North American News
NASDAQ surges. S&P and Dow also off to a good start for the week
- NASDAQ is up for 7 consecutive weeks and rose 1.53% to start week number 8
Coming off a 7 straight weeks of gains, the NASDAQ index was certainly due for a correction, right?
Not today. The NASDAQ index sword by 1.53% with a gain of over 202.77 points to 13461.91. The S&P had a solid 0.94% gain to 4339.07. The Dow industrial average rose 190.47 points or 0.56% at 34067.24.
Some winners today included:
- broadcom +6.31%
- Shopify, +6.0%
- AirBNB 5.71%
- Intel 5.52%
- Adobe 4.54%
- Taiwan semi conductor 4.15%
- Palo Alto Networks 4.11%
- Lam Research 3.45%
- AMD 3.42%
- Intuit 3.3%
- Micron 3.09%
Oracle earnings are out with
- EPS 1.67% versus estimate of $1.58
- Revenues $13.84B versus estimate $713.73 billion
Oracle shares are trading down -$0.52 in after-hours trading at $116.01. It closed at $116.53
NY Fed: One-year ahead expected inflation at 4.1% vs 4.4% in April
- NY Fed survey results
- Lowest one-year inflation reading since May 2021
- three-year inflation 3% vs 2.9% prior
- Five year inflation 2.7% vs 2.6% prior
- Perceptions of access to credit declined in May
U.S. Treasury auctions off $32 billion in 10 year notes at a high yield of 3.791%
- WI level at the time of the auction 3.776%
- High-yield 3.791%
- Tail 1.5 basis points versus segment average of 0.9 basis points
- WI level at the time of the auction 3.776%
- Bid to cover 2.36Xversus assessment average of 2.44X
- Directs 19.9% versus a 6 month average of 18.5%
- Indirects 62.3% versus 6-month average of 66.4%
- Dealers 17.8% versus 6-month average of 15.0%
Bank of America says the Federal Reserve could take Fed Funds to 6% in the next 12 months
A Bank of America research note issued on Friday says the Federal Open Market Committee (FOMC) could take the Fed Funds rate up to 6% in the next year.
- “Fed ain’t done with hikes” says BoA citing persistently high inflation
- rate hikes could usher in 4% unemployment, or higher
- Says there is a 25% chance of a US recession next year
- even without a recession, there is a 70% chance of a slowdown
Goldman Sachs: FOMC likely to keep rates unchanged; dollar depreciation expected later
- Goldman Sachs on Wednesday’s FOMC decision
Goldman Sachs, a leading global investment banking and securities firm, has issued a preview of the forthcoming Federal Open Market Committee (FOMC) meeting, emphasizing its impact on the US dollar’s trajectory.
According to Goldman Sachs, the FOMC is likely to hold interest rates steady at the upcoming meeting. However, it may revise the median terminal “dot” upwards once again, indicating an increase in federal funds rate expectations over the long term.
Goldman Sachs has been anticipating a gradual and bumpy deceleration of the dollar this year. However, two factors need to align for this to happen: Clarity on the Federal Reserve’s peak interest rate, marked by noticeable easing in inflation pressures, and the appreciation of the Euro and Chinese Yuan, which necessitates improved capital return prospects.
While Goldman Sachs maintains that the dollar should depreciate slightly from current levels, it notes that there has been minimal progress on these two conditions so far. This suggests that the dollar’s depreciation might be more likely in the later part of the year, subject to changes in inflation pressures and the relative strength of other major currencies.
This forecast implies a need for investors to keep a close eye on global inflation trends, central bank policies, and the relative performance of major currencies to understand and navigate the potential shifts in currency markets
US May Federal budget deficit $240 billion vs $236 billion expected
- May 2023 budget data
- Year ago May deficit was $66 billion
- April surplus was $176 billion
- Year to data deficit at $1.165 trillion vs $246 billion a year earlier
- Outlays $548 B
- Receipts $307 B
US sells 3-year notes at 4.202% vs 4.200%
- Results of the $40 billion US 3-year note auction
- Prior was 3.695%
Commodities
Gold awaits clues around $1,950
Spot Gold is on the back foot on Monday, trading near a daily low of $1,949.20 a troy ounce.
Gold is persistently meeting sellers at around the 23.6% Fibonacci retracement of its latest daily slump at $1,966.20, which skews the risk to the downside and points to a test of the May monthly low at $1,932.00. From a technical perspective, the bright metal has room to extend its slide, as the daily chart shows that it remains below a bearish 20 Simple Moving Average (SMA), which currently extends its downward slope below the aforementioned Fibonacci level. At the same time, the 100 SMA remains flat at around $1,941.24, providing intraday support. Finally, technical indicators are retreating from around their midlines, favoring another leg south without confirming it amid the absence of clear momentum.
ICYMI – China raised gold holding for 7th straight month / Physical gold demand slowed
- Physical gold demand slowed in China and India this week and forced dealers to offer discounts, with volatile prices in India prompting buyers to delay purchases.
- China raises gold holding for 7th straight month
Silver pullbacks as evening star emerges, suggesting further downside
- XAG/USD dips 1.13% to $24.00, supported by 50-day and 20-day EMA.
- RSI and three-day RoC indicators suggest a downward trend.
- Support and resistance at $23.51 and $24.52, respectively; $25.00 remains crucial.
Silver retreats as it forms a three-candlestick pattern “evening-star” at around $24.00, though cushioned by the presence of the 50-day Exponential Moving Average (EMA) at $23.89, ahead of the 20-day EMA at $23.83.
WTI crude oil futures settle at $67.12
- Down -$3.05 or -4.35%
WTI crude oil futures are settling at $67.12.That is down $3.05 or -4.35%.The price low today reached $66.80. The high was at $70.33.
Saudi Arabia & OPEC+ are trying to combat “uncertainties and sentiment” in the oil market
- Comments on Sunday from Prince Abdulaziz bin Salman
Bloomberg has the report of remarks from Saudi Arabia’s Prince Abdulaziz bin Salman at an Arab-China business forum in Riyadh on Sunday:
- Saudi Arabia and its OPEC+ allies are trying to combat “uncertainties and sentiment” in the oil market
EU News
European equity close: German DAX rings up a 0.9% gain
- Strong start to the week for German stocks
Closing changes for the main European bourses:
- Stoxx 600 +0.1%
- UK FTSE 100 flat
- German DAX +0.9%
- Italy MIB +0.9%
- French CAC +0.5%
- Spain IBEX +0.4%
BOE’s Haskel: Further rate hikes cannot be ruled out
- Remarks by BOE policymaker, Jonathan Haskel
- Important that we lean against the risks of inflation momentum
- Monitoring indicators of inflation momentum and persistence closely
SNB total sight deposits W.E 9 June CHF 509.8 bn vs CHF 519.0 bn prior
- Latest data released by the SNB – 12 June 2023
- Domestic sight deposits CHF 498.3 bn vs CHF 504.5 bn prior
Other News
US CPI Banks Preview: Headline inflation is moderating, but underlying persists
The annual inflation is expected to suffer a sharp fall to 4.1% in May vs. 4.9% in April. On a monthly basis, headline is expected at 0.2% vs. 0.4% last month. Meanwhile, US underlying inflation is expected to have risen by 0.4% month-on-month in May and 5.2% YoY vs. 0.4% and 5.5% in April, respectively.
Danske Bank
We expect the May CPI, released just ahead of the FOMC meeting, to slow down to 0.2% MoM (4.2% YoY) driven by negative contribution from energy prices. We also forecast Core CPI to continue cooling to 0.3% MoM (5.2% YoY).
Commerzbank
Across all goods and services, consumer prices are likely to have risen by only 0.1% in May compared to April.
The YoY rate would then fall significantly from 4.9% to 4.1%.
However, one should not conclude from this that the inflation problem is gradually disappearing. We expect the core rate, which excludes volatile energy and food prices and better reflects the underlying trend, to be high again. We forecast a core rate of 0.4% in MoM terms, which would be roughly in line with the increase in recent months. A clear easing of inflationary pressure is therefore still not in sight for this important indicator.
ANZ
We expect core CPI inflation to rise by 0.4% MoM and headline CPI by 0.3% in May.
TDS
Core prices likely stayed firm in May, with the index rising a strong 0.4% MoM for a second straight month, also matching the MoM avg since June 2022. Goods inflation likely stayed positive, with shelter prices remaining the key wildcard (expect slowing). Retreating gas prices (-6% MoM) will drag non-core inflation. Our MoM forecasts imply 4.0%/5.3% YoY for total/core prices.
RBC Economics
We expect YoY growth in the US CPI to slow substantially to 4.1% in May from 4.9% in April. Gas prices were 20% below year-ago levels in May. Oil prices are down after surging in the wake of Russia’s invasion of Ukraine. And soaring food inflation has cooled in recent months with back-to-back MoM declines in grocery prices over March and April.
NBF
The energy component may have had a negative impact on the headline index as prices likely fell in both the gasoline and natural gas segments. Expected gains for shelter could still result in a 0.2% monthly increase in headline prices. If we’re right, the YoY rate should come down from 4.9% to a 2-year low of 4.1%. The core index, meanwhile, could have advanced 0.3% on a monthly basis, something which would translate into a 5.1% annual gain.
Deutsche Bank
We expect a wafer-thin +0.01% MoM advance for headline CPI (vs. +0.37% previously) and a +0.37% increase for core (vs. +0.41%). This would lead the former to drop by about a full percentage point to 4.0% YoY, with the latter down -0.2% to 5.3%, with the 3, 6 and 12-month core readings all still struggling to gain much downward momentum below 5% at the moment.
CIBC
With prices at the pump averaging lower over the month, the total CPI was likely limited to a 0.1% increase in May, masking a hotter advance in categories outside of energy and food. Indeed, core CPI prices could have risen by 0.4%, extending April’s momentum, in line with continued strength in the labor market that will have worked to support demand, implying an acceleration in the Fed’s preferred sub-category of services ex. housing. The risks to the core figure could be slightly to the downside, as the rent measures could have resumed their deceleration following a temporary pause in April, and used car prices could have declined following a sharp increase in April. Moreover, the ISM services prices paid measure also fell in May.
Wells Fargo
Overall consumer price inflation likely moderated in May. We forecast the headline CPI was flat during the month, as gasoline prices fell and food prices appeared to hold steady. Core inflation, on the other hand, likely remained firm. Auction data suggest used vehicle prices rose again last month, and we look for ongoing strength in core services. Specifically, we suspect the core CPI rose 0.4% for the third consecutive month, which would leave the YoY change little improved at 5.3% in May.
Credit Suisse
We expect core CPI inflation to decline to 0.3% MoM in May, a welcome step lower after five consecutive months of registering 0.4% MoM. The YoY reading is likely to decline to 5.2%. Headline inflation is likely to decline to 0.1% MoM.”
New Zealand data – May retail sales -1.7% m/m 9exp +0.3%)
Data for purchases made in New Zealand on debit, credit and store cards. Sales on electronic cards cover about 68% of core retail sales in New Zealand.
Sources: FTC to file injunction to block Microsoft’s Activision deal
- Microsoft shares are trading up $0.85 on the day
The UK has already blocked the deal. The European Commission has approved the deal.
This is not a surprise given the Biden administration’s tone toward mergers.
Macron: Ukranian counter-offensive started and was meticulously planned
- If there was any doubt that it has started
- France has intensified delivery of ammunition and weapons; that will continue in the coming weeks
The ‘weeks’ line might be a hint at how long it will last.
Cryptocurrency News
XRP price defends above $0.49 as Ripple CTO details new strategic shift and vision for XRP Ledger
- Ripple price continues to sustain above the $0.495 support level despite broader market gloom and falling buyer momentum.
- XRP starts the week 5% lower than Friday’s $0.541 close after pulling back 13% from Saturday’s intraday low of $0.472.
- Meanwhile, Ripple’s CTO has revealed a new strategic shift and vision underpinning the company’s focus on XRPL.
Despite the bearish sentiment in the broader market, Ripple (XRP) is struggling to defend against the load-shedding exercise engaged over the weekend. The struggle continues to wear out the bulls, and now XRP price shows an inclination to the downside as buyer momentum continues to fall.
XRP price recovers as Ripple CTO gives key network insights
Ripple (XRP) price is down 5% lower than the $0.541 high recorded on Friday before a 13% downswing to an intra-day low of $0.472 on Saturday. With this move, XRP briefly lost the crucial support at $0.495 before a bullish pull upwards to start the week at the current price of $0.517.
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