling talks.
IMF’s Georgieva: Lack of debt-ceiling solution would have detrimental impact on US economy
International Monetary Fund (IMF) Managing Director Kristalina Georgieva noted on Tuesday that discussions on the US debt-ceiling have always been quite tense but resulted in a solution, as reported by Reuters.
“A lack of solution would have detrimental impact on the US and world economy,” Georgieva added. “Hopefully we won’t have to wait to the 11th hour for a solution on the US debt-ceiling.”
Latest from Washington: McCarthy has not spoken to US Pres. Biden today
- The mood has soured a bit today
Is it politicking or something to worry about?
Speak of the house McCarthy says that he has not spoken to US Pres. Biden today, but adds that he will work until we get it all done. He is not scheduled to go to the White House today.
Cryptocurrency News
Shiba Inu price safe from falling to December 2022 lows; investors pull back regardless
- Shiba Inu price is exhibiting signs of recovery, rising by more than 4% in the last 24 hours.
- Network growth is currently at a two-year low which indicates that there is bearishness among investors still.
- However, this might be short-term since the broader market has still not conceded to fear.
Shiba Inu price is attempting to escape the bearishness witnessed by the crypto market over the last few days. Unlike Dogecoin, SHIB is following Bitcoin’s lead to note consecutive green candlesticks, which could increase not only the meme coin’s value but investors’ faith as well.
Shiba Inu price might make a comeback
Shiba Inu price, trading at $0.0000089, has noted a 4.22% rise in the last 24 hours. The cryptocurrency nearly missed the December 2022 lows of $0.0000079 and is now potentially charting a path to recovery.
The Relative Strength Index (RSI), which slipped into the oversold zone below the 30.0 mark in the past couple of days, is now climbing back up, nearing the neutral line at 50.0. This is bringing SHIB closer to the critical resistance at $0.0000097.
This price level also coincides with the 50-day Exponential Moving Average (EMA), which is a key barrier to breach.
Furthermore, flipping the critical resistance into a support floor would enable Shiba Inu price to also rise to $0.00001030. The completion of a potential Measured Move pattern observed on the charts since early February further suggests a conclusion of the downtrend. Legs A and C of the three-wave pattern are of similar length, and the price is recovering.
A decisive break above the May highs of $0.00001030 would act as the confirmation of a bullish reversal.
Like our recently launched pages. Join our community and never miss a beat in the dynamic world of trading.
https://www.facebook.com/BilalsTechLtd
https://www.linkedin.com/company/bilals-tech/
