MARKET REPORT

Ville Bourse, built 1652

Day in Review:

– Trump DESTROYS Biden in tragic ‘Debate’. Trump disciplined and measured, Biden lost and incoherent.
– Watch Bidens Donations EXTINQUISH (hint, they’re NON-refundable)

– US Personal Spending BELOW forecasts +0.2% Exp +0.3%
– US PCE Inflation Slows as Expected UNCH May vs April following +0.3% April
– Goods -0.4%, Services +0.2%
– Ex Food and Energy +0.1% vs +0.3% Prev
– US Core PCE Prices Rise LEAST in 6-months +0.1% vs +0.3% 3 prior months
– US Personal Income Slightly above Forecasts +0.5% ($23.924B) Prev +0.3%, Exp +0.4%
– The probability of a rate cut by September increased to 66% from 64% (prior). The odds for a rate cut by November also increased to 78% from 76% and to 95% from 94% by December

Rate-cut expectations have plunged YTD, with 2024 starting the year with 160bps priced in and ending H1 with just 45bps priced in. 2025 expectations did pick up modestly, from around 70bps to 87bps

– US 10yr Treasury Yield drops post PCE (4.28% vs vs Prev highs 4.35%)

–  The dollar is on track to end the June month about 1.2% higher, and Q2 1.3% stronger, as the Federal Reserve is lagging behind other major central banks in easing policy.

– US Consumer Sentiment revised higher 68.2 June  from Prelim 65.6 (Exp 65.8)

– Year-ahead inflation expectations compiled by Uni of Michigan revised down to 3% in June 2024, Exp 3.3% Prev 3.3%,
– Concurrently, the five-year outlook stood at 3% in June, the same as in May and April, compared to the preliminary estimate of 3.1%.

– Daly says Fed still has work to do

– Nike shares SMOKED (-20%) post Sales warning, worst day in 20yrs

– Japan to replace top currency diplomat

– Steel hits 7yr LOW (poor demand)

– French Bourse hits 22-wk LOW
– The French 10-year OAT yield increased to 3.28% on Friday, reaching its highest level since mid-November. Concerns ahead of the first round of parliamentary elections, with polls suggesting Marine Le Pen’s National Rally could secure over 30% of the votes. The left-wing coalition New Popular Front is expected to fall below 30%, and President Macron’s party would come in third.
– Investors fear a shift away from centrist policies could lead to increased spending and worsen the government’s fiscal position.
– France’s 5.5% budget deficit and public debt at 110.6% of GDP in the previous year have raised alarms, prompting the European Commission to consider initiating excessive deficit procedures.

– Nat Gas -2.75%, Cotton -10%, Corn -8.2%, Wheat -4.17%, Canola +5.81%, Cocoa +3.84%

– DOLLAR UNCH, GOLD/SIL UNCH, EQUITIES/CRYPTO/CRUDE DOWN, TREASURY YIELDS UP!

DOLLAR DX UNCH: 105.56            UNCH (105.79 – 105.42) MID
– AUD up: 66.70                               +0.35% (66.21 – 66.84) HIGHS
– EUR UNCH: 93.34                         UNCH (93.56 – 93.22) Off LOWS
– GBP UNCH: 1.2643                       UNCH (126.60 – 126.21) MID
– JPY up: 160.88                               +0.1% (160.12 – 160.28) Off HIGHS

GOLD down: $2334                        -0.1% (2330 – 2349) Off LOWS
DOW/ES/ND down:                        39482 -0.17%, 5532 -0.24%, 19961 -0.39%
CRYPTO: BTC/ETH down:               60208 -2%, 3383 -1.75%
CRUDE down: $81.53                     -0.25% (82.67 – 81.00) LOWS

Upcoming:

–  French & UK elections
– US ISM & NFP
– EZ CPI
– Minutes from RBA and FOMC

Speakers:

EARNINGS:

MAJORS:

DX:
The Dollar traded within a contained range Friday, DXY hit a peak overnight just above 106 before paring ahead of the US PCE data.
The data saw only a slight reaction with Headline and Core PCE M/M and Y/Y were in line with expectations, meanwhile, Personal Income rose slightly above expectations, and Personal Spending came in less than expected.

Fed’s Daly noted the Fed is not done yet, but the PCE data is good news.

Chicago PMI beat expectations, while the UoM Consumer Sentiment Final was revised higher, but the 1yr, and 5yr inflation expectations for June were revised down.

DXY volatility following the data releases was minimal, with the session range 105.745-106.126, putting the DXY’s three-week rally on pause, with the weekly and intraday performance flat.

Heading into next week, dollar watchers eye JOLTs and Fed’s Powell on Tuesday, ISM PMI and FOMC Minutes on Wednesday, NFP and the Unemployment rate on Friday.

DOLLAR DX UNCH: 105.56            UNCH (105.79 – 105.42) MID

EUR:
The Euro was flat against the buck ahead of 1st round of French elections on Sunday (30th June).

FX’s session range was tight, showing little reaction to data within the region:
– Italian Prelim Y/Y Inflation for June was cooler than expected
– CPI in France was in line.
– Germany’s Unemployment Change was higher than forecasts
European Consumer 1-yr and 3yr Inflation Expectations in May fell slightly.
Heading into the upcoming French elections OAT/BUND spreads widened to highs of 85.20 from the open of 81.10, levels not seen since 2012, albeit narrowed as the session progressed, finishing the session at 80.30.

EUR/USD spent the day hovering around the 107 mark; EUR/USD experiences its first weekly gain since May 13th, though it finishes the month in the red, erasing most of May’s gains.

EUR UNCH: 93.34                            UNCH (93.56 – 93.22) Off LOWS

GBP
UK data saw the Final GDP Q/Q and Y/Y, revised above expectations, that said, Cable finished the week unchanged, ending its three-week decline, ahead of the July 4th election (Next Thursday)

GBP UNCH: 1.2643                         UNCH (126.60 – 126.21) MID

AUD:
The Aussie outperformed in the G10 space, AUD/USD peaked at session highs of 0.6685, finishing the session well in the green before RBA’s Minutes next Tuesday.

AUD up: 66.70                                 +0.35% (66.21 – 66.84) HIGHS

YEN:
The Yen once again took the spotlight in the haven FX space, with session lows of 160.26 and highs of 161.283.

It was announced that Japan’s Ministry of Finance is to replace top currency diplomat Kanda; USD/JPY initially fell 23 pips to 161 from 161.23.

Elsewhere, Tokyo Core CPI Y/Y was hotter than forecast, Unemployment Rate was in line, and Prelim Industrial Production M/M beat market expectations, driven by a large rebound in the output of motor vehicles.

USD/JPY finished the session flat against the dollar ahead of Japanese Consumer Confidence for June on Monday.

JPY up: 160.88                                 +0.1% (160.12 – 160.28) Off HIGHS

GOLD/SILVER
Gold surged in H1, up over 13%, its second-best year since 2016 (only 2020 was better). But the last six weeks have seen the precious metal coiling

GOLD down: $2334                        -0.1% (2330 – 2349) Off LOWS

EQUITIES:

US:
– SPX -0.41% 5,461
– NDX -0.54% 19,683
– DJI UNCH 39,124
– RUT +0.46% 2,048

EURO:
– DAX +0.13% 18,234
– CAC -0.68% 7,479
– FTSE -0.19% 8,164
– ES50 -0.20% 4,893

SECTORS (W to S): Communication Services -1.63%, Consumer Discretionary -1.36%, Utilities -1.08%, Technology -0.43%, Consumer Staples -0.46%, Materials flat, Health flat, Industrials flat, Financials +0.38%, Energy +0.42%, Real Estate +0.62%

STOCKS:
Nike (-20%)- Said next quarterly sales will fall 10%, warned of China weakness, in addition to revenue falling short of expectations. In commentary, the CFO expects headwinds to have a more pronounced impact in fiscal 2025.
Apple (-1.63%) – iPhone shipments jumped 40% in China for May after steep discounts, Bloomberg reported. UK CMA said it has extended its analysis and review of Apple’s App Store investigation from June to August 2024.
Lockheed Martin (UNCH) – Awarded a USD 1.5bln Navy contract for logistics support of F-35 Lightning II aircraft.

OIL:
WTI (Q4) SETTLES USD 0.20 LOWER AT 81.54/BBL; BRENT (U4) SETTLES USD 0.26 LOWER AT 85.00/BBL

The crude complex was choppy on Friday, ending the day in the roughly flat, and the week slightly in negative territory.

From the European morning to settlement energy was choppy, with no move seemingly driven by a headline, but potentially month/quarter end flows and positioning.
As such, WTI and Brent reversed from highs of USD 82.72/bbl and 86.18/bbl, respectively, to lows of 80.97/bbl and 84.52/bbl in the US afternoon.

Oil specific headlines were light to conclude the week, with in line US PCE taking the headlines, although Baker Hughes saw oil rigs -6, with natgas -1, leaving the total -7 at 581, the lowest since December 2021.

Elsewhere, Russia is reportedly to continue gasoline exports in July, according to Reuters sources. Oil report courtesy of newsquark.

CRUDE down: $81.53                     -0.25% (82.67 – 81.00) LOWS

BOND YIELDS:
US 1-MO 5.365 +0.030
US 6-MO 5.318 -0.010
US 1-YR 5.124 +0.012
US 5-YR 4.369 +0.068
US 10-YR 4.392 +0.104
US 30-YR 4.553 +0.126

2YR/10YR -0.36

CRYPTO
Bitcoin had its 5th best start to a year on record (2016, 2017, 2019, 2022, 2023 were better) ending H1 up 40%. Solana and Ethereum also had a great start to the year

CRYPTO: BTC/ETH down:               60208 -2%, 3383 -1.75%

KEEP DOING WHATS WORKING
STOP WHAT ISNT.

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

Joke of the Day:
https://vimeo.com/51954761

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