Round up of today’s market news

North American News

US Stocks Close with Mixed Results in Uneventful Trading Session

• One day to US jobs

US stocks ended the day with mixed results and little overall change as investors braced for the upcoming US jobs report, set to be released tomorrow at 8:30 AM ET. Apple shares snapped their eight-day winning streak, closing down $1.37, or 0.70%, at $194.50. Nvidia, vying with Apple for the position of the second-largest market capitalization firm, also saw a decline, with its shares dropping $13.98, or 1.14%, to close at $1,210.45. The market exhibited caution as traders positioned themselves ahead of the critical jobs data, which is expected to provide insights into the economic landscape and influence future monetary policy decisions.

The final numbers are showing:

• Dow Jones Average rose 78.84 points or 0.20% at 38886.18
• S&P fell -1.09 points or -0.02% at 5352.95
• Nasdaq fell -14.78 point or -0.07% at 17173.12

The small-cap Russell 2000 fell -14.43 points or -0.70% at 2049.42

Atlanta Fed GDPNow growth estimate for Q2 bounces to 2.6% from 1.8% previously

• Hold off on the slower growth as the Atlanta Fed GDP growth estimate rebounds

Earlier this week,the Atlanta Fed Atlanta Fed GDPNow growth estimate for Q2 fell sharply to 1.8% from 2.7% previously.Today that decline was nearly fully erased with the bounce back up to 2.6%.

In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2024 is 2.6 percent on June 6, up from 1.8 percent on June 3.After recent releases from the US Census Bureau, the Institute for Supply Management, and the US Bureau of Economic Analysis, the nowcasts of second-quarter real personal consumption expenditures growth and second-quarter real gross private domestic investment growth increased from 1.8 percent and 4.6 percent, respectively, to 2.4 percent and 5.8 percent, while the nowcast of the contribution of the change in real net exports to second-quarter real GDP growth increased from -0.54 percentage points to -0.50 percentage points.

US treasury announces coupon auctions for next week. Auction sizes come in as expected

• 3 year $58B. 10 year $39B and 30 year $22B

The U.S. Treasury will auction off 3/10/30-year coupon issues week.

• 3-year $58 billion as expected
• 10-year $39 billion as expected
• 30-year $22 billion as expected.

The 10 and 30 year will be re-opened (9 year 11 months and 29 year 11 months). The 3 year will be a new issue.

The three year will be auctioned on Monday, June 10.The 10 year on Tuesday, June 11 and the 30 year on Thursday, June 13.

The FOMC meeting will be on Wednesday, June 12.

US initial jobless claims 229K vs 220K estimate

• The weekly US initial jobless and continuing claims for the current week

• Prior week initial jobless claims 219K revised 221K last week
• Initial jobless claims 229K vs 220K estimate
• 4-week moving average of initial jobless claims 222.25K vs 223.0K last week
• Prior week continuing claims 1.791M revised to 1.790M
• Continuing claims 1.792M vs 1.790M estimate
• 4-week moving average continuing claims 1.789M vs 1.786M last week

A tick up in the initial jobless claims, but continuing claims remains steady and generally lower (see chart below).

US Q1 revised non-farm productivity +0.2% vs +0.3% q/q prelim

• Latest data released by the BLS – 6 June 2024
• Unit labour costs +4.0% vs +4.7% q/q prelim

From the same quarter a year ago, non-farm business labor productivity increased by 2.9%. That marks the largest four-quarter increase since the Q1 2021. Meanwhile, the labour cost split shows a 4.2% increase in hourly compensation and 0.2% increase in productivity.

US May Challenger layoffs 63.82k vs 64.79k prior

• Latest data released by Challenger, Gray & Christmas, Inc. – 6 June 2024

US-based employers announced 63,816 job cuts in May this year, which is a roughly 20% decline compared to the same month a year ago. The number of layoffs is little changed compared to April, but this still represents the third-highest January-to-May total since 2009. Looking at the details, tech continues to lead job cuts overall but is significantly lower (60%) compared to the same period last year.

US international trade deficit for April $-74.6 billion versus -76.1 billion estimate

• US international trade deficit for April 2024

• Prior month $-69.4 billion glass two US$-60.6 billion
• international trade deficit for April 20 US -$74.1B versus -$76.1 billion estimate
• Good deficit $99.21 billion. Services surplus $24.65 billion

Details:

• US April exports +0.8% versus March -1.7%
• US April imports +2.4% versus March -1.5%
• US exports $263.67 billion versus $261.61 billion last month
• US imports $330.23 billion versus $330.19 billion last month.
• US Goods imports $78.08 billion versus $75.71 billion last
• US – China people trade deficit $-20.11 billion versus $-17.17 billion last month.
• April oil imports priced $73.72 versus $69.39 last month. Oil import price is up +6.8% from April 2023 level $69.05

U.S. Commerce Secretary Gina Raimondo announces US$25bn Indo-Pacific Infrastructure

• A tie up with private equity firms KKR and Global Infrastructure Partners (GIP)

Info via Reuters:

• U.S. Commerce Secretary Gina Raimondo said on Thursday that private equity firms KKR and Global Infrastructure Partners (GIP) and the newly formed Indo-Pacific Partnership for Prosperity were forming a coalition to invest $25 billion in infrastructure in the region.
• Raimondo, speaking in Singapore, said investments would include green data centers in Indonesia, renewable energy in the Philippines and smart meters and hybrid renewables in India.

Goldman Sachs sees a “wall of money” pouring into the US equity market in Q3

• Goldman Sachs’ global markets division managing director Scott Rubner with the projection.

• Says there will be a “wall of money” pouring into the equity market during Q3 this year
• money from passive equity allocations will come into the stock market in early July
• will push the current rally higher through early (northern) summer

Cites seasonality:

• strong seasonal trends coming from retail investors,
• historically, the first 15 days of July were the best two-week trading period of the year for equities
• rally tends to fade after July 17

Canada Ivey PMI index seasonally adjusted 52.0 versus 63.0 last month

• The May Canada Ivey PMI index

• Prior month 63.0
• Ivey seasonally adjusted PMI for May 52.0
• Not seasonally adjusted to 59.1 versus 65.7 last month

Canada April trade balance -$1.05 billion vs -$1.40 billion expected

• Latest data released by Statistics Canada – 6 June 2024

• Prior -$2.28 billion; revised to -$1.99 billion
• Exports $64.45 billion
• Prior $62.56 billion; revised to $62.81 billion
• Imports $65.50 billion
• Prior $64.84 billion; revised to $64.80 billion

Bank of Canada rate cut – will cut again in July and 100bp in total for 2024

• Easily leaves open a 1.40-handled USD/CAD

Snippet now from ScotiaBank, expecting another cut in July and 100bps of easing this year from 75bps previously

• Bank of Canada Governor Macklem is “setting a high bar against not cutting again in July”
• We think they will wish to deliver this 100bps in a straight line fashion until the October meeting

While Scotia make these forecasts, they aren’t happy, and see numerous points of concern for higher inflation ahead:

• Canada continues to face higher full-cycle inflation risk than the US and the BoC should be much more careful than the Governor sounded today
• There are several drivers of relative inflation risk
• Wage growth remains in excess of productivity in Canada by contrast to the US.
• Fiscal policy is still adding to growth and likely to add even more into an election year.
• Severe housing shortfalls are very likely to persist and maintain high upward pressure on shelter costs.
• The economy is outperforming the BoC’s expectations coming into the year with the consumer doing rather well.

On the CAD, “Green Light to Sell”

• Macklem sounded remarkably indifferent toward the currency. When asked about the currency and implications for importing inflation, he said: “One of the ways monetary policy works is through the exchange rate.We don’t have a target for the exchange rate.We believe in flexible exchange rates. By being clear about our forecasts, markets have a very good idea of what’s on our mind which is going to be reflected in markets.” I choked on “clear” in their forecasts considering he just cut when he said he wouldn’t, but the main point here is not to disagree with his comments on CAD but to view them as signaling he would tolerate a lot further currency weakness from here.
• That easily leaves open a 1.40-handled currency

Bank of Canada rate cut – the BoC isn’t done, another 50bp of cuts in 2024, more in 2025

Via TD now, analysts there are expecting another 50bp of cuts this year, the first of these to come in July and then a [pause.

• “The BoC didn’t want to wait any longer to cut rates. The central bank saw its window to make a move and took it. This was made easier with market pricing moving towards a June cut over the last few weeks.”
• “We expect the BoC isn’t done. We have the central bank cutting twice more in 2024, before continuing the cutting cycle throughout 2025.”

Bank of Canada rate cut – expect a further 75bp of cuts in the second half of the year

• Canadian dollar is likely to remain under pressure

A response from ING to the decision:

• The Bank of Canada has clearly concluded that diminishing inflation worries and excess supply in the economy mean its monetary policy doesn’t need to be quite so restrictive.
• This 25bp move is likely to be followed by a further 75bp of cuts in the second half of the year.
• The Canadian dollar is likely to remain under pressure

And, further out:

• USD/CAD short-term risks are moderately skewed to the upside, but in line with our call for US data to start pointing to a September Fed cut, the pair can still find its way into 1.35 in the second half of the year.

Commodities

Gold Surges to Two-Week Peak Amid Dismal US Jobs Report Pre-NFP Release

• Gold climbs 0.54% and reaches a two-week high of $2,378.
• Higher-than-expected US jobless claims weaken US Dollar
• Traders focus on upcoming Nonfarm Payrolls; forecasts suggest 185,000 new jobs with a 3.9% Unemployment Rate.

Gold hit a two-week high of $2,378 on Thursday after the US BLS announced weaker-than-expected jobs data. The yellow metal trades at $2,369, registering a gain of 0.54% after bouncing off weekly lows of $2,320.

Gold price capitalizes again

• US Initial Jobless Claims for the week ending May 31 rose by 229,000, above estimates of 220,000 and the previous reading of 221,000
• ADP Employment Change revealed that private US hiring in May rose by 152K, below estimates of 175K and missing April’s 188K.
• Softer-than-expected Nonfarm Payrolls data could increase the odds of rate cuts by the Federal Reserve.
• According to the Fed’s Watch Tool, traders are currently pricing in a 57% chance of a rate cut in September.
• Last week, the US Core PCE, the Fed’s preferred inflation gauge, stabilized, boosting hopes for potential rate cuts.

Crude oil futures settle at $75.55

• Up $1.48 or 2.00%

Crude oil futures are settling at $75.55.That is up $1.48 or 2.0%. The high price today reached $75.79. The low price was at $74.06. The price bottom this week at $72.48 on Tuesday. For the trading week the price is still down -1.9% or $-1.46, but well off the low of $-4.51.

Morningstar say OPEC is operating from a weak position, to weigh on oil

• WTI to drop to as low as $65 by the end of this year

A Morningstar energy and utilities strategist says OPEC is operating from a position of weakness, in an oversupplied market

• pointing to near-term oil price weakness
• oil prices are more likely to hit S70 a barrel (WTI) and perhaps below S65 by the end of 2024
• OPEC has three separate cuts in progress at the moment, totaling 5.86 million barrels per day.
• The key phrase in the announcement, in our view, was that the monthly increases from the reversal of the 2.2 million barrels per day cut can be “paused or reversed subject to market conditions.” In other words, we could expect the 2.2 million barrels per day reversal to be placed on hold, if the market remains oversupplied. The extensions look particularly weak when OPEC is assuming about 2.25 million barrels per day of oil demand growth in 2024, while the International Energy Agency is less than half of that at 1.06 million barrels per day.Further, the International Energy Agency and US Energy Information Administration have been cutting demand growth forecasts for 2024, while OPEC’s forecast has been unchanged since the start of 2024.In other words, OPEC’s own demand forecast looks potentially stale, and even if OPEC believes it remains accurate, it has now been undercut by the extensions of reduction cuts.

From a note on Tuesday.

ICYMI – Saudi Aramco lowered prices for all of its oil to Asia, increased to Europe though

• Price reduction for Asia in July

Saudi Aramco lowered prices for all of its oil to Asia for July 2024. This is the first price cut since February. next month, the first reduction since February

• reduced its Official Selling Price (OSP) for the flagship Arab Light crude loading in July for refiners in Asia
• $0.50/b reduction, which was in line with expectations
• medium & heavy cut by 40 cents, extra light cut by 60 cents

On the other hand, Aramco increased premiums to Europe

• to reflect the underlying weakness in Brent relative to Dubai

EU News

European indices close higher on the day

• Major European stock indices end the day up, with Italy’s FTSE MIB and Spain’s Ibex leading the rally. US markets mixed, crude oil and metals rise, Bitcoin and Ethereum see positive movement.

Major European indices closed the day with gains across the board:

• German DAX, +0.41%
• France CAC, +0.42%
• UK FTSE 100 +0.47%
• Spain’s Ibex +0.80%
• Italy’s FTSE MIB +0.95%

looking at European debt market, yields are closing mostly higher:

• Germany 2.548%, +4.2 basis points
• France 3.042%, +4.4 basis points
• UK 4.175%, -1.0 basis points
• Spain 3.284%, +4.5 basis points
• Italy 3.869%, +5.0 basis points

ECB cuts key interest rates by 25 bps in May monetary policy meeting, as expected

• ECB announces their latest monetary policy decision – 6 June 2024
• Prior decision
• Main refinancing rate 4.25% vs 4.25% expected
• Prior 4.50%
• Deposit facility rate 3.75% vs 3.75% expected
• Prior 4.00%
• Marginal lending facility 4.50%
• Prior 4.75%
• Determined to ensure that inflation returns to its 2% medium-term target in a timely manner
• Will keep policy rates sufficiently restrictive for as long as necessary
• To continue to follow a data-dependent and meeting-by-meeting approach
• Not pre-committing to a particular rate path
• To reduce holdings of securities under PEPP by €7.5 billion per month on average in 2H 2024
• ECB stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its 2% target over the medium term

In terms of their latest forecasts, the ECB sees that:

• Economic growth is to pick up to 0.9% in 2024, 1.4% in 2025, and 1.6% in 2026
• Inflation is to average 2.5% in 2024, 2.2% in 2025, and 1.9% in 2026
• Core inflation is to average 2.8% in 2024, 2.2% in 2025, and 2.0% in 2026

Eurozone April retail sales -0.5% vs -0.3% m/m expected

• Latest data released by Eurostat – 6 June 2024

• Prior +0.8%; revised to +0.7%

The details:

Germany May construction PMI 38.5 vs 37.5 prior

• Latest data released by HCOB – 6 June 2024

• Prior 37.5

It’s only a marginal improvement in German construction activity on the month. But overall, conditions are still in the dumps with new orders slumping hard once again. Of note, firms are also seen continuing to retrench accordingly, scaling back both purchasing activity and employment. The housing sector remains the worst performer but the declines are also broad-based in the commercial and civil engineering sectors.

Germany April industrial orders -0.2% vs +0.5% m/m expected

• Latest data released by Destatis – 6 June 2024
• Prior -0.4%

UK May construction PMI 54.7 vs 52.5 expected

• Latest data released by S&P Global – 6 June 2024

• Prior 53.0

It’s all looking good for the UK construction sector, with another increase in overall activity seen in May. That owes to a further rise in new orders but there are also further improvements in other areas like employment and purchasing. That’s a good sign at least in this part of the economy. S&P Global notes that:

“The UK construction sector looks to be building good momentum as we approach the middle of 2024, highlighted by activity increasing at the fastest pace in two years during May. Particularly pleasing was the broad-based nature of the rise in activity as work on housing projects increased for the first time in more than a year-and-a-half.

“Firms are gearing up for further growth in the months ahead, posting renewed expansions in both employment and purchasing activity as workloads increase.

“Moreover, the supply-chain environment continued to improve in May. Companies were able to secure inputs much more quickly than in April and at prices that were only slightly higher than in the previous month on average. These factors should help constructors in their efforts to ramp up operations in line with greater new order inflows.”

UK businesses see no change to CPI outlook for the year ahead – survey

• The latest findings from the BOE DMP survey for the month of May

• Year-ahead CPI seen at 2.9% (unchanged from April)
• Year-ahead output price inflation seen at 3.9% (vs 4.0% in April)
• Year-ahead output wage growth seen at 4.5% (vs 4.8% in April)

Switzerland May seasonally adjusted unemployment rate 2.4% vs 2.3% prior

• Latest data released by SECO – 6 June 2024
• Prior 2.3%

The Swiss jobless rate ticks a little higher on the month, although the unadjusted reading remains the same at 2.3%. The registered number of unemployed persons is seen at 105,465 in May and even down from the 106,957 persons in April.

Some ECB hawks argued that committing to June rate hike too early was a mistake

• More from ECBs sources post the ECB rate cut

Despite the cut in rates today by 25 basis points:

• Some ECB hawks argued that committing to June rate cut too early was mistake
• A few ECB hawks said they might have supported holding rates if there had not been a commitment.

No cut seen in July at the ECB

• September the focus for the next cut window

Reuters is reiterating and ECBs sources piece released on Bloomberg earlier. That is

• ECB governors see a July cut as unlikely.
• The ECB is focused on September as a potential rate cut meeting.

ECB’s Lagarde: Rate cut today is justified by confidence in the path ahead

• ECB president, Christine Lagarde, comments in her press conference

• Expects euro area economy to continue to recover in the coming quarters
• That follows the growth in Q1, after five quarters of “stagnation”
• Services sector is expanding, manufacturing is showing signs of stabilisation
• Price pressures are gradually diminishing
• However, wages are still rising at an elevated pace
• But forward-looking indicators signal that wage growth will moderate during the year
• Inflation expected to fluctuate around current levels for this year
• Inflation to only decline towards target in 2H 2025
• Risks to growth are balanced in the near-term but are skewed towards the downside in the medium-term
• At each and every step of the way when we decide to move, we have halved inflation
• In October 2022, we were at peak inflation i.e. double-digit inflation
• In September 2023, we were at 5.2% inflation
• And today, we are at 2.6% inflation
• “Markets do what markets have to do, and we do what we have to do”

The full statement from the June 2024 ECB rate decision

• The full statement from the June 2024 rate decision

The Governing Council today decided to lower the three key ECB interest rates by 25 basis points.Based on an updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it is now appropriate to moderate the degree of monetary policy restriction after nine months of holding rates steady. Since the Governing Council meeting in September 2023, inflation has fallen by more than 2.5 percentage points and the inflation outlook has improved markedly. Underlying inflation has also eased, reinforcing the signs that price pressures have weakened, and inflation expectations have declined at all horizons. Monetary policy has kept financing conditions restrictive.By dampening demand and keeping inflation expectations well anchored, this has made a major contribution to bringing inflation back down.

At the same time, despite the progress over recent quarters, domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year.The latest Eurosystem staff projections for both headline and core inflation have been revised up for 2024 and 2025 compared with the March projections.Staff now see headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026.For inflation excluding energy and food, staff project an average of 2.8% in 2024, 2.2% in 2025 and 2.0% in 2026.Economic growth is expected to pick up to 0.9% in 2024, 1.4% in 2025 and 1.6% in 2026.

The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. It will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim.The Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction.In particular, its interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.The Governing Council is not pre-committing to a particular rate path.

The Governing Council today also confirmed that it will reduce the Eurosystem’s holdings of securities under the pandemic emergency purchase programme (PEPP) by €7.5 billion per month on average over the second half of the year.The modalities for reducing the PEPP holdings will be broadly in line with those followed under the asset purchase programme (APP).

Key ECB interest rates

The Governing Council decided to lower the three key ECB interest rates by 25 basis points.Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 4.25%, 4.50% and 3.75% respectively, with effect from 12 June 2024.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)

The APP portfolio is declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.

The Governing Council will continue to reinvest, in full, the principal payments from maturing securities purchased under the PEPP until the end of June 2024.Over the second half of the year, it will reduce the PEPP portfolio by €7.5 billion per month on average.The Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.

The Governing Council will continue applying flexibility in reinvesting redemptions coming due in the PEPP portfolio, with a view to countering risks to the monetary policy transmission mechanism related to the pandemic.

Refinancing operations

As banks are repaying the amounts borrowed under the targeted longer-term refinancing operations, the Governing Council will regularly assess how targeted lending operations and their ongoing repayment are contributing to its monetary policy stance.

The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission.Moreover, the Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.

Asia-Pacific-World News

PBOC sets USD/ CNY reference rate for today at 7.1108 (vs. estimate at 7.2436)

• PBOC CNY reference rate setting for the trading session ahead

PBOC injects 2bn via 7-day RR, sets rate at an unchanged 1.8%

• 260bn mature today
• a net drain of 258bn yuan in Open Market Operations (OMOs)

Australia Trade balance (May) AUD 6.548bn surplus (expected AUD5.5bn surplus)

• Slump in imports a big part of the widened surplus on the month

Australia Trade Balance for April 2024 comes in at a surplus of AUD 6.548bn

• expected AUD5.4bn, prior AUD5.02bn

Exports -2.5% m/m

• prior -0.6%

Imports -7.2% m/m

• prior +4.2%

Australia housing finance data for April, Owner occupied loans +4.3% m/m

• Solidly higher, the trend looks higher too

Home loans value +4.8%

• expected +1.5%, prior +3.8%

Owner occupied loan value +4.3% m/m

• prior +3.5%

Investor loan value +5.6% m/m

• prior +4.4%

New Zealand data: ANZ Commodity Price Index for May +1.1% m/m (prior 0.5%)

• A summary of the price trends for New Zealand’s 17 main commodity exports.

The index offers a summary of the price trends for New Zealand’s 17 main commodity exports.

+1.1% m/m

• prior +0.5%

In New Zealand dollar terms, the index fell 0.7% m/m as the NZD Trade Weighted Index lifted 1.3%

ANZ on Global shipping prices:

• firmed during May
• The volatile Baltic Dry Index did ease slightly during the month, but both the China Containerized Freight Index and the Harper Peterson Index increased.
• Global shipping routes remain subject to disruptions, and this has prompted unprecedented demand for charter ships. Charter ships give exporters more control of the route taken and departure dates, which helps ensure product is delivered to markets on time.This is particularly important for fresh produce, which has a limited shelf life.
• The longer shipping routes being taken to avoid high-risk areas has resulted in congestion at some international ports, and a shortage of containers.

BOJ’s Ueda: Inflation expectations are gradually rising but yet to reach 2%

• Remarks by BOJ governor, Kazuo Ueda

• We will move cautiously on rate decision to avoid any big mistakes
• By how much BOJ should raise rates depends on level of neutral interest rate
• And that is still quite uncertain
• As we move towards exit from massive monetary stimulus, it would be appropriate to reduce bond purchases

Japanese Government Bond futures jump after strong auction

• Japan sold 30yr Japanese Government Bonds

• bid to cover 3.59
• average yield was 2.153% (lowest accepted 2.161%)

BOJ’s Nakamura: says cannot directly control FX moves with monetary policy

• Bank of Japan policy board member

Bank of Japan policy board member Nakamura:

• Japan’s economy recovering moderately albeit some weak signs
• Want to check whether capex growth will become broad-based, as some smaller firms appear to be delaying investment due to supply constraints
• confident that wage growth will be sustained
• Structural changes in economy are necessary for Japan to sustainably, stably achieve BOJ’s 2% inflation target
• Pace of overseas economic recovery slowing, uncertainty remains high
• Japan’s consumption has recently been sluggish
• says raising rates now would be premature
• It is desirable for FX to move in a way that reflects fundamentals
• Sharp, one-sided fall in yen heightens uncertainty
• Japan’s economy is not that strong yet
• Need to look at data in deciding when to start tapering bond purchases
• I am neutral on whether and when to taper bond buying
• Raising rates at next week’s policy meeting would be too early

Cryptocurrency News

Ethereum Active Users Soar 55% in Q1 Amid Volatility Shares ETH ETF Surge

• Volatility Shares 2x ETH ETF records over $15 million on second day of trading.
• Average daily Ethereum ecosystem users spike by more than 55% in Q1’24.
• Ethereum needs to overcome key resistance before any attempt to flip the yearly high of $4,093.

Ethereum (ETH) failed to overcome a key resistance as it resumed its horizontal trend on Thursday. Following the lag, the Volatility Shares 2x ETH Futures ETF showed considerable growth on its second day of trading.

ETHU, daily active users, and fee growth

Volatility Shares 2x Ether Futures ETF (ETHU) volume tripled on its second day of trading, reaching $15 million. It did over $5 million on its first day of trading — more than all ETH futures ETFs did on their first day. Bloomberg analyst Eric Balchunas termed the performance “impressive,” considering ETF volume usually slows down after their “Big Day One.”

ETHU’s success was likely triggered by the expectation of spot ETH ETFs after the SEC approved issuers’ 19b-4 filings on May 23.

Users have been marching into the Ethereum ecosystem despite its Q1 price lag compared to Bitcoin. According to Bitwise, the average daily Ethereum ecosystem user growth reached 2.25 million in Q1 2024, a more than 55% increase from the previous quarter. Much of this growth seems to have come from the Base ecosystem, which has racked up over 7 million users since January, according to the analytics dashboard.

Meanwhile, Ethereum Layer 1 has still outperformed L2s and Solana combined in terms of fees despite the March Dencun upgrade lowering gas fees. Ethereum Layer 1 total fees is about $5.66 million compared to $1.74 million from L2s and Solana combined.

Worldcoin price edges closer to a 30% rally ahead of Apple’s WWDC

• Worldcoin price shows bullish signs on both the daily and four-hour timeframes.
• The daily chart forecasts a move to $8.85, but the four-hour, short-term target suggests a revisit of $6.39.
• A breakdown of the $4.59 support level will invalidate the bullish thesis for WLD.

Worldcoin (WLD), a digital identification platform token, seems to be coiling up on the lower and higher timeframes, suggesting that a volatile breakout could be around the corner. WLD, developed by OpenAI’s Sam Altman, has been swayed by Artificial Intelligence (AI) developments in the past, be it OpenAI’s release of new frontier models or Nvidia’s earnings. Hence, Apple’s upcoming Worldwide Developers Conference (WWDC) 2024 could provide a significant tailwind to the altcoin, propelling it higher.

Meme coins foment clash among crypto experts amid growing interest from institutional investors

• Crypto experts dispute value of celebrity meme coins following Iggy Azalea’s reply to Vitalik Buterin.
• Meme coin holdings among institutional investors have surged almost 300% since January.
• SHIB, DOGE, PEPE among top meme coin holdings held by institutional investors.

The subject of meme coins sparked a series of online clashes among crypto experts on Thursday after rapper Iggy Azalea took a jab at Ethereum co-founder Vitalik Buterin. This follows a report from crypto exchange Bybit, claiming that institutional investors’ meme coin holdings have increased 300% since January.

Meme coins spark debate despite huge holdings from institutional investors

Several crypto experts took shots at each other on Thursday over the recent celebrity meme coin trend and how it affects investors. The series of attacks appeared to have begun shortly after Iggy Azalea posted a sarcastic meme picture in reply to Vitalik Buterin’s comment on the approaches that celebs have taken toward launching their tokens and the impact it has had on the space.

The reply from Iggy Azalea spurred conversations among some well-known crypto experts, including Uniswap co-founder Hayden Adams, who believes Azalea’s post about Buterin “condescends the best builder in the entire space” proves his point at the same time.

Crypto trader Ansem blasted Adams, calling him and many other Ethereum top voices on X “elitists”. The feud occurred hours before MOTHER, Iggy Azalea’s Solana-based meme coin, hit an all-time high of $0.2306, up 113% in the past 24 hours.

The rise of MOTHER token adds to the recent buzz around meme coins. A report from Bybit confirmed that institutional investors on its exchange have increased their attention toward these tokens in the last six months.

The report reveals a 300% increase in meme coin holdings among institutional and retail investors in 2024.Notably, institutional holdings of meme coins skyrocketed by 226% between February and March. In addition, retail holdings surged 478% between February and April following the meme coin frenzy around the same period.

PEPE, SHIB and DOGE lead the top meme coin holdings among these institutional investors.

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