North American News
Strong day for US stocks as major indices snap 2-day losing streak
- NASDAQ and S&P rebounds after falling 5 last 6 trading days
The border S&P and NASDAQ index have been down 5 of the last 6 trading days. The NASDAQ index fell -3.24%. The S&P index fell -2.19%. However, each of those indices are up solidly today retracing some of the declines.
The final numbers are showing:
- Dow industrial average rose 211.74 points or 0.63% at 33926.46
- S&P index rose 49.51.41.14 percent at 4378.32
- NASDAQ index rose 219.88 points or 1.65% at 13555.66
The small-cap Russell 2000 index recovered as well with a gain of 26.66 points or 1.46% at 1849.92
- Meta rose $8.53 or 3.06% after Citi’s bullish overweight rating bump. Meta shares are up over 130% in 2023
- Nvidia rose $12.38 or 3.05%
- Adobe rebounded $9.71 or 2.02%
- Microsoft rose $5.96 or 1.81%
- Apple rose $2.75 or 1.48%
- Tesla rose by $9.16 or 3.80%
- Delta Airlines rose $2.94 or 6.82%
- Unity Software was a big winner with a gain of $5.66 or 15.41%
Alphabet was a laggard today as it works through a number of recent downgrades. It closed near unchanged at $180.33
Concerns about the US economy rolling into a recession were erased after durable goods came in better than expectations, housing data was strong, and consumer confidence pushed higher. That might not be good for inflation if it persists but it is good for Goldilocks views.Yields in the US moved higher and are trading near the highs for the day:
- 2-year yield 4.761% +9.1 basis points
- 5-year yield 4.034% +7.0 basis points
- 10-year yield 3.765% +4.7 basis points
- 30-year yield 3.837% +1.9 basis points
US treasury auctions off $43 billion of 5-year notes at a higher yield of 4.019%
- WI level at the time of the auction was 4.012%
- High-yield 4.019%
- WI level at the time of the auction 4.012%
- Tail 0.7 bps vs. 6-month auction average of -0.8bps.
- Bid-to-Cover 2.52X vs. 6-month auction average of 2.53x.
- Dealers 12.21% vs.6-month auction average of 12.2%.
- Directs (a measure of domestic demand) 19.7% vs 6-month auction average of 17.7%.
- Indirects (a measure of international demand) 68.1% vs. 6-month auction average of 70.1%.
US May new home sales 763K vs 675K expected
- US May 2023 new home sales data
- Prior was 683K (revised to 680K)
- Single family sales +12.2% vs +3.5% prior
- Median sale price $416.3K vs $450.7K a year ago
- Supply 6.7 months vs 7.6 months prior
S&P Case Schiller for April 0.9% versus 0.4% expected
- S&P Case Shiller Home Price data for April
- Prior month 0.5% revised to 0.4%
- Case Shiller Home Price 0.9% versus 0.4% expected
- case Shiller not seasonally adjusted +1.7% versus 1.6% last month (revised from +1.5%).
- Case Shiller year on year -1.7% versus -2.6% expected. The prior month came in at -1.1%
Among the 20 cities reported in March, Miami, Chicago, and Atlanta experienced the highest year-over-year gains.
- Miami led with a 5.2% year-over-year price increase.
- Chicago took second place with a 4.1% increase.
- Atlanta reclaimed third place over Charlotte with a 3.5% increase.
- 17 out of 20 cities reported lower prices in the year ending April 2023 compared to the year ending March 2023.
- Only Boston, San Francisco, and Cleveland showed slight increases of 0.1%, 0.1%, and 0.9%,
Richmond Fed manufacturing index for June -7 versus -15 last month
- Richmond Fed index for the month of June 2023
- Prior month -15
- Manufacturing index -7 versus -15 last month
- Fifth District manufacturing activity was relatively flat in June, with the composite manufacturing index improving from -15 in May to -7 in June.
- Two of its three component indexes — shipments and new orders — also improved but remained negative. Shipments index rose from -13 in May to -5 in June, while the new orders index rose from -29 to -15.
- The employment index slightly decreased from 5 in May to 2 in June.
- Firms were less pessimistic about local business conditions as the index rose to -8 in June from -16 in May.
- The index for future local business conditions also improved, increasing to 3 from -16.
- Many firms continued to report reductions in orders backlogs and vendor lead time, as these indexes remained negative.
- All three spending indexes increased.
- The average growth rate of prices paid decreased somewhat in June, while the average growth rate of prices received decreased notably.
- Firms expect both growth rates to moderate over the next 12 months.
Atlanta Fed GDPNow dips to 1.8% from 1.9% last
- Atlanta fed GDP now estimate for Q2 growth
The Atlanta Fed GDPNow estimate for Q2 growth dipped to 1.8% from 1.9%.In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2023 is 1.8 percent on June 27, down from 1.9 percent on June 20.After recent releases from the US Census Bureau and the National Association of Realtors, the nowcast of second-quarter real gross private domestic investment growth decreased from 9.7 percent to 8.6 percent.
US June consumer confidence 109.7 vs 104.0 expected
- US June 2023 consumer confidence data from the Conference Board
- Prior was 102.3
Details:
- Present situation index 155.3 vs 146.8 prior
- Expectations index 79.3 vs 71.5 prior
- 1 year Inflation 6.0% vs 6.1% prior
- Jobs hard-to-get 12.4 vs 12.5 prior
Dallas Fed Texas June service sector outlook survey -8.2 vs -17.3 prior
- The latest survey from the Dallas Fed for June 2023
- Prior was -17.3
- Revenue outlook +3.6 vs +6.9 prior
- Wages +18.6 vs +16.6 prior
- Selling prices +12.8 vs +13.8 prior
- Company outlook -1.4 vs -9.5 prior
US May advance durable goods orders (preliminary) 1.7% versus -1.0% expected
- US advance durable goods orders for May 2023
- Prior month +1.1% revised to 1.2%
- Durable goods orders 1.7% versus expectations of -1.0%.Prior month +1.1% revised to 1.2%. This marks an increase for three consecutive months, following a 1.2 percent increase in April.
- Transportation equipment orders led the increase, going up $3.9 billion or 3.9 percent to $102.6 billion.
- Ex Transportation 0.6% versus expectations of -0.1%. Prior month -0.2% revised to -0.6%
- Ex Defense 3.0% versus the prior month of -0.6% revised to -0.5%.
- Non-defense Cap Ex-air 0.7% vs expectations of 0.0%. Prior month +1.4% revised to 0.6%
Morgan Stanley sees Fed hiking rates by 25 bps in July
- It will just be a “skip” and not a “pause”, says Morgan Stanley
The firm adds that they are also upping their terminal rate forecast for the Fed to 5.375% from the 5.10% previously.
I would argue it is still early days and we are yet to hear of anything firm from Fed speakers recently.In any case, the FOMC meeting will be on 26 July so there is still roughly four weeks to go.And there will still be plenty of big data coming up before that, with the US CPI data set to be released on 12 July next.
Canada May CPI 3.4% y/y versus 3.4% expected
- Details of Canada’s CPI for the month of May 2023
- Lowest reading since June 2021
- Prior was 4.4%
- CPI m/m +0.4% vs +0.5% expected
- Prior m/m reading was 0.7%
- Gasoline prices -18.3% vs -7.7% y/y in prior month
- Gasoline prices -0.8% m/m vs +6.3% prior month
- Ex gasoline +4.4% vs +4.9% prior
- Food +8.3% vs +9.1% y/y prior
- Mortgage interest costs 4.9% y/y vs 4.9% increase in April
- Goods inflation +2.1% y/y
- Services inflation +4.9%
Core measures:
- BOC core y/y 3.7% vs 3.9% expected (prior 4.1%)
- BOC core m/m +0.4% vs +0.5% prior
- Median 3.9% vs 4.2% prior
- Trim 3.8% vs 4.2% prior
- Common 5.2% vs 5.7% prior
Commodities
US crude oil futures settle at $67.70
- Down $1.67 or 2.41%
The price of WTI crude oil futures is settling at $67.70 today. That is down $-1.67 or -2.41%. The low price reached $67.55. The high price was at $70.15.
Current economic projections lean toward the potential for recessions in the US (and other global economies) and that has traders worried about the demand-side. That view comes despite pretty decent US economic data today from durable goods, consumer confidence, and housing.
Natural Gas price plateaus after Russia turmoil eases
- Natural Gas price trades little changed on Tuesday after geopolitical risk surrounding Russia eases with Wagner coup U-turn.
- The summer heatwave in much of North America and Europe continues to drive demand for Natural Gas to power air conditioning.
- Price has climbed towards a significant level around $3.000 MMBtu where the longer-term downtrend could be at risk of reversing.
Natural Gas price trades flat at the start of the US Session on Tuesday after posting four consecutive days of gains. Traders had been bidding up the commodity on the back of fears political turmoil in Russia could disrupt supply, and as higher-than-average temperatures in much of the Western World increase demand for Natural Gas used in air conditioning.
Natural Gas is trading in the $2.800s MMBtu on Tuesday, during the US session.
Natural Gas news and market movers
- Natural Gas trades flat after the Wagner mutiny suddenly grinds to a halt, easing concerns Russian supply might suffer in the event of civil war, according to CNN.
- Analysts also believe the market is pricing in a greater risk premium after the failed coup over the weekend.
- Demand for Natural Gas to power air conditioning continues to be high as much of the US and Europe experience hotter-than-usual temperatures for this time of year.
- Norwegian supply concerns, after outages at the Hammerfest LNG export terminal and the processing plants at Nyhamna and Kollsnes, continue to underpin prices.Norway has taken over from Russia as Europe’s main source of Natural Gas.
- Weaker demand from faltering global growth, however, has offset the threat to supplies.
- Last week’s Purchasing Manager Index data was on the whole poor for most of Europe and the US, potentially indicating a weaker global economic growth trajectory.
OPEC denies to inviting Guyana to be part of the organisation
- Insert sarcastic comment here
There was a report yesterday stating that OPEC were had invited Guyana, one of the more faster growing oil producers globally at the moment, to join its cartel. However, that was swiftly denied by the country itself:
“We were not formally invited to join OPEC. That is not something we are interested in.We have been invited, however, to participate in OPEC meetings.”
EU News
European equity close: Six-day losing streak in the Stoxx 600 halted
- Closing changes for the main European bourses
- Stoxx 600 +0.1%
- German DAX +0.3%
- French CAC +0.5%
- UK FTSE 100 +0.2%
- Italy MIB +0.6%
- Spain IBEX +1.3%
BOE’s Dhingra: UK wages are responding to inflation with a lag
- Remarks by BOE policymaker, Swati Dhingra
- Sharp drop in PPI is promising
- There is a lag between fall in PPI and CPI around one or two quarters
- Food prices is where inflation remains most stubborn
- Not very convincing to argue that UK grocery inflation is driven by “greedflation”
ECB’s Lagarde: Inflation remains too high
- Remarks by ECB president, Christine Lagarde
- We are committed to reaching inflation target come what may
- We cannot waver, cannot declare victory yet
- Need to bring rates to “sufficiently restrictive” territory
- Need to communicate clearly that we will stay at those levels for as long as necessary
- Have not yet seen the full impact of the cumulative rate hikes since last July
- Not likely to say with full confidence that rates have peaked
ECB sources: Sees little chance of a pause in rate hikes in July or September
- ECB sources on Reuters
An ECB’s sources comment is being reported on Reuters saying:
- Policymakers see little chance of a pause in rate hike’s in July or September as inflation remains stubbornly high.
ECB’s Wunsch: Rate pause would need a clear signal of slowing core inflation
- Wunsch comments
- Rate pause needs a clear signal that core inflation is slowing
- Stagflation is the base case
- More action is needed if core does not moderate
ECB’s Kazaks: Market bets on rate cuts in early 2024 are wrong
- Remarks by ECB policymaker, Martins Kazaks
- Sees rate hikes going past July as inflation remains too high
- Softness of the economy is unlikely to deal with inflation
- There are still strong risks of persistence in inflation
- Don’t think that in July we’ll be comfortable enough to say “we’re done”
ECB’s Simkus: Should not rule out the option of a September rate hike
- Remarks by ECB policymaker, Gediminas Simkus
- We are not done with hiking rates
- Too early to say whether there will be a rate hike in September
- Must keep rates restrictive to reach 2% inflation target
ECB’s Wunsch: We must accept that our ability to fix inflation at exactly 2% is limited
- Comments from Wunsch in Germany’s SZ newspaper
- If inflation is at 2.3% and the economy is weak, I wouldn’t tighten monetary policy
Other News
Japan finance minister Suzuki says recent FX moves are sharp, one-sided
The ‘sharp, one-sided’ comments are more firthright than usual. More strident.
Suzuki’s statement:
- Fx should move stably reflecting fundamentals
- Recent fx moves are sharp, one-sided
- Will respond appropriately if fx moves become excessive
UBS is preparing to cut more than half of Credit Suisse’s workforce
- That’s a tough one to swallow
How Bill Hwang cost Credit Suisse $4.7 billion via a leveraged squeeze on Paramount shares is one of the all-time great screwjobs.
Cryptocurrency News
Ethereum investors react to Shanghai upgrade contrary to expectations, enabling staking withdrawals
- Ethereum staking has seen a 280% increase in monthly average since the Shapella upgrade.
- With the option to withdraw their investment, investors seem to be more secure in staking their ETH, as noted by the rising number of new depositors.
- The minimal withdrawal has also kept Ethereum price from falling sharply, resulting in ETH following the broader market cues.
Ethereum price was expected to decline after the Shanghai upgrade was scheduled to go live as many believed investors would jump to unstake and sell their ETH for profits. Interestingly that did not occur, and instead, investors took a different approach – staking more, not less ETH.
Ethereum investors turn more bullish after Shapella
Ethereum network experienced significant withdrawals of staked ETH before the Shapella upgrade first went live. But the tables turned pretty quickly post the Merge in September 2022, when the average ETH staked every month increased from 560,000 to 630,000 ETH.
The average of monthly ETH staked then increased by about 280% in April after the Shanghai hard fork took place. The trend continued, and at the moment, on average, investors seem to be staking nearly 2.4 million ETH, with the month of May registering the highest inflows.
Bitcoin briefly hits $31,000 as Fidelity joins the spot ETF race
- Everyone thinks someone knows something
Fidelity is preparing to submit a a bitcoin ETF, according to The Block.
BlackRock kicked off a fresh bitcoin ETF frenzy on June 15 with a filing that caught the market by surprise. Many are speculating that BlackRock received some kind of nudge in a process that’s been stagnant for many years.
The Fidelity report suggests they may have received some of the same intelligence, adding credence to it. The thinking may be that US regulators will shut down crypto exchanges but allow bitcoin to be traded via ETF as some kind of compromise. Fidelity previously filed for a bitcoin ETF in 2021 but it was denied.
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