MARKET REPORT
Review:
– Headline PCE matches forecast but Core slows
– Headline +0.3% vs Exp +0.3% Prev +0.3%
– Core +0.2% vs Exp +0.3% Prev +0.3%
– US Personal Spending +0.2% vs Exp +0.3%
– US Personal Income +0.3% vs Exp +0.3% Prev +0.5%
– Chicago PMI hits 4yr low
– Musk states ‘great damage done to the public faith in the American legal system’ post Trump verdict
Rate cut hopes rise
– BoJ confirms spent more than $62B trying to prop up Yen
– New human case of bird flew (get it) confirmed by CDC
– Blinken approves use of US weapons inside Russia
– Hot EU inflation
– Weak China PMIs
– Canada GDP disappoints
– Weak DELL guidance
– DX UNCH, GOLD/CRUDE/CRYPTO/NASDAQ/TR YIELDS DOWN, DOW UP
DOLLAR DX UNCH: 104.58 UNCH (104.85 – 104.31) MID
– AUD up: 66.53 +0.3% (66.28 – 66.73) MID
– EUR down: 92.15 -0.15% (92.47 – 91.87) MID
– GBP UNCH: 127.43 UNCH (127.00 – 127.65) MID
– JPY up: 157.27 +0.32% (157.36 – 156.58) Off HIGHS
GOLD down: $2348 -0.75% ($2380 – $2341) Off LOWS
DOW/ES/ND UP/up/down: 38826 +1.5%, 5300 +0.9%, 18.578 -0.15%
CRYPTO: BTC/ETH down/up: -1.2% 67635 , +1.3% 3794
CRUDE down: $77.23 -0.8% ($78.56 – $76.70) Off LOWS
Upcoming WEEK AHEAD:
OPEC+
ECB Rate decision
US Jobs report
Speakers:
EARNINGS:
MAJORS:
DX:
The DXY declined throughout the session, dipping beneath its 200DMA at 104.425 in wake of the US Core PCE release. The softer Core PCE print and consumer spending/income numbers saw DXY push lower but the lows of the session were seen in response to the woeful Chicago PMI report which came in beneath even the most pessimistic analyst forecast. Nonetheless, the Dollar weakness pared as yields moved off lows losses but the index still saw its first monthly decline since December 2023.
DOLLAR DX UNCH: 104.58 UNCH (104.85 – 104.31) MID
No call
EUR:
The Euro was slightly firmer, initially weakening in the session, though strength did pick up ahead of EZ data, where the Euro was lifted to the upside modestly following EZ’s hotter CPI print. The Euro gains extended after the soft US Core PCE data; seeing EUR/USD peak at 1.0882. That said, as the Dollar has moved off lows, EUR/USD has eased off highs back beneath 1.0850.
Focus turns to the ECB’s meeting on Thursday next week for any further commentary on the sequencing of rate cuts with a 25bp rate cut widely expected
EUR down: 92.15 -0.15% (92.47 – 91.87) MID
No call
AUD:
The Australian dollar appreciated to above the $0.666 mark, approaching the four-month high of $0.67 touched on May 15th as the latest economic data favored conflicting monetary policy responses between the RBA and the Fed.
The Fed’s preferred measure of underlying slowed on a monthly basis while US personal spending missed expectations, adding to a batch of cold data after the US GDP was revised lower in the first quarter.
Conversely, stronger-than-expected inflation figures domestically added to the risk that the RBA may have to raise borrowing costs again. The latest monthly CPI pointed to a 3.6% increase in annual terms, accelerating from the 3.5% in March.
Still, support for the Aussie was limited as the unexpected contraction in Chinese manufacturing activity and a slowdown in its construction activity dented import demand for Australia’s top commodity consumer.
AUD up: 66.53 +0.3% (66.28 – 66.73) MID
GBP
The British pound rose to above the $1.275 mark, rebounding from the $1.27 level touched on May 29th to near fresh 5-week highs, as PCE inflation data reassured investors that the Federal Reserve has room to cut rates this year.
In April, core PCE prices slowed compared to March, while the headline monthly and annual rates remained steady, meeting forecasts.
Meanwhile, the UK’s annual inflation rate eased to 2.3%, approaching the Bank of England’s target of 2% but exceeding the forecasted 2.1%. As a result, investors now anticipate the BoE’s first rate cut in September, shifting from the earlier consensus of June.
The likelihood of a June rate cut was further reduced by Prime Minister Sunak’s unexpected announcement of a general election in early July. Despite the BoE emphasizing its independence, previous allegations of political interference have made markets more inclined to expect a September cut.
GBP UNCH: 127.43 UNCH (127.00 – 127.65) MID
YEN:
Yen saw little reaction to the stronger Japan retail sales Y/Y, which saw machinery and equipment increase the most, and traded flat upon the in-line Tokyo Core CPI Y/Y print (note: the Tokyo CPI is considered by some as a leading economic indicator of nationwide price trends). USD/JPY hit lows of 156.57 in wake of the US PCE data but the cross pared to rise back above 157.00.
It is also worth noting that recent data confirmed that Japan had stepped into the FX market to support its currency about a month ago, where the MoF purchased JPY 9.788tln (USD 62.2bln) between April 26th and May 29th, surpassing the record annual intervention of JPY 9.188tln in 2022.
JPY up: 157.27 +0.32% (157.36 – 156.58) Off HIGHS
No call
GOLD/SILVER
Gold ended lower on the week thanks to a post-PCE puke today.
SI puked 3% today
GOLD down: $2348 -0.75% ($2380 – $2341) Off LOWS
EQUITIES:
US INDEXES:
– SPX +0.80% 5,278
– NDX -0.01% 18,53
– DJIA +1.51% 38,686
– RUT +0.66% 2,070
EUR INDEXES:
– FTSE: +0.54% 8,275.38
– CAC: + 0.18% 7,992.87
– ES50: -0.05% 4,979.55
– IBEX35: -0.14% 11,332.00
SECTORS (W to S): Energy +2.49%, Real Estate +1.86%, Utilities +1.67%, Cons Stpl +1.46%, Health +1.41%, Financials +1.41%, Industrials +1.16%, Materials +1.09%, Communication Svs +0.56%, Cons Disc +0.15%, Technology flat
STOCKS
– Google: Reportedly hired two cloud executives from Amazon (AMZN) Web Services and Microsoft, as it builds AI ranks with the goal of boosting its cloud business, according to The Information. Reportedly conducted sweeping layoffs in its Cloud unit, according to Business Insider.
– Tesla: Recalling 125k US vehicles as a seat belt warning system fails to alert occupants of an unbelted seat belt.
– General Motors: Has reportedly restarted its driverless car business, according to NYT.
– Dell Technologies: Saw a decent quarter but guidance disappointed with heavy AI investments expected to hit profit margins.
– Caesars: Carl Icahn took a stake in CZR, later noting “I like Caesars and I own some stock, I would never do activism in Caesars”.
OIL:
Crude prices slipped lower again today, back into the red on the week.
CRUDE down: $77.23 -0.8% ($78.56 – $76.70) Off LOWS
BOND YIELDS:
US 1-MO 5.368 +0.002
US 6-MO 5.369 -0.005
US 1-YR 5.192 -0.007
US 5-YR 4.509 -0.062
US 10-YR 4.502 -0.052
US 30-YR 4.65 -0.035
2YR/10YR -0.38
CRYPTO
For the 13th straight day, Bitcoin ETFs saw net inflows.
CRYPTO: BTC/ETH down/up: -1.2% 67635 , +1.3% 3794
KEEP DOING WHATS WORKING
STOP WHAT ISNT.
Best of luck out there. Let the market come to you
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