MARKET REPORT

Review:

Gold, Equities, Treasuries, Crypto, Crude UP. Dollar down.

US Super-Core CPI hotter than expected (but headline and core CPI in-line/small miss)
– US Retail sales softer than expected
– US Homebuilder sentiment slumped
– US Empire Fed Manufacturing disappoints

Fedspeak:
– Mester echoes Powell (pre-data)
– Schmid is prepared to be patient (pre-data)
– Kashkari happy to keep policy where it is for a while longer (post-data)

– 2 cuts fully priced in for 2024 and 3 more cuts 2025:

– Dollar back to post April CPI levels giving up all gains since:

– Gamestop and AMC (Meme’s) both down 20%

– Major EV players sold off substantially amid rumors China is contemplating a reaction to a U.S. tariffs increase.

DOLLAR DX down: 104.20             -0.66% (104.84 – 104.19) LOWS
– AUD up: 66.91                               +1% (65.30 – 66.95) HIGHS
– EUR down: 91.85                          -0.6% (92.38 – 92.85) LOWS
– GBP up: 126.83                             +0.75% (125.88 – 126.83) HIGHS
– JPY down: 154.90                         -1% (156.47 – 154.69) Off LOWS

GOLD up: $2392                                             +1.3% ($2359 – $2395) HIGHS
DOW/ES/ND up:                                             40021 +0.8%, 5328 1.1%, 18683 +1.45%
CRYPTO: BTC/ETH UP:                                  +7% 65826, +4% 3018
CRUDE up: $78.88                                          +1.1% ($76.72 – $78.88) HIGHS

Upcoming:

– Japanese GDP

– Australian Employment

– US IJC, Philly Fed

Speakers:

– BoE’s Greene
– Fed’s Harker, Mester, Bostic, Barr

EARNINGS:

Deutsche Telekom, Siemens, Sage, easyJet, Applied Materials, Bath & Body Works, Deere, Walmart.

MAJORS:

DX:
The Dollar sold off on Wednesday after the headline CPI came in beneath expectations, boosting Federal Reserve rate cut bets slightly. Although this is just one data release, it is an encouraging sign after the string of hot Q1 inflation reports, and thus will be a welcome sign to the Fed, but they will likely need to see more evidence of inflation narrowing. Many economists, who use CPI and PPI to calculate PCE, have released their Core PCE forecasts and the current range is between 02-0.26% (via WSJ’s Timiraos). DXY hit a low of 104.300, taking out the May low of 104.52 with technicians eyeing 104.00 to the downside. Note, Retail Sales data was also softer than expected while the NY Fed Manufacturing was worse than expected.

DOLLAR DX down: 104.20             -0.66% (104.84 – 104.19) LOWS

No call

EUR:
The Euro was bid thanks to the softer buck with Fed rate cut pricing leaning towards a September rate cut, narrowing the policy differentials between the ECB and Fed with the ECB looking set to cut in June.

EU Flash GDP for Q1 was in line with forecasts at 0.3%, with employment data also in line with expectations.

EUR down: 91.85                            -0.6% (92.38 – 92.85) LOWS

No call

AUD:
Both Aussie and Kiwi benefitting from the risk on trade while both were supported pre-data anyway on reports regarding China support. Bloomberg reported that China is considering government purchases of millions of unsold homes to ease the glut, while Beijing is seeking feedback on the preliminary proposal. Note, both offshore (CNH) and onshore Yuan (CNY) were firmer vs the Dollar on Thursday. Meanwhile, for the Aussie, wage data came in slightly softer than expected in Q1, hence the downside in AUD/NZD to sub 1.0950.

AUD up: 66.91                                 +1% (65.30 – 66.95) HIGHS

YEN:
The Yen was among outperformers on Wednesday as the lower Dollar and lower UST yields post CPI gave the Japanese currency a helping hand, a move Japanese officials will be pleased to see after the pronounced weakening seen this year, prompting FX intervention from around the 160.00 mark in USD/JPY. USD/JPY fell from a peak of 156.56 to a low of 154.70.

JPY down: 154.90                            -1% (156.47 – 154.69) Off LOWS

No call

EQUITIES:

US INDEXES:
– SPX +1.17% 5,308
– NDX +1.49% 18,597
– DJI +0.88% 39,908
– RUT +1.14% 2,109

EUR INDEXES:
– DAX: +0.85% 18,875.35
– FTSE: +0.21% 8,445.80
– CAC: +0.17% 8,239.99
– ES50: +0.41% 5,101.15
– IBEX 35: +1.10% 11,362.80

SECTORS (S to W): Technology +2.29%, Real Estate +1.69%, Health +1.44%, Utilities +1.41%, Communication Services +0.91%, Financials +0.72%, Industrials +0.63%, Materials +0.16%, Energy +0.15%, Consumer Staples +0.02%, Consumer Discretionary -0.01%

STOCKS
– Bitcoin-linked Super Micro Computer Inc rallied over 10%, after boasting a 5% surge on Tuesday
Hertz tanked nearly 10% after reports that the car-hire company could face liquidity challenges as early as next year.

OIL:
WTI (N4) SETTLES USD 0.51 HIGHER AT 78.16/BBL; BRENT (N4) SETTLES USD 0.37 HIGHER AT 82.75/BBL

Crude prices ultimately settled slightly green with morning weakness reversed after a larger-than-expected draw in EIA crude inventories and a weaker buck post soft CPI. WTI and Brent hit lows of USD 76.70/bbl and USD 81.05/bbl, respectively ahead of the data. The downside appeared with a lack of fundamental reasoning although some upside was observed after the soft-leaning US CPI report, weighing on the Dollar, supporting global growth prospects, thus boosting crude prices. Nonetheless, any CPI-related crude strength was shortlived before continuing its move lower into inventory data with the move in the dollar initially paring. The data saw crude stocks draw by 2.5mln bbls, much deeper than the expected 540k draw, while distillates and gasoline also posted surprise draws. The bullish inventory data saw crude stocks trend higher into settlement with renewed weakness in the Dollar also supporting once the dust settled from CPI and the typical dovish reaction ensued (stocks, bonds gold, higher, dollar lower). Elsewhere, the IEA OMR cut its 2024 oil demand growth forecast by 140k BPD to 1.1mln, while it raised its 2025 world oil demand growth forecast to 1.2mln BPD from a prior estimate of 1.1mln. On production, Colombia is closing in on average oil production of close to 800k BPD, according to the oil regulator President. The Congo Oil Minister, via Energy Intel, said his country is not “battling” for a higher baseline In the coming 2-3 years, and that Congo plans to increase production by 40-50%. Oil report by newssquark.

CRUDE up: $78.88                                          +1.1% ($76.72 – $78.88) HIGHS

BOND YIELDS:

US 1-MO 5.353 -0.001
US 6-MO 5.361 -0.016
US 1-YR 5.095 -0.057
US 5-YR 4.345 -0.113
US 10-YR 4.344 -0.101
US 30-YR 4.505 -0.088

2YR/10YR -0.38

CRYPTO

– Vanguard names Crypto Groundbreaker Ramji new CEO

– Ramji wont reverse decision to not launch BTC ETF

– BTC up over 7% on BUY EVERYTHING CPI, Best day since Mar 2023!

CRYPTO: BTC/ETH UP:                                   +7% 65826, +4% 3018

KEEP DOING WHATS WORKING
STOP WHAT ISNT.

Best of luck out there. Let the market come to you

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