MARKET REPORT

Euronext Lisbon

Day in Review:

Today:

US Job Growth Tops Forecasts
                – 206K jobs June, slightly below a downwardly revised 218K in May and above forecasts of 190K.
– Data for May was revised sharply lower from an initial 272K, April reading was also revised down by 57K to 108K. With these revisions, employment in April and May combined is 111K lower than previously reported.
– Job gains occurred mainly in government, Losses in private sector
– The average monthly payroll growth for this year has been 222K, compared to 251K in 2023 and 377K in 2022.
US Jobless Rate Highest since November 2021
                – The unemployment rate rose to 4.1% in June 2024, highest since November 2021, up from 4% in the previous month and surprising market expectations (Exp UNCH). The number of unemployed individuals increased by 162,000 to 6.811 million, while employment levels increased by 116,000 to 161.199 million.
– labor force participation rate went up to 62.6% from 62.5%
– Employment-population ratio decreased to 60.1% from 60.2%.
US Wage Growth Slows, As Expected
Average hourly earnings for all employees on US private nonfarm payrolls increased by 10 cents, or 0.3%, to $35.00 in June 2024, following a 0.4% increase in the prior month and slightly below market forecasts of 0.4% gain. In June, average hourly earnings of private-sector production and nonsupervisory employees increased by 10 cents, or 0.3%, to $30.05. Over the past 12 months, average hourly earnings have increased by 3.9%, the least since June 2021, after a 4% advance in May, matching market estimates.

– Data from the CME Group showed investors pricing in a 75% chance the Fed would cut rates in September

– This coming Thursday’s Consumer Price Index report will be the next catalyst RE US rates.

– June’s Jobless rate triggers Sahm rule (predicted last 9 recessions)

– UK’s Labour party sweeps to power

Canada Unemployment Rate Rises More than Expected
– The unemployment rate in Canada rose to 6.4% in June of 2024 from 6.2% in the previous month, highest since January ‘22, surpassing expectations of 6.3%.

Euro Area Retail Sales Rise Less than Expected
– Retail sales in the Euro Area 0.1% MoM May, rebounding from an upwardly revised 0.2% fall in April, and compared to forecasts of a 0.2% rise.

– Gold hits 1-month high, Silver approaching 11yr high +3.16%, US Stocks break records

– Crypto continues to get smoked, BTC LOWEST since FEB

– Since 1928, the first 10 trading days of July have historically been the strongest period for the S&P 500 Index, with the benchmark stocks gauge advancing 1.5% on average, rising nearly 70% of the time, according to Bank of America Corp.

– Tesla continue rally, turning positive for 2024
– Macy’s +10% on takeover offer
– Sunpower plunges 24% on fin misconduct allegations
– JP Morgan warns 86m customers they might have to start paying for their bank accounts

– Tropical storm Beryl hits Mexico enroute to Texas

– Russia holds Nuclear drills ahead of NATO summit in DC

-Efforts to mediate a ceasefire and release hostages in Gaza gained momentum on Friday with a revised proposal from Hamas and Israel’s willingness to resume stalled negotiations

– OJ +3.52%
– Sugar -2.22%

– DOLLAR DOWN, GOLD UP (SILVER LEADS), DOW UNCH, ES500 UP, TECH LEADS, CRUDE OFF, CRYPTO SH*TS THE BED OFF OF MT.GOX ($2.7B WALLET TRF)

DOLLAR DX down: 104.60            -0.40% (105.75 – 104.54) LOWS
– AUD UP: 67.51                                 +0.61% (66.36 – 67.52) HIGHS
– EUR down: 92.22                          -0.26% (93.34 – 92.22) LOWS
– GBP up: 1.2815                              +0.43% (126.15 – 128.16) HIGHS
– JPY down : 160.81                        -0.26% (161.93 – 160.54) Off Lows

GOLD UP: $2399                                              +1.25% (2330 – 2399) HIGHS
DOW/ES/ND UNCH/up/up:                         39665 UNCH, 5617 +0.48%, 20605 ++0.94%
CRYPTO: BTC/ETH SMOKED:                        56422 -3.11%, 2975 -5%
CRUDE down: $83.31                                     -0.68% (84.52 – 83.08) Off Lows

Next week:

– US CPI and PPI data for June
– Federal Reserve Chair Powell’s semiannual testimony on monetary policy at the Senate Banking Committee Tues 10am!
– Michigan consumer confidence.
– EU: spotlight will be on the second round of parliamentary elections on Sunday.
– IR decisions will be announced in New Zealand, South Korea, and Malaysia, accompanied by inflation data releases in Mexico, China, Brazil, India, and Russia.
– UK, key data points include GDP for May, goods trade balance, industrial production, and the BRC retail sales monitor.
– CH will release its inflation rate, PPI, new yuan loans, and trade balance data.
– AU will report on NAB business confidence and Westpac consumer confidence
– IN will release its industrial production figures.
– GE trade balance

Speakers:
EARNINGS:

MAJORS:

DX:
The Dollar headed into Friday’s Non-farms payroll report slightly weaker against its peers, with the DXY breaking below the 105 level.
The DXY saw two way price action on the data but ultimately was lower on the session.
There was a choppy reaction due to the headline NFP beat, but overall it was a dovish report.
There were huge downward revisions both on prior and on a two-month aggregate basis while the unemployment rate surprised to the upside, 4.1% (exp. 4.0%, prev. 4.0%). That said, the index gradually sold off through much of the session to see DXY finishing the session at lows of c. 104.83.
The DXY incurred its 7th consecutive day of losses, as session lows indicate the index has wiped out its last three weeks of gains.

Dollar participants will set their gaze on next week’s, Fed Chair Powell’s Testimony on Monday and speech on Tuesday, the CPI June report on Wednesday, PPI, and UoM Consumer Sentiment on Friday.

DOLLAR DX down: 104.60            -0.40% (105.75 – 104.54) LOWS

EUR:
The Euro strengthened against the buck, though underperformed relative to its G10FX peers.

EU data included surprise declines in German Industrial Output M/M for May, -2.5% (exp. 0.2%, prev. -0.1%), marking the country’s steepest decrease since 2022, driven by lower output from machinery equipment and the automotive industry; French Industrial output surprised to the downside as well. Elsewhere, EU Retail Sales Y/Y for May beat expectations, 0.3% (exp. 0.1%), and M/M missed, 0.1% (exp. 0.2%).

On the ECB front, Stournaras said they could have one or two more interest rate cuts this year; as a reminder 46bps of cuts are priced in by 2024 year-end. EUR/USD rallied for the fourth consecutive day ahead of France’s Second round of parliamentary elections on Sunday; OAT/BUND spread narrowed from 78.20 at the beginning of the week to 68.40.

Note, the latest IFOP poll saw the RN’s lead narrow somewhat.

EUR down: 92.22                             -0.26% (93.34 – 92.22) LOWS

GBP
The pound initially led the space in terms of performance, following the Labour Party’s UK Election win as expected. Cable showed little reaction to the exit poll results which had been priced in and mulled for some time, nevertheless, the dollar weakness saw Cable finish the session above 1.28.

GBP up: 1.2815                +0.43% (126.15 – 128.16) HIGHS

AUD:

AUD UP: 67.51                                  +0.61% (66.36 – 67.52) HIGHS

YEN:
USD/JPY hit highs of 161.39 earlier in the session, however, fell back below the 161 level as the session progressed in wake of the dovish NFP report and downside in US yields. Meanwhile, the upcoming BoJ report reportedly reveals a broadening wage rise trend, according to Reuters sources.

JPY down : 160.81                           -0.26% (161.93 – 160.54) Off Lows

US TREASURIES
– Treasury yields dropped across the curve. Swaps fully projected two Fed reductions in 2024 — and bets have been building around a September cut.
– Treasury 10-year yields fell eight basis points to 4.28%
– In the run-up to the jobs report, bond funds recorded about $19 billion in weekly inflows, the biggest additions since February 2021, according to a note from Bank of America Corp. citing EPFR Global data. The trend suggests investors are “locking in peak yields,” BofA strategist Michael Hartnett wrote.
– Germany’s 10-year yield declined five basis points to 2.56%
– Britain’s 10-year yield declined seven basis points to 4.12%


GOLD/SILVER
Silver extended its upswing toward $31.5 per ounce in July, the highest since the 11-year highs of $32 in late May amid mounting bets that the Fed is due to start its cutting cycle in September, lending support to precious metals.

Further evidence of a softening labor market in the US following major downward revisions to non-farm payrolls, in addition to an unexpected decline in the country’s service sector, pressured the dollar and reduced the opportunity cost of holding non-interest bearing bullion.

Silver prices were also supported by expectations that China will unveil concrete stimulus targets in its Third Plenum this month, as a large extent of economic support is estimated to be necessary should Beijing achieve its 5% growth target this year. Increasing needs for power raise silver demand as a key input for solar panels. In the latest developments, the strong momentum for solar power investment was underscored by the connection of the world’s largest solar farm in Xinjiang.

Gold Highest Since MAY!

GOLD UP: $2399                                              +1.25% (2330 – 2399) HIGHS

OIL:
Up on the week despite $84 level HIGH RES

CRUDE down: $83.31                                     -0.68% (84.52 – 83.08) Off Lows

BOND YIELDS:

US 1-MO 5.365 +0.022
US 6-MO 5.283 -0.019
US 1-YR 5.          -0.045
US 5-YR 4.225 -0.084
US 10-YR 4.277 -0.069
US 30-YR 4.475 -0.044

2YR/10YR -0.33

CRYPTO
Just over a week after initial rumors – and wallet movements – sent bitcoin prices lower, Mt. Gox – the collapsed crypto exchange – officially began repaying its debts yesterday (on one of the most illiquid days of the year, of course) in Bitcoin and Bitcoin Cash.

This overhang sparked a major wave of selling pressure across the crypto space (after German and US authorities ‘simultaneously’ moved the ill-gotten-gains on to exchanges

The total Bitcoin balance on all known addresses of the Mt. Gox Trustee is 94,457 BTC, with 47,288 BTC being moved from these addresses since.

Selling in Bitcoin forced it back below its 200DMA for the first time since October of last year.

– Other highly traded cryptocurrencies, including Ether and Solana’s, also saw almost 10% drops on the day

– More than $9.4 billion worth of Bitcoin is owed to approximately 127,000 Mt. Gox creditors who have been waiting for over 10 years to recover their funds

– Bitcoin fell below the average realized buying price of the spot Bitcoin ETF buyers, or $57,979 – considered a significant support line for BTC analysts

CRYPTO: BTC/ETH SMOKED:                        56422 -3.11%, 2975 -5%

KEEP DOING WHATS WORKING
STOP WHAT ISNT.

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

Joke of the Day:

YouTube player

POINT OF THE DAY:
While the much-watched UMich inflation expectations index (median) has been stabilizing over the past year or so (fitting the narrative of disinflation and Fed victory); the mean longer-term inflation expectation has blown back out in recent months to its highest since February 1993.
The huge spread between mean and median implies that the distribution of inflation expectations has a very, very high right-tail (i.e. a relatively large number of respondents are expecting significantly higher inflation over the next 5-10 years).

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