North American News
US stocks rip higher for the second day as Nasdaq closes at highest since August
- Strong gains for US equities
There were non-stop flows into US stock markets on Friday, led by the Nasdaq:
- S&P 500 +1.3%
- Nasdaq Comp +2.2%
- DJIA +1.0%
- Russell 2000 +1.1%
On the week:
- S&P 500 +0.3%
- Nasdaq Comp +2.4%
- Russell 2000 flat
Broadcom was a big winner on Friday, gaining 11% with Qualcom and Intel making some headway as the chip rally broadens out.
Atlanta Fed GDPNow tumbles to 1.9%
- Wider than expected trade deficit sends a model value lower
The Atlanta for GDPNow model for 2Q growth tumbled to 1.9% from 2.9% previously. In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2023 is 1.9 percent on May 26, down from 2.9 percent on May 17.After recent releases from the US Census Bureau, the US Bureau of Economic Analysis, and the National Association of Realtors, decreases in the nowcasts of second-quarter real net exports and second-quarter real gross private domestic investment growth were partially offset by increases in the nowcasts of second-quarter real personal consumption expenditures growth and second-quarter real government spending growth.
US April PCE core inflation 4.7% vs 4.6% expected
- US April 2023 data from the US personal consumption expenditure report
- Prior was +4.6%
- PCE core MoM +0.4% vs +0.3% expected
- Prior MoM +0.3%
- Headline inflation PCE +4.4% vs +4.2% prior
- Deflator MoM +0.4% vs +0.1% prior
Consumer spending and income for April:
- Personal income +0.4% vs +0.4% expected. Prior month +0.3%
- Personal spending +0.8% vs +0.4% expected (prior +0.0%)
- Real personal spending +0.5% vs 0.0% prior
UMich final May US consumer sentiment 59.2 vs 57.7 expected
- The second-and-final reading on May US consumer sentiment from the University of Michigan
- Prelim was 57.7
- Prior was 63.5
Details:
- Current conditions 64.9 vs 64.5 prelim (68.2 prior)
- Expectations 55.4 vs 53.4 prelim (60.5 prior)
- 1-year inflation 4.2% vs 4.5% prelim (4.6% prior)
- 5-10 year inflation 3.1% vs 3.2% prelim (3.0% prior)
US April durable goods orders 1.1% versus -1.0% expected
- US April 2023 durable goods orders data
- Prior 2.8% (revised to 3.3%)
- U.S. April durable goods orders increased by 1.1%, outperforming the consensus of a 1.0% decrease, and following a 3.3% increase in March (previously reported as 2.8%).
- Durable goods orders excluding transportation decreased by 0.2% in April (consensus of -0.1%), compared to a 0.3% increase in March (previously reported as 0.2%).
- April durable goods orders excluding defense decreased by 0.6% from March’s increase of 3.2% (previously reported as 3.0%).
- U.S. April nondefense capital goods orders excluding aircraft increased by 1.4% (above the consensus of -0.2%), compared to a decrease of 0.6% in March (previously reported as -1.1%).
- April nondefense capital goods shipments excluding aircraft increased by 0.5%, compared to a decrease of 0.2% in March.
- U.S. April durable goods shipments decreased by 0.7% from March’s increase of 0.7%.
- General machinery orders in April increased by 1.0%, while orders for electrical equipment decreased by 1.0%. Defense aircraft and parts orders increased dramatically by 32.7%.
US April wholesale inventories -0.2% vs +0.0% expected
- US April wholesale and retail inventory data
- Prior was 0.0%
- Retail inventories +% vs +0.3% prior
Dallas Fed April trimmed mean PCE price index +4.4% vs +3.8% prior
- Dallas Fed measure rises in April
- Prior was +3.8%
- Six-month trimmed mean annualized +4.4%
- 12-month trimmed mean +4.8%
Fed’s Mester: Fed has made slow progress on inflation. It’s concerning
Comments from Mester
- Says she may have to revise up her inflation projections in the next SEP in June
- Data confirms inflation is still too high
- PCE inflation underscored slow progress
- Everything is on the table for June FOMC
- Fed committed to lowering inflation in a timely way
- Hasn’t seen much sign that banking stress is affecting credit conditions
- Says she does think they will have to tighten ‘a bit more’
US average good trade balance $-96.77 billion versus $-85.7 billion expected
- US average good trade balance for April 2023
- Prior month $-82.70 billion
- The international trade deficit rose to $96.8 billion in April, an increase of $14.1 billion from March’s $82.7 billion.
- Exports decreased in April, reporting at $163.3 billion, down $9.5 billion from March.
- Imports increased to $260.0 billion in April, up $4.5 billion compared to March.
Commodities
Silver climbs back closer to 100-day SMA support breakpoint
- Silver stages a solid rebound from over a two-month low touched this Friday.
- The setup warrants some caution before positioning for any further recovery.
- A sustained move beyond the $24.00 mark could negate the bearish outlook.
Silver gains strong positive traction on Friday and snaps a four-day losing streak to the $22.70-$22.65 area, or over a two-month low touched earlier today. The white metal maintains its bid tone through the early North American session and currently trades around the $23.20-$23.25 zone, up over 2% for the day.
A slightly oversold Relative Strength Index (RSI) on the daily chart turns out to be a key factor that prompts aggressive short-covering around the XAG/USD. That said, this week’s convincing break through the 100-day Simple Moving Average (SMA) support and the overnight slide below the 50% Fibonacci retracement level of the March-May rally favour bearish traders. This, in turn, suggests that any subsequent move up might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly.
Gold ascents gradually amidst high US bond yields, post solid US data
- US economic strength shown by the latest round of data raises prospects of a June Fed rate hike, boosting the US Dollar.
- Wall Street climbs despite a rise in Fed’s gauge for inflation, with Core PCE hitting 4.7% YoY.
- Rising US Treasury bond yields and Fed hawkish commentary could hurt Gold’s recovery.
Gold price recovers some ground but remains shy of reclaiming the $1950 figure after solid economic data in the United States (US) suggests the Federal Reserve (Fed) could opt to hike again in June. Consequently, US Treasury bond yields are rising, while the US Dollar (USD) hits new two-month highs vs. a basket of peers. The XAU/USD is trading at $1940.21, still up by a minuscule 0.03%.
Oil price finds its feet after steep sell-off on mixed OPEC+ messaging
- Oil price recovers after the steep sell-off on Thursday due to mixed messaging from OPEC+ members.
- Russia’s Novak says production cuts are unlikely whilst Saudi Oil Minister seems to imply the opposite.
- US Dollar corrects after strong rally, giving Oil a backdraught.
Oil price steadies on Friday after the previous day’s tumble, as traders weigh conflicting messages from two of the largest members of OPEC+ and the US Dollar weakens.
Russia’s Deputy Prime Minister Alexander Novak said that he did not think further cuts would be announced, when only a few days earlier, the Saudi Oil Minister, Prince Abdulaziz bin Salman, seemed to suggest the opposite. The next OPEC+ meeting is on June 4.
Baker Hughes total rig count down -9 in the current week
- The move lower in rigs continues move lower
- Total rigs -9 at 711
- Oil rigs -5 at 570
- Natural gas rigs -4 at 137
EU News
European equity close: A bounce back to close out the week
- Closing changes on the day and the week
A three-day slump in European stocks came to an end today with a strong rebound.
- Stoxx 600 +1.2%
- German DAX +1.2%
- UK FTSE 100 +0.8%
- French CAC +1.4%
- Italy MIB +1.2%
- Spain IBEX +1.0%
On the week:
- Stoxx 600 -1.4%
- German DAX -1.5%
- UK FTSE 100 -1.5%
- French CAC -2.2%
- Italy MIB -2.9%
- Spain IBEX –0.5%
ECB’s Lane: No sense of certainty on terminal rate
- Further remarks by Lane
- Uncertainty in inflation dynamics is high
- ECB shouldn’t predict where rate hikes will end up
- Energy price fall will feed into core prices but timeframe is uncertain
- There is some upside risks to wage growth
- Real wage growth correction has to be a gradual process
France May consumer confidence 83 vs 84 expected
- Latest data released by INSEE – 26 May 2023
- Prior 83
UK April retail sales +0.5% vs +0.3% m/m expected
- Latest data released by ONS – 26 May 2023
- Prior -0.9%; revised to -1.2%
- Retail sales -3.0% vs -2.8% y/y expected
- Prior -3.1%; revised to -3.9%
- Retail sales (ex autos, fuel) +0.8% vs +0.3% m/m expected
- Prior -1.0%; revised to -1.4%
- Retail sales (ex autos, fuel) -2.6% vs -2.8% y/y expected
- Prior -3.2%; revised to -4.0%
HSBC raises BOE terminal rate forecast to 5.25%
- The firm now expects the BOE to hike further in August and September, in addition to June
Well, the calls are coming in now after the UK inflation data this week. UK CPI
IMF raises Italy’s 2023 GDP forecast to 1.1% from 0.7%
- Italian GDP proves resilient this year
- IMF also sees 2024 at 1.1%
ECB’s Makhlouf: Haven’t seen wage settlements that raise concerns on a eurozone level
- Comments from Makhlouf
- My lead option is to hike rates in June and July; open about subsequent decisions
- ‘Very relaxed’ about market pricing of rates
- Upward momentum in core inflation has slowed by food price pressure still building
- Can achieve target without recession
Barclays sees BOE hiking beyond June with one additional 25 basis point hike in August
- Sees terminal rate at 5.0%
Barclays sees the Bank of England on hiking beyond June with additional 25 basis point hike in August for a 5% terminal rate.
The Bank of England hiked rates to 4.5% on May 11.The CPI data this week came in higher than expectations at 8.7% versus 8.2%.Moreover, the core inflation level came in at 6.8% versus 6.2% expected and 6.2% last month.
Other News
GOP negotiator McHenry: Cites progress in debt ceiling talks, but
- warns that remaining issues become more difficult
GOP McHenry is saying that:
- That debt ceiling talks are progressing, but…
- Warns that remaining issues become more difficult as more progress is made
- Deal needs to be made in next day or 2 or 3.
BOJ to maintain yield curve control policy until at least next year – poll
- The latest from Reuters’ poll of economists on BOJ policy
- 6/24 (25%) economists expect BOJ to end yield curve control (YCC) this year
- 11/24 economists expect BOJ to end YCC in 2024
- 5/24 economists expect BOJ toe end YCC in 2025 or later
- 2/24 economists expect BOJ to not end YCC at all
- 10/24 economists expect BOJ to start scaling back on ultra-easy policy in July
- 4/24 economists expect BOJ to do so earlier in June
Republican House negotiator says ‘major issues’ still not worked out on debt ceiling
- Garret Graves is negotiating for Republicans
The hardest part of any deal is always at the end. The two sides met virtually today and we’re not at the finish line.
“We continue to have major issues that we have not bridged the gap on,” Garret Graves said. He was asked if he’d drop demand for work requirements, he said “hell no”.
IMF sees US growth at 1.7% this year and 1.0% in 2024
- That’s not an exciting growth rate
The IMF is out with its latest review of the US economy and it paints a picture of stumbling growth and inflation slowly returning to target.
The IMF said the US economy in 2022 demonstrated resilience amidst fiscal and monetary policy changes, with consumer demand buoyed by the utilization of pent-up savings and steady real disposable income growth.Notably, labor force participation rose, unemployment rates dropped to historical lows, and real wages exceeded inflation since mid-2022.1.2% growth is projected for 2024, despite expected modest unemployment increases to around 4.5%.
Cryptocurrency News
PEPE price action puts traders on the edge of their seats as pennant gets filled
- PEPE price trades in marginal moves as the consolidation phase continues.
- PEPE is poised to reveal on Friday which way the breakout will go.
- With no real breaks above the pivotal level at $0.0014700, the verdict may favor the bears with a slide to $0.0010000.
PEPE (PEPE) price is entering the very last possible stage before finally determining whether bulls or bears have the winning hand in this poker game showdown. Analyzing the performances of past sessions and taking into account the Relative Strength Index (RSI), it would appear that the bears will win the game. Expect a breakdown soon of the green ascending trendline and price action heading to $0.0010000 if that is indeed the outcome.
PEPE price to drop 30% as bears go all in
PEPE price is trading in a very narrow and minor range that is even smaller this Friday than on Thursday. Bears and bulls both do not want to give way on their trading positions, and that means that the pennant will decide which way this tug-of-war will go. Seeing the already small slippages below the supportive green ascending trendline, it appears that bears might have the better and tighter upper hand in this.
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