The Morning Hark - 30 June 2022
Today’s focus ……Apologies for briefness…..major system issues
Daily roundup - all prices are at 7.45 BST (British Summer Time) with changes reflecting movement from midnight BST
Oil - Brent and Crude September futures flat on the day at 112.40 and 107.10 respectively. A mixed bag of news with the US SPR data showing it at record lows with only 27 days of reserves left in the tank. Equally talks between the West and Iran failed to bring a breakthrough although further talks between the EU and Iran’s nuclear negotiators have been cited. Libya confirmed also a halt to all oil exports. Ultimately however fears of a recession and a global slowdown trumped all other news in the sector.
EQ - Asia stocks weaker across the board again following the US markets sell off yesterday. All major indices in the region in the red with Kospi, Nikkei and the Hang Seng trading at 308, 26,400 and 21,680 respectively. The Hang Seng was helped a tad by the best Chinese PMI data in four months but still couldn’t print green.
The US stock futures indices continue to slide further down over one percent with the Nasdaq and S&P currently at 11,520 and 3,780 respectively.
Gold - Gold futures flat overnight at 1817. Gold remains caught in the crosswinds of a hawkish central bank environment and the recessionary fears that seem to grow on a daily basis. Continues to feel like a step aside market for now.
FI - Global yields continue to sell off with the US 2y and 10y yields now at 3.02 and 3.08 respectively as the economic prints continue to disappoint and recessionary fears continue to rise. The US10y is now sitting below the trend line at 3.10 and the 50dma sits around the 3% level so key areas for the market to focus on. The Sintra forum did little to ease market anxiety with little to suggest that the central bankers of the world are in control of the situation.
FX - The USD has held onto its gains from yesterday with the USD Index steady at 104.90 Similarly all the majors are flat on the day with USDJPY trading 136.40, the EUR at 1.0465 and GBP 1.2140. USDJPY ticked off another recent new high yesterday as it printed 137 in US trading.
Others - Bitcoin and Ethereum continue to be sidelined with the pair trading at 19,500 and 1060 respectively. Three Arrows Capital finally succumbed to the inevitable and entered liquidation yesterday and it probably won’t be the last crypto firm to do so in the coming months as we make our way through the “crypto winter”. Some articles below to cheer you through the winter.
Sintra finished with lots of determined chat about inflation fighting from central bankers but nothing new in terms of policy with the ECB endorsing a 25bp hike in July and a work-in-progress stamp for the anti-fragmentation tools. So if “ECB sources” don’t appear in the meantime it seems that the July 21 meeting will be announcement time. The BoE again highlighted the persistence of inflation and seem set to hike 50bp in August. Finally the Fed reiterated their tightening policy with hope that “a soft landing is possible but will be quite challenging”. The confidence that the economy will avoid a recession is based on the strong labour market and excess household savings. On that note today’s personal income and spending data should give a clue as to whether those savings are being spent. Again Powell followed recent Fed colleagues in calling the economy “strong” which flies in the face of recent economic prints but hey they’re driving the car. The market seems to be telling him the contrary with peak rates seen in the first quarter of next year and rate cuts thereafter.
📅⠀The main highlights for the day ahead in terms of data and speakers:
EU Unemployment Rate May consensus 6.8% vs previous 6.8% (10.00 BST)
US Personal Income MoM May consensus 0.5% vs previous 0.4% (13.30 BST)
US PCE Price Index YoY May previous 6.3% (13.30 BST)
US Core PCE Price Index YoY May consensus 4.8% vs previous 4.9% (13.30 BST)
US Chicago PMI Jun consensus 58.1 vs previous 60.3 (14.45 BST)
Enria (08.00 BST)
Lagarde (14.30 BST)
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🔥⠀Top 5 trending links on Harkster yesterday:
Visual Capitalist - Who’s Still Buying Fossil Fuels From Russia?
Prometheus Research - The Observatory
Alhambra Partners - Getting Whipped Will Really Hurt
UniCredit - Economics Chartbook - Downside risks to growth building (3Q22)
Real Vision - What Does Commodity Price Action Tell Us About the Economy?
📚⠀Further reading on the current key macro themes:
Fortune - Crypto lending platform BlockFi sought a $5 billion valuation a year ago, but a leaked call reveals it’s valued at less than $500 million now
Coindesk - Genesis Faces ‘Hundreds of Millions’ in Losses as 3AC Exposure Swamps Crypto Lenders: Sources
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