Morning Brew June 11 2024

Good morning,

The Nasdaq and the S&P500 closed at record highs yesterday. The Dow rose 0.2%, the S&P500 0.3% and the Nasdaq 0.4% in fairly low volumes.  The US 500 is currently trading at 5358 and the US Tech 100 NAS at 19060.  Nvidia shares added 0.7%, and there are considerations, the chip maker might be included in the Dow. Apples kickoff of the developer conference did not inspire traders, the stock closed 2% lower. Tesla also lost app. 2% on the uncertainty arround Elon Musk`s renumeration vote. 

Yields and the USD Index stabilized yesterday and remain at 4.45 and 105.15, EURUSD is 1.0766, GBPUSD 1.2735 and USDJPY 157.25.

Kim took a look at key technical levels in FX: Technical Update - EURUSD how low can it go? GBPUSD could turn bearish. EURGBP broken key support, looking lower

Ole on the COT: COT: Brent long cut to ten-year low; Metals left exposed to end of week slump

Gold and Silver as well as Bitcoin are giving up ground today with Gold at 2300, Silver approaching 29 and Bitcoin at 67700. The World Gold Council reports a slow production.

Todays agenda is thin and focus is turning to tomorrow with the CPI and the FOMC: 

Peter Wrote on the likelihood of “US rate cut seems distant as inflation report looms”

Charu outlines the expectations around the CPI and FOMC:

While April inflation came in softer-than-expected, paving the way for rate cuts once again after the initial pushback, we have argued that one month of data does not constitute a trend. This puts the May inflation print heavily under the radar, to confirm that disinflation is progressing and to give confidence to the Fed to cut rates this year.

Market expectations are as below:
Headline CPI: 3.4% YoY (same as April) and 0.1% MoM (vs. 0.3% in April)
Core CPI: 3.5% YoY (vs. 3.4% in April) and 0.3% MoM (same as in April, which was a 3-year low)

The key measures to focus on will be:

• Core CPI MoM – if that rounds off the 0.2%, it can offer relief to markets but if it rounds to 0.4%, there could be further pushback on Fed rate cut pricing for this year
• Supercore inflation MoM (core services less housing) – this is also a key focus for markets and it is still running high at 0.42% MoM in April. But markets will likely be relieved if it comes in below 0.4%.
• Annualized trends – The 3-month and 6-month annualized inflation trends are also closely watched by markets.

Key Events:

Tuesday

• Data: UK Labor Data

Wednesday

• Data: China CPI & PPI, DE HICP, UK GDP, US CPI, US Rate Decision

Thursday

• Data: US Initial Jobless Claims

Friday

• Data: EU Trade Balance, US Import Prices, University of Michigan Sentiment