North American News
The S&P and NASDAQ halt their three-day losing streak
- Dow Industrial Average edge near unchanged
The S&P and NASDAQ indices are closing near the highs for the day and snapped 3-day losing streaks. The Dow Industrial Average is closing near unchanged/marginally lower.
The final numbers are showing:
- Dow industrial average -4.75 points or -0.01% at 33946.76
- S&P index +16.18 points or 0.37% at 4381.86
- NASDAQ index up 128.4 points or 0.95% at 13630.60
The small-cap Russell 2000 index did not fare as well with a decline of -14.83 points or -0.80% at 1848.17.
The Dow 30 was led by:
- Merck +2.3%
- Microsoft +1.84%
- Salesforce +1.76%
- Apple +1.65%
- Amgen +1.15%
Losers in the Dow today included:
- Boeing -3.04% after workers at a key supplier went on strike
- J.P. Morgan -1.93%
- IBM -1.89%
- Caterpillar -1.72%
- Goldman Sachs -1.69%
Big-cap technology companies continue to propel the market forward as the Nasdaq reaches its highest level of the session
- Nasdaq Composite rises 0.8%
The story of the stock market this year is now being called ‘the magnificent 7’ for the seven mega-cap tech stocks that are up massively since November and carrying the market this year. Here’s how they’re doing today:
- Amazon +3.8%
- Alphabet +1.7%
- Tesla +1.6% (after falling 4% at the open)
- Microsoft +1.6%
- Meta +0.4%
- Nvidia +0.1%
- Apple +1.5%
Amazon AWS looks to revolutionizes AI with $100M generative AI innovation center
- Amazon shares move higher
Amazon Web Services (AWS) announced an investment of $100 million in a new Generative AI Innovation Center.This innovative move serves to bridge the gap between AWS’s machine learning and AI specialists with their customers and partners. Amazon is planning to externalize its advanced artificial intelligence, known as large language models, later this year. The introduction of Generative AI is expected to be a significant driving force for Amazon’s business, promising to foster innovation and streamline solutions. They add that AI improvements will transform Alexa into more of a “personalized aide”.
Amazon shares have moved up to the highest level since September 15, 2022. The high price for the day just reached $129.92. The current prices trading up $4.87 or 3.9% at $129.60. The 50% midpoint of the move down from the 2022 high comes in at $134.74.
US sells 5-year TIPS at +1.832% vs 1.794% expected
- Results of the US 5-year TIPS sale
- Prior was was +1.320%
- Bid to cover at 2.56 vs 2.34 prior
US May existing home sales 4.30M vs 4.25M expected
- US May 2023 existing home sales data
- Prior was 4.28M
- Inventory of homes for sale 1.08M vs 1.04M prior
- Supply at months 3.0 vs 2.9 months prior (balanced is considered 6 months)
- Median sale price $396.1K vs $388.8K prior
- Median sale prices -3.1% y/y
A summary of the Fed Chair Powell’s major comments during his testimony on Capitol Hill
- Fed Chair concludes remarks on Capitol Hill
On Federal Reserve Policy
- Fed Chair Jerome Powell stated that the reverse repo facility has been decreasing since March and doesn’t account for the decline in bank deposits.He mentioned that the reduction of the balance has been orderly and doesn’t expect reserves to become scarce soon.
- Powell mentioned that tightening credit may act as a substitute for a rate hike and expressed that his forecasts align closely with the committee’s predictions.He reiterated that a strong majority of the committee believe two more rate hikes are necessary before the year ends.
- He also highlighted that the Federal Reserve decided to move more slowly last week, indicating a cautious approach to policy adjustment. He emphasized that we are nearing the destination on rates and it is sensible to proceed at a careful pace to avoid going overboard.
On Inflation and Labor Market
- Powell expressed that they anticipate inflation to decrease this year, and the labor market to continue to gradually cool.He noted a lack of progress in services inflation and still sees a long way to go in terms of monetary policy targets.
- Powell sees a path for inflation to continue falling with little increase in unemployment. He stated that he expects the unemployment rate to increase slightly and hopes that most of the labor market loosening will come through other means rather than unemployment.
On Monetary Policy Effectiveness
- Powell believes there isn’t a consensus agreement on the duration it takes for monetary policy to affect the economy, but approximated it to be around a year. He refuted the idea that monetary policy is becoming less effective and is committed to doing what it takes to bring inflation down to 2% over time.
On Rate Hikes
- Powell revealed that the FOMC broadly agrees it will be appropriate to raise rates again this year and perhaps two more times. He clarified that the decision to keep rates on hold was to provide more time for decision-making, hinting at a further cautious approach.
Fed’s Bowman: Additional hikes will be needed
- Comments from the Fed Governor
- Additional policy rate increases will be needed to reach sufficiently restrictive level and control inflation
- Inflation still ‘unacceptably high’ despite drop in the headline number
- Mon pol has some effect on the economy but core inflation has essentially plateaued since the fall of 2022
- Will look for inflation on a ‘consistent downward path’ in deciding appropriate policy steps at coming meetings
Commodities
Gold falls to the lowest level since mid-March
- Looks toward $1900
The price of gold is trading at $1915.70. The low price reached $1912.90 today. That took the price to the lowest level since March 16.
Looking at the daily chart, the price fell and closed below its 100-day moving average on Tuesday. That moving average comes in at $1942.58. Yesterday the price action remained below that level, and today that momentum to the downside has continued.
The 38.2% retracement of the move up from the September 28, 2022 low comes in at $1903.40 and is the next downside target. Move below that level and the sellers become even more in control off the daily chart. It would take a move back above the 100 day moving average to hurt the bias at least in the short term.
WTI crude oil sinks on inventories, settles $3.02 lower to $69.51
- WTI gives up this week’s gains and more
WTI crude oil fell $3.02 to settle at $69.51 as the oil market priced in a recession once again.This time it was more central bank hiking weighing, along with mixed US inventory reports.
EIA weekly natural gas inventories +95 vs +91B expected
- Weekly US national gas supply data
- Prior was 84B
EU News
European equity close: Fourth day of declines
- Rough week for European equities
Closing changes:
- Stoxx 600 -0.5%
- German DAX -0.3%
- French CAC -0.9%
- UK FTSE 100 -0.9%
- Italy MIB -0.7%
- Spain IBEX -0.8%
Eurozone June flash consumer confidence -16.1 versus -17.0 estimate
- June 2023 consumer confidence for the eurozone
- Prior was -17.4
- Flash consumer confidence for the eurozone -16.1 versus -17.4 last month and – 17.0 estimate
France June business confidence 100 vs 100 prior
- Latest data released by INSEE – 22 June 2023
- Prior 100
BOE surprises with 50 bps rate hike, bringing bank rate to 5.00%
- The Bank of England announces its monetary policy decision for June 2023
- Prior 4.50%
- Bank rate vote 7-2 vs 7-2 expected (Dhingra, Tenreyro voted to keep rates at 4.50%)
- Continuing to monitor closely the impact of the significant rate hikes so far
- Core goods price inflation has also been much stronger than projected
- But CPI inflation is expected to fall significantly further during the course of the year
- Food price inflation is projected to fall further in coming months
- If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required
JP Morgan now sees two further Bank of England rate hikes
- Sees terminal rate at 5.75%
The market is pricing in 6.00% or 6.25% so this isn’t exactly a hawkish forecast, but the direction of change is the important change. Surely they won’t be the last to hike forecasts.
SNB raises policy rate by 25 bps to 1.75%, as expected
- The Swiss central bank announces its monetary policy decision for June 2023
- Prior 1.50%
- Rate hike is to counter inflation, which has increased again over the medium-term
- Additional rate hikes cannot be ruled out to ensure price stability
- In the current environment, the focus is on selling foreign currency
- Will remain active in the FX market as necessary
- Sees 2023 inflation at 2.2% (previously 2.6%)
- Sees 2024 inflation at 2.2% (previously 2.0%)
SNB’s Jordan: The view that policy would be better by not tightening today is false
- Further remarks by Jordan
- Most likely we will have to tighten monetary policy again
- But we can also take a more gradual approach
- A gradual approach is appropriate at present, we can look again in September
- Monetary tightening has strengthened Swiss franc
- Still, underlying inflation pressure has risen further
- There is a danger inflation may become entrenched above 2%
- Inflation caused by higher rents not a reason to refrain from future rate hikes
Maechler is also chiming in with some comments as per below:
- SNB has sold foreign currencies in recent quarters
- Will continue that if this is appropriate for monetary policy
- Remain ready to buy foreign currencies if there is excessive franc appreciation
Other News
New Zealand data – May credit card spending +3.3% y/y
New Zealand May 2023 credit card spending +3.3% y/y
- +13.9% expected, prior was +11.4%
BOJ’s Noguchi: Exchange rate should move stably reflecting fundamentals
- Remarks by BOJ policymaker, Asahi Noguchi
- Yen decline last year was too rapid
- Weak yen hurts households via rising prices but benefit firms via increase in overseas profits, rise in inbound tourism
- Monetary policy does not directly target exchange rate
- Don’t need to make operational tweaks to YCC for the time being
Japan maintains overall economic assessment for the month of June
- Says that the economy is “recovering at a moderate pace”
But the government did at least raise their view on employment for the first time in 11 months, noting that “the employment situation has shown movements of improvement recently”.
Cryptocurrency News
MATIC price fails to breach $0.7, leaving over 100k investors stuck in losses
- MATIC price did rise to $0.71 during the intra-day trading hours, but broader market cues resulted in a pullback.
- This bullish momentum failing might result in a slowdown in the gradually receding network-wide losses.
- More than 100k investors with 1.3 billion MATIC in losing positions are still waiting for a recovery.
MATIC price has had a rather disappointing day, with the mixed signals from the broader market impacting the altcoin significantly. This most certainly did not sit well with the investors as they were expecting a much larger recovery on the back of Bitcoin breaching a critical barrier.
PEPE price explodes with 74% weekly gains, traders speculate whether meme coin rally is sustainable
- PEPE climbed 74% over the week in an explosive price rally.
- The internet frog meme-inspired coin has emerged as one of the best-performing cryptocurrencies amidst regulatory crackdown.
- Gemini exchange hinted at PEPE coin listing early on Thursday, fueling a bullish sentiment among holders.
PEPE, one of the largest meme coins in the crypto ecosystem, yielded upwards of 80% gains for holders over the past seven days. PEPE price advanced nearly 74% since Monday’s opening price of $0.00000093.
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