- US stock indices closed mostly higher albeit with the upside predominantly led by large caps in which tech and consumer discretionary outperformed while the majority of sectors were in the red and the Russell 2000 suffered losses. The gains in the major indices were contained amid a higher yield environment as bonds tumbled despite soft ISM Manufacturing PMI data with selling pressure in the Treasury complex exacerbated after SCOTUS gave Trump a partial win whereby it ruled that Trump has ‘absolute immunity’ for official acts.
- USD saw two-way price action and clawed back early weakness with the help of rising yields although gains were capped after the DXY hit resistance just shy of the 106.00 level and as participants digested data releases including a soft ISM report.
- Looking ahead, highlights include New Zealand Business Confidence, South Korean CPI, RBA Minutes, Supply from Japan.
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LOOKING AHEAD
- Highlights include New Zealand Business Confidence, South Korean CPI, RBA Minutes, Supply from Japan.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stock indices closed mostly higher albeit with the upside predominantly led by large caps in which tech and consumer discretionary outperformed while the majority of sectors were in the red and the Russell 2000 suffered losses. The gains in the major indices were contained amid a higher yield environment as bonds tumbled despite soft ISM Manufacturing PMI data with selling pressure in the Treasury complex exacerbated after SCOTUS gave Trump a partial win whereby it ruled that Trump has ‘absolute immunity’ for official acts.
- SPX +0.27% at 5,475, NDX +0.66% at 19,812, DJI +0.13% at 39,170, RUT -0.86% at 2,030.
- Click here for a detailed summary.
NOTABLE HEADLINES
- Fed's Williams (voter) said the country's experience with inflation mirrored other countries and the Fed has owned responsibility for inflation control, while he is confident the Fed is on a path of getting inflation back to 2%.
- Democrats are reportedly considering an early Biden nomination to squash the talk of a swap, while a July 21st meeting offers a potential date for the party to tap Biden, according to Bloomberg.
- US Supreme Court has thrown out the judicial decision which rejected former President Trump's bid for immunity from Federal prosecution for the 2020 election subversion, while the Supreme Court has partially backed Trump on immunity in which it stated that he has immunity for official acts but there is no immunity for un-official acts i.e. no immunity for personal actions.
- French anti-trust regulators are reportedly preparing to charge Nvidia (NVDA) over alleged anti-competitive practices, according to Reuters citing sources.
DATA RECAP
- US S&P Global Manufacturing PMI Final (Jun) 51.6 (Prev. 51.7)
- US ISM Manufacturing PMI (Jun) 48.5 vs. Exp. 49.1 (Prev. 48.7)
- US ISM Manufacturing New Orders Index (Jun) 49.3 (Prev. 45.4)
- US ISM Manufacturing Prices Paid (Jun) 52.1 (Prev. 57.0)
- US Construction Spending MM (May) -0.1% vs. Exp. 0.2% (Prev. -0.1%, Rev. 0.3%)
FX
- USD saw two-way price action and clawed back early weakness with the help of rising yields although gains were capped after the DXY hit resistance just shy of the 106.00 level and as participants digested data releases including a soft ISM report.
- EUR held on to the initial gains following the first round of the French elections albeit with the upside limited as participants also digested a slew of data from the bloc including Eurozone PMIs and softer-than-expected German CPI.
- GBP traded flat as participants await the looming UK election, while the pace of UK Manufacturing PMI data slowed.
- JPY continued to weaken which saw USD/JPY print a fresh 38-year high of 161.73 amid the upside in US yields.
FIXED INCOME
- T-notes bear steepened as they tracked Bunds lower with bolstered Trump re-election prospects adding to the downside despite soft ISM Manufacturing PMI.
COMMODITIES
- Oil prices advanced throughout the session despite the Dollar paring from lows a focus turns to hurricane season with close attention on Cat 4 Hurricane Beryl which appears to be headed to the mouth of the Gulf of Mexico.
- OPEC June output is reportedly steady as some members exceeded limits, according to a Bloomberg survey.
- Saudi Energy Minister announced the discoveries of multiple oil and gas fields, according to the state news agency.
GEOPOLITICAL
MIDDLE EAST
- Israeli PM Netanyahu said Israel is nearing the end of the phase of eliminating Hamas military capabilities and will continue to destroy the remnants of the Hamas military.
- Israel’s Army ordered a mass evacuation of Palestinians from part of Khan Younis in Gaza, according to Sky News.
- Iranian Acting Foreign Minister said the resistance in Lebanon will inflict a heavy price on Israel in response to any aggression, according to Sky News Arabia.
- Yemen's Houthis said it conducted four military operations targeting four ships associated with the US, the UK and Israel.
OTHER
- NATO will station a senior civilian official in Kyiv as part of new measures designed to shore up long-term support for Ukraine which are expected to be announced at the summit in Washington next week, according to WSJ citing US officials.
- Russia reportedly sent the Kilo attack submarine towards the Irish Sea twice since the 2022 invasion of Ukraine, according to Bloomberg sources.
ASIA-PAC
NOTABLE HEADLINES
- China's Vice Premier was reported to hold a symposium related to foreign investments on Monday with China to further expand market access and break unreasonable limits for foreign investments. Furthermore, it was said that key provinces should shoulder their responsibilities and step up targeted investment promotion and that China treats domestic and foreign firms the same regarding equipment and government purchases.
EU/UK
NOTABLE HEADLINES
- ECB's Lagarde said it will take time to be certain that inflation is on track and that a strong labour market means the ECB has time to gather information. Lagarde added that a soft landing for the Eurozone economy is not guaranteed, as well as noted the work is not done and the ECB must remain vigilant.
- ECB's Nagel said the German economy is regaining its footing but additional investment is required, according to Econostream.
- ECB's Simkus said two more cuts in 2024 are possible if the data is as expected and the ECB should not limit rate moves to projection meetings, while he added the case for a July interest rate cut has gone and he does not see disorderly moves in French bonds.
- ECB's Wunsch said the market pricing on the ECB rate path looks reasonable and the first two rate cuts are relatively easy, while he added the ECB would need convincing to cut more than twice this year and a July cut is an option in theory, but in practice, the ECB must be cautious.
DATA RECAP
- UK S&P Global Manufacturing PMI (Jun) 50.9 (Prev. 51.4)
- EU HCOB Manufacturing Final PMI (Jun) 45.8 vs. Exp. 45.6 (Prev. 45.6)
- French HCOB Manufacturing PMI (Jun) 45.4 vs. Exp. 45.3 (Prev. 45.3)
- Italian HCOB Manufacturing PMI (Jun) 45.7 vs. Exp. 44.3 (Prev. 45.6)
- German HCOB Manufacturing PMI (Jun) 43.5 vs. Exp. 43.4 (Prev. 43.4)
- German CPI Prelim MM (Jun) 0.1% vs. Exp. 0.2% (Prev. 0.1%)
- German CPI Prelim YY (Jun) 2.2% vs. Exp. 2.3% (Prev. 2.4%);
- German HICP Prelim MM (Jun) 0.2% vs. Exp. 0.2% (Prev. 0.2%)
- German HICP Prelim YY (Jun) 2.5% vs. Exp. 2.6% (Prev. 2.8%)
