Round up of today’s market news

North American News

Nasdaq Sets Another Record Close Alongside S&P’s Strong Finish

• 7 Consecutive Days of Gains

The Nasdaq index continued its impressive run, closing higher for the seventh consecutive day, with each day setting new record levels. Today’s close at 17,862.23, though marginally below recent peaks, marked another positive day in this remarkable streak. Since its initial high close of 17,192.53 on June 10th, the index has surged by 3.86%, highlighting robust investor confidence and market resilience.

Simultaneously, the S&P also notched a record close for the second consecutive day, reinforcing the broader market’s bullish sentiment. This synchronized performance across major indices underscores ongoing optimism amid evolving economic conditions and corporate performance. Investors remain buoyed by strong fundamentals and supportive monetary policies, driving the indices to new heights amidst fluctuating global dynamics.

 Closing numbers:

• Dow Industrial Average rose 56.76 points to +0.15% at 38834.87
• S&P rose 13.78 points or 0.25% at 5487.02
• Nasdaq rose 5.21 points or 0.03% at 17862.23

The small cap Russell 2000 rose 3.22 points or 0.16% at 2025.22.

Nvidia closed up $4.60 or 2.51% at $135.58 which was good enough to surpass both Apple and Microsoft as the highest capitalized stock.

A look at the league table shows the market capitalization coming in at:

• Nvidia $3.34T
• Microsoft $3.32T
• Apple $3.29T

Both Microsoft (-0.45%) and Apple (-1.10%) fell in trading today.

US treasury auctions off 20 year bonds at a high-yield of 4.452%

• WI level at the time of the auction 4.480%

• High yield: 4.452%
• WI level at the time of the auction: 4.480%
• Tail -2.8 basis points vs six month average of 0.1 basis points
• Bid to cover: 2.74X versus a six month average of 2.6X
• Directs 16.35% vs six-month average of 18.9%
• Indirects 77.89% versus six-month average of 67.8%
• Dealers 5.77% vs six at average of 13.3%

Atlanta Fed GDPNow for 2Q growth 3.1% unchanged from the last estimate.

• Despite the lower Retail Sales, the growth estimate remains elevated at 3.1%

The Atlanta Fed GDPNow growth estimate for 2Q growth remain unchanged at 3.1%.IN their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2024 is 3.1 percent on June 18, unchanged from June 7 after rounding.After recent releases from the US Department of the Treasury’s Bureau of the Fiscal Service, the US Census Bureau, the US Bureau of Labor Statistics, and the Federal Reserve Board of Governors, a decrease in the nowcast of second-quarter real personal consumption expenditures growth from 2.8 percent to 2.5 percent was offset by increases in the nowcasts of second-quarter real gross private domestic investment growth and second-quarter real government spending growth from 7.7 percent and 2.4 percent, respectively, to 8.8 percent and 2.5 percent, while the nowcast of the contribution of the change in real net exports to second-quarter real GDP growth increased from 0.68 percentage points to 0.75 percentage points.

US May advance retail sales +0.1% vs +0.3% expected

• The US retail sales data for May 2024

• Prior month 0.0% (revised to -0.2%)

Details:

• Retail sales for May +0.1% vs +0.3% expected
• Ex-auto MoM -0.1% vs +0.2% expected. Prior month +0.2% (revised to +0.1%)
• Control group +0.4% vs +0.4% expected. Prior month -0.3% (revised to -0.5%)
• Ex auto and gas +0.1% vs. -0.1% prior (revised to -0.3%)
• Total nominal sales for the March 2024 through May 2024 period were up 2.9% y/y

Details:

• Motor vehicles +0.8% m/m
• Furniture -1.1%
• Electronics +0.4%
• Building materials -0.8%
• Food and beverage stores -0.2%
• Gasoline stations -2.2%
• Clothing +0.9%
• General merchandise stories +0.1%
• Nonstore retailers (online) +0.8%

US CBO boosts fiscal 2024 deficit forecast by $408 billion

• Sees additional $2.067 trillion in deficits over the next decade

• Sees 2024 fiscal deficit at $1.915 trillion
• FY 2025-34 deficit seen at $22.083 trillion, up 10% from Feb forecast
• 2024 real GDP seen up 2.0% vs 1.5% in Feb
• 2025 GDP seen at 2.0% vs 2.2% in Feb
• Sees 2024-34 avg GDP growth at 1.8%
• 2024 deficit higher due to outlays on student loans, bank resolutions, Ukraine/Israel aid and Medicaid
• Legislation, including Israel/Ukraine aid to add $1.6 trillion to deficits through 2034

US May industrial production +0.9% vs +0.3% expected

• US May industrial production data

• Prior was 0.0%
• Capacity utilization 78.7% vs 78.6% expected
• Manufacturing output +0.9% vs +0.3% expected
• Prior manufacturing output -0.3% (revised to -0.4%)
• The index for mining increased 0.3% in May, and the index for utilities advanced 1.6%
• The index for defense and space equipment rose 1.0% and was nearly 10% above its year-earlier level

US April business inventories +0.3% vs +0.3% expected

• US April business inventory data for April 2024

• Prior was -0.1%
• Inventories ex-autos +0.3%

Fed’s Collins cautions against over-reacting to recent inflation data

• Comments from the Boston Fed President

• Too soon to say if inflation is retreating to 2%
• Appropriate for US central bank to remain patient on monetary policy
• Remains ‘realistic optimist’ on economy and monetary policy
• Recent inflation data has been encouraging
• Economy has been remarkably resilient
• Restoring price stability may take more time than thought
• Inflation is still stubbornly above target

Fed’s Kugler: Policy has more work to do, judgement will be guided by data

• Comments from Fed Governor Kugler

• Preponderance of labor market data shows it coming into balance
• Monetary policy is ‘sufficiently restrictive’, economic conditions moving in the right direction
• If wage growth continues to moderate, will soon be at levels consistent with price stability
• Most indicators point to a slow, steady easing of labor market
• Watching closely for signs of labor market deterioration
• I expect some cooling of economic data to continue
• Inflation too high but encouraged by renewed recent progress
• How much we cut will be a question we continue to assess as more data comes in
• It’s not an answer we can give today
• It depends on whether it is from disinflation or rapid deterioration of the labor market
• Remains concerned about housing. Import and wages are still higher than productivity
• Have to see that continued progress on wage moderation
• We certainly need to be convinced that we are not going to put in danger all the great progress made on inflation

Fed’s Logan: Will need to see ‘several more months’ of better CPI numbers

• Logan on inflation data

• May CPI data was welcome news
• Great to see CPI data but will need to see several more months to have confidence inflation heading to 2%
• Will be watching data in coming months quite closely
• In a good position to be patient on policy
• Will be watching and seeing what’s happening in the economy

Fed’s Musalem: Confidence to cut rates could take months and likely quarters to play out

• Comments from Musalem

• He needs to observe a period of favorable inflation, moderating demand and expanding supply before he will have confidence for a rate cut
• The conditions could take months, or more-likely quarters to play out
• If inflation becomes stuck meaningfully above 2% or moves higher, he would support additional tightening
• Says he will remain vigilant until inflation is clearly and convincingly on its way back to 2%
• Retail sales for May suggests aggregate demand is growing at a moderate pace so far in Q2
• Expects consumptio nto moderate in coming quarters without stalling
• Labor market no longer seems overheated but remains tight
• Expects some further cooling in the labor market in the coming months
• There are potential early signs of continued progress on inflation
• PCE should show welcome downshift in inflation in May

Fed’s Goolsbee: Latest inflation number was ‘excellent’ hopefully more to come

• Comments from Goolsbee

• There is still a little bit of ‘juice’ left in last year’s rapid inflation decline
• External shocks have derailed soft landings in the past
• Can’t help but be optimistic if you look at the long view
• The ‘vibes’ used to be good indicator of spending but no longer so we put less weight on them now

NY Fed Pres. Williams: Rate cut path depends on data

• NY Fed Pres. Williams speaking on FOX Business

• Rate cut path depends on data.
• US economy is doing well, is in better balance.
• Fed decision to depend on economy.
• Things are moving in right direction for monetary policy.
• Expect interest rates to come down gradually as inflation eases.
• Politics will not influence fed right decision.
• We have a very strong economy and incomes are growing.
• Interest rates will come down over next few years.
• Recent inflation data has been encouraging.
• Expect inflation to continue to come down.
• 3% inflation is not the new norm.The Fed will get inflation down to 2%
• We still have a very strong labor market with some hiring slowing

Fed’s Barkin: It’s hard to know how much signal to take from inflation last year, or this quarter, or last couple of weeks

• Comments from the Richmond Fed President

• It’s hard to know how much signal to take from inflation last year, or this quarter, or last couple of weeks
• I didn’t quite get more confidence in Q1 this year about inflation, we’ll see where we go
• On the goods side, I hear pricing power is waning
• This month’s inflation reading was very encouraging
• Labor market is also heading in the right direction
• The hiring rate has dropped a lot
• I’m watching closely if we’re going to see an acceleration
• The dynamic underpinning spending is a strong jobs market and a stock market at record levels
• Consumer spending is still solid
• It’s not hard to see scenarios where the labor market weakens
• There could be lots of reasons for why the yield curve is inverted
• A lot of economic signals have not worked well this cycle

A secular mismatch in jobs will likely keep Canadian wage pressures high – CIBC

• CIBC notes several occupations that will continue to be in short supply

The Canadian jobs market will face cyclical pressures in the coming months that will lower inflation and lead to rate cuts but in the years ahead, the economy could struggle to keep wage inflation in check.

Right now, just 22% of firms report labour shortages in the Bank of Canada’s latest Business Outlook Survey; that’s down from a pandemic-era peak of 46%, and below the historical average level of 31%.

Despite that, wage growth expectations are high and CIBC has a good idea of why. They estimate that 38% of jobs in the country are showing signs of shortages and seeing strong employment gains. Those include occupations in health, technical trades, administrative positions in supply chain logistics, middle management positions in trade, and professional jobs in finance. Of the shortage group, about one-third are in non-cyclical fields like healthcare, education, government and law.

Here’s the takeaway from CIBC:

There is a risk of a permanent change in the composition of the labour market in a way that in aggregate puts higher pressure on wage inflation relative to the pre-Covid period, as employers will have to keepwage growth strong in order to attract labour.That will not prevent the Bank of Canada from continuing to ease this cycle,but if these pockets of labour shortages continue to grow overtime while demand returns to the economy, it will make the Bank’s life complicated and affect where the overnight rate ultimately rests.

Commodities

Gold Surges $11 Amid Central Banks’ Reserve Boost Plans

• World Gold Council says 29% of central banks plan to increase reserves

The World Gold Council surveys central banks each year on attitudes around gold and currency reserves. This year, 29% said they plan to increase holdings in the year ahead. That’s the highest since the survey began in 2018.

The survey also showed that managers expect rising portions of gold reserves in the coming years and lower holdings of US dollars.

With that, gold prices bumped $11 higher today to $2329 in a reversal of yesterday’s loss.

Crude oil futures settled at $80.71

• Up up $0.99 or 1.24%

Crude oil futures settled at $80.71. That is a $0.99 or 1.24%. That is the highest level since April 30.Looking at the daily chart, the price is also closing back above its 100 and 200-day moving averages at $79.51 and $79.63 respectively.The price is also closing above its 50% midpoint of the move down from the April high to the June low at $80.06.

After the close the private inventory data will be released.The EIA will release their data tomorrow at 11 AM.THe expectations are for crude inventories to show a drawdown of -2.267 million. Gasoline inventories are expected to show a buildup 1.533M and distillates are expected to show a drawdown of -0.264M

Gold stays in consolidative mode but the technical risks are growing

• A head-and-shoulders pattern is emerging on the gold chart

Precious metals have lost much of their momentum from May trading but while silver has retraced the upside move by quite a bit, gold is still pretty much in consolidation territory.Granted, the run higher in gold largely came earlier in March and April. In May, gold threatened fresh record highs above $2,400 but ultimately settled lower during the month.

As seen from the daily chart, we can note that a head-and-shoulders pattern is emerging.

The most important part of that is the neckline around $2,280 to $2,295. As such, if we do get a break of that as the next key move in gold, the target looks to be a potential drop towards $2,100. That will coincide with a shove towards its 200-day moving average, at least for the time being.

The key technical level there is one where buyers can definitely lean on for support, should the structural narrative for gold continue to hold and that is if we do see this head-and-shoulders pattern play out accordingly.

EU News

European equity close: Political fears continue to ebb and flow

Closing changes:

• Stoxx 600 +0.6%
• German DAX +0.3%
• UK FTSE 100 +0.65%
• French CAC +0.8%
• Italy MIB +1.2%
• Spain IBEX +1.0%

Eurozone May final CPI +2.6% vs +2.6% y/y prelim

• Latest data released by Eurostat – 18 June 2024

• Prior +2.4%
• Core CPI +2.9% vs +2.9% y/y prelim
• Prior +2.7%

Germany June ZEW survey current conditions -73.8 vs -65.0 expected

• Latest data released by ZEW – 18 June 2024

• Prior -72.3
• Economic sentiment 47.5 vs 50.0 expected
• Prior 47.1

ECBs Villeroy: We owe our citizens respect. That means not running big deficit

• Bank of France and ECB member Villeroy speaking

• We owe our citizens respect, that means not running bigger deficits that can’t be financed
• That also means quickly clarifying our countries economic and budget strategy.

ECB’s de Guindos: Best time to make rate decisions is together with updated projections

• He’s alluding to the idea that the next rate cut could follow in September

• The projections are updated every three months
• We’ll have new ones in September
• Those are the most significant and interesting moments from the point of view of monetary policy
• They are a very important indicator when it comes to deciding on rates

Citi downgrades European equities, cites 3 reasons. Upgrades its view on US equities.

• Political risk in Europe featuring prominently

A note on Monday from Citi, downgraded its outlook on European equities to ‘neutral’ from ‘overweight’.Simultaneously upgraded the more “growth-oriented” US.

Citi’s key reasons for the Europe downgrade:

• heightened political risks;
• narrowing market leadership;
• and potential for a continued positioning unwind
• “Our sector allocation is tilted towards growth (‘overweights’ in tech, industrials) and select defensives (healthcare)”
• Citi analysts say they remain constructive over the medium-term due to early-cycle macro dynamics in Europe and inflecting fundamentals.

Asia-Pacific-World News

PBOC sets USD/ CNY mid-point today at 7.1148 (vs. estimate at 7.2494)

• PBOC CNY reference rate setting for the trading session ahead

PBOC injects 86bn via 7-day RR, sets rate at an unchanged 1.8%

• 2 bn yuan mature today
• a net 84 bn yuan injection Open Market Operations (OMOs)

RBA’s Bullock: We need a lot to go our way to bring inflation back to range

• Remarks by RBA governor, Michele Bullock

• There was a discussion on whether to hike rates at the meeting
• But decided to stay the course on policy
• Wanted to make a point that we are alert to upside risks on inflation
• Difficult to get a read on inflation with just quarterly data
• But would not say that the case for a rate hike is increasing
• Very conscious that high rates are hurting some sectors of the country
• Inflation is also hurting the people, so we are focused on bringing it down
• Use of the word ‘vigilant’ does not mean a rate hike is coming

RBA leaves cash rate unchanged at 4.35%, as expected

• The RBA announces its monetary policy decision for June 2024

• Prior 4.35%
• Inflation has fallen substantially since its peak in 2022
• Conditions in the labour market eased further over the past month
• But it is tighter than is consistent with sustained full employment and inflation at target
• The economic outlook remains uncertain
• The process of returning inflation to target is unlikely to be smooth
• There are uncertainties regarding the lags in the effect of monetary policy
• Returning inflation to target within a reasonable timeframe remains the highest priority
• Need to be confident that inflation is moving sustainably towards the target range
• Inflation is easing but has been doing so more slowly than previously expected and it remains high
• It will be some time yet before inflation is sustainably in the target range
• RBA is not ruling anything in or out to ensure that inflation returns to target in a reasonable timeframe

A projection for “wider and higher ranges for AUD in the month ahead”

• China to weigh though

A snapshot note via Westpacon their Australian dollar view.

In brief:

We anticipate wider and higher ranges for AUD in the month ahead. Volatile French politics will have their sway over the global risk climate, but a resumption of more encouraging US disinflation trends and revamped Fed rate cut bets should ultimately prove more decisive.

• AUD/USD remains in a choppy and challenging 0.6575-0.6715 range. Surging French political and fiscal risks are taking a toll on the global risk climate.
• Still, AUD should respect supports around 0.6550/60. The case for a higher AUD/USD range continues to develop, with yield spreads potentially providing a more secure floor.
• Last week’s US May CPI, PPI and jobless claims showed that disinflation trends are resuming.

Not helping the AUD, saw WPAC, are:

• commodity prices and China macro sentiment aren’t helping.Iron ore prices have fallen 15% since mid-May and port inventories are hitting two-year highs, despite efforts to ease a protracted property crisis.
• China’s core growth drivers remain sluggish. May financing data showing ongoing sluggish corporate and household credit demand, while May factory output and fixed investment signal the rebound is already losing steam.

New Zealand GDT price index -0.5%

• The latest dairy auction results

• Prior was +1.7%
• Whole milk powder -2.5%

New Zealand data – Q2 consumer confidence falls to 82.2 from 93.2 in Q1

• Westpac McDermott Miller consumer sentiment survey

Westpac McDermott Miller consumer sentiment survey for the second quarter of 2024 comes in at 82.2

• prior 93.2

Nomura warn of yen intervention – also see risk of a BoJ rate hike at its next meeting

• The BoJ meet again next month

Nomura with a review of last week’s Bank of Japan decision, what to watch for the yen, and a preview of the next BoJ meeting:

• The June meeting had no hawkish surprises
• The BOJ decided to reduce JGB purchases after the July Monetary Policy Meeting, with the details to be determined at that MPM.
• Japan’s economy will likely remain on a recovery path, exceeding potential after contracting in Q1 2024.
• This year’s shun to wage hikes have proved materially higher than last year’s, increasing the stickiness of inflation through 2025.
• We expect the BOJ to hike rates in October 2024, with a risk of it being front loaded to July.

Bank Japan Gov Ueda: Must be vigilant to impact of weak yen, import price moves on economy

Bank of Japan Governor Ueda:

• As we taper bond buying, we will of course be aiming to shrink size of our balance sheet in ratio to GDP terms
• Basic purpose of our bond tapering would be to allow yields to move more freely driven by market forces, and revive market functioning
• Japan’s economy willlikely see more clear signs of positive wage-inflation cycle asnominal wages rise
• Must be vigilant to impact of weak yen, import price moves on economy
• Corporate price, wage-setting behaviour clearly changing on record profits, tightening job market
• Nominal wages likely to rise ahead and gradually lead to positive real household income, underpin consumption
• Consumption likely to increase moderately as nominal wage gains accelerate
• For now, don’t expect japan to experience stagflation
• Depending on economic, price and financial data and information available at the time, there is chance we could raise interest rates at July meeting
• Decision on BOJ’s bond tapering and short-term rate target are two different things
• expects strengthening in Japan wage-price cycle – underlying inflation to gradually accelerate
• sees Japan’s economy recovering moderately
• monitoring the FX impact on economy and inflation
• data out since April roughly in line with BoJ estimates
• We need to scrutinise data a bit more to judge whether underlying inflation will heighten on a firm note
• If we become more convinced that underlying inflation will accelerate toward our price target, we will adjust degree of monetary easing by raising short-term policy rate
• Inflation-adjusted real wages continue to decline but expected toslow pace of decrease as a trend
• Cannot say now how much BOJ will actually trim bond buying
• Want to avoid using bond buying operation as a monetary policy tool,means of communication on monetary policy

Japan finance minister Suzuki – Interest rates are set by markets

Japan finance minister Suzuki:

• Ministry of finance will continue debt management through dialogue with markets
• Interest rates are set by markets reflecting JGB demand and various aspects
• Decline to comment on Bank of Japan’s decision last week on planned reduction of JGB purchases

Singapore’s May non-oil domestic exports down 0.1% y/y (vs. expected -1.0%)

• Not as bad as forecast and way better than the huge drop in April y/y

Singapore’s non-oil domestic exports (NODX) down 0.1% y/y

• expected -1.0%
• prior -9.6% drop in April
• electronics exports growing for a second straight month

For the m/m, also -0.1%:

• expected +1.7%
• prior +7.3%

Cryptocurrency News

Ethereum ETFs See Global Surge as Hashdex Plans Combined Spot ETH and Bitcoin Fund

• Hashdex filed for a market-weighted ETF that will track both spot Ethereum and Bitcoin prices.
• Ethereum exchange reserves approach an all-time low following massive inflows across global ETH ETFs.
• Ethereum’s decline is likely caused by high correlation with Bitcoin and short-term speculative trading.

Ethereum (ETH) is down 3% on Tuesday as Hashdex submitted a market-weighted crypto ETF to the SEC, aiming to track the price of ETH and Bitcoin. Additionally, global investors have increasingly purchased ETH ETFs amid declining exchange reserves.

Combined ETH & BTC ETFs, Global Ethereum ETF net inflow

Hashdex submitted a 19b-4 filing for a combined spot BTC and ETH ETF, Hashdex Nasdaq Crypto Index US ETF. According to the filing, Bitcoin will account for 70.54% and Ethereum 29.46% of the Index’s weight.

Hashdex’s crypto index filings come after the asset manager withdrew its initial spot ETH ETF application on May 24, a day after the SEC approved 19b-4 filings of similar products from eight other issuers, including VanEck, Franklin Templeton, Invesco & Galaxy, BlackRock, 21Shares, Fidelity, Grayscale and Bitwise.

While the SEC has yet to approve S-1 registration statements that will enable these issuers to launch spot ETH ETFs for trading, Bloomberg analyst Eric Balchunas confirmed that the SEC has already sent in their first round of comments on the drafts. He also speculated that ETH ETFs could go live on or before July 2.

DOGE Faces High Liquidations Amid Heavy Bleeding in Meme Coin Sector

• DOGE sees nearly $60 million in long liquidations following 18% dive.
• DOGE could see support at the $0.109 level based on on-chain data.
• Meme coin sector is down more than 16% as WIF, BRETT, MAGA take heavy losses.

Dogecoin’s (DOGE) sharp decline earlier on Tuesday wiped off nearly $60 million from the crypto market as tokens in the meme coin sector struggled with huge losses.

DOGE liquidations nears that of Bitcoin

Dogecoin long traders took a heavy hit on Tuesday as DOGE’s 18% dive within 3 hours triggered long liquidations worth about $60 million. This marks DOGE’s largest daily liquidation since May 2021. As a result, DOGE open interest (OI) declined by 11% in the past 24 hours.

The increased DOGE liquidations are quite notable, considering they approached levels usually seen in Bitcoin and Ethereum, which have larger market caps and trading volumes.

DOGE descent may have been fueled by whales gradually reducing their holdings. Data shows that the percentage of DOGE held by addresses owning more than 0.1% of its supply has reduced from 45% to 41%. In contrast, the holdings of retailers and mid-sized investors have grown.

The $0.109 price level may prove a critical support for the top meme coin as it marks its highest accumulation zone — investors purchased over 43 billion DOGE at an average price of $0.109.

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