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Market News Financial Breakfast on June 10: The US dollar hit a new high in nearly three weeks before the CPI data, and the price of gold was under pressure. US oil was dragged down by the sharp drop in US stocks
Financial Breakfast on June 10: The US dollar hit a new high in nearly three weeks before the CPI data, and the price of gold was under pressure. US oil was dragged down by the sharp drop in US stocks
The U.S. dollar index rose sharply to a nearly three-week high overnight, putting pressure on gold prices. The market worried that the U.S. CPI data to be released in the evening would strengthen the possibility of aggressive interest rate hikes by the Federal Reserve. U.S. bond yields continued to rise and held above 3%, increasing their holdings of gold. opportunity cost. International oil prices fluctuated slightly on Thursday, with some bulls taking profits, repeated epidemics in Asia, and sharp declines in U.S. stocks, which dragged down oil prices. However, the relationship between Iran and international nuclear monitoring agencies deteriorated sharply, supply remained tight, and oil prices fell limited.
2022-06-10
9860
At the beginning of the Asian market on Friday (June 10), spot gold fluctuated in a narrow range around US$1,846. The US dollar index rose to a nearly three-week high overnight, which put pressure on gold prices. The market is worried that the US CPI data to be released in the evening will strengthen the aggressiveness of the Federal Reserve. With the possibility of interest rate hikes, U.S. bond yields continue to rise and stay above 3%, increasing the opportunity cost of holding gold. International oil prices fluctuated slightly on Thursday. Some bulls took profits, the Asian epidemic repeated, and U.S. stocks plummeted, causing some drag on oil prices. However, the relationship between Iran and international nuclear monitoring agencies has deteriorated sharply, supply is still tight, and oil prices have limited declines; currently U.S. crude oil It traded around $121.33 a barrel.
In terms of commodity closings, August Brent crude futures settled down $0.51, or 0.4%, at $123.07 a barrel; July U.S. crude futures settled down $0.60, or 0.5%, at $121.51 a barrel. U.S. gold futures were down 0.2 percent at $1,852.80.
At the close of U.S. stocks , the Dow Jones Industrial Average fell 638.11 points, or 1.94%, to 32272.79; the S&P 500 fell 97.95 points, or 2.38%, to 4017.82; the Nasdaq fell 332.05 points, or 2.75%, to 11754.23 point.
U.S. stocks ended sharply lower on Thursday as investor anxiety grew ahead of Friday's consumer price data, which is expected to show inflation remained elevated in May.
Selling intensified near the close. Growth giants led losses, with Apple and Amazon down 3.6% and 4.2%, respectively, the biggest drag on the S&P 500 and Nasdaq. All 11 S&P 500 sectors ended lower, with communications services and technology stocks falling the most.
The 10-year U.S. Treasury yield hit 3.073 percent, its highest since May 11, adding to nervousness. The recent surge in oil prices also weighed on sentiment ahead of Friday's U.S. consumer price index (CPI) report.
"We're preparing for the news that may come out tomorrow on inflation," said Peter Tuz, president of Chase Investment Counsel. "I think the data will be mixed. If headline inflation is high, but core inflation shows some sort of decline, I would I actually think the market could bounce back from that, as the data will show that inflation is pulling back slightly.”
Data is expected to show that the CPI rose 0.7% in May, while the core CPI, which excludes volatile food and energy, rose 0.5%.
As of the close, the Dow Jones Industrial Average fell 638.11 points, or 1.94%, to 32,272.79; the S&P 500 fell 97.95 points, or 2.38%, to 4,017.82; the Nasdaq fell 332.05 points, or 2.75%, to 11,754.23 .
All three major indexes posted their biggest one-day percentage losses since mid-May. The S&P 500 is down 15.7% so far this year, while the Nasdaq is down about 25%.
The higher-than-expected inflation data could add to concerns that the Federal Reserve will raise interest rates more aggressively than previously expected.
The Fed has raised short-term interest rates by 75 basis points so far this year and intends to raise rates by another 50 basis points at next week's meeting, with another 50 basis points expected in July.
Gold prices fluctuated and fell on Thursday, falling to the 1840 mark during the session and closing at $1847.96 per ounce. The rise in US Treasury yields and the strengthening of the US dollar weakened the attractiveness of gold. The US inflation data to be released on Friday may strengthen the Fed's active closing. reasons for tighter policies. U.S. gold futures were down 0.2 percent at $1,852.80.
"The ECB signaled that it will start raising interest rates in July and continue to raise interest rates, which sent gold down a little... It feels like some risk aversion in the market has also spread to the gold market. In addition, Treasury yields have also climbed, ” said Bob Haberkorn, senior market strategist at RJO Futures.
The ECB said it would end quantitative easing on July 1, before raising rates by 25 basis points on July 21. Rates will be raised again on Sept. 8, and possibly more, unless the inflation outlook improves in the interim. (Full Story)
Rising U.S. bond yields have increased the opportunity cost of holding non-yielding gold, and a strong dollar has made gold less attractive to overseas buyers.
The survey showed that the U.S. core consumer price index (CPI) in May is expected to rise by 5.9% year-on-year, compared with a year-on-year increase of 6.2% in April. CPI data due on Friday could provide clues as to whether the Fed will continue to aggressively tighten in the second half of the year.
Oil prices fell on Thursday after a resurgence of the virus outbreak in Asia added to some worries, but remained near three-month highs as a strong rally in refined products provided a persistently bullish environment for oil markets.
August Brent crude futures settled down $0.51, or 0.4%, at $123.07 a barrel; July U.S. crude futures settled down $0.60, or 0.5%, at $121.51 a barrel.
Oil prices have been recovering steadily over the past two months, led by a surge in refined products, which have been helped by tight supply and surging demand.
The peak U.S. summer gasoline demand continued to drive crude oil prices. The United States and other countries have carried out a series of strategic oil reserve releases, but so far with limited success, and global crude oil production has grown very slowly.
"I think energy prices will be higher for the rest of the year unless we see some breakout that brings a lot of crude back into the market," said Andrew Lipow, president of Lipow Oil Associates.
U.S. gasoline inventories unexpectedly fell last week, government data showed, suggesting that demand for gasoline remains resilient during peak driving periods despite high oil prices. Four-week U.S. demand is around 9 million bpd, just 1% shy of 2021 levels.
Refiners have been unable to keep pace with demand. Crude processing capacity in the U.S. is near peak, while refineries in China have been shut down due to coronavirus-related restrictions.
The dollar index rose 0.73% on Thursday, rising for a second day at 103.31, after hitting a near three-week high of 103.36 during the session, while the euro fell 0.9% after the European Central Bank released its latest policy decision suggesting it will start raising interest rates.
The European Central Bank announced on Thursday that it would end a long-term stimulus program and said it would raise interest rates in July for the first time since 2011, before possibly more in September. The central bank is seeking to curb rising inflation.
However, the euro was lower against the dollar in the absence of any details on plans to deal with the fragmented funding environment. The European Central Bank said differences in borrowing costs among European countries hindered the execution of its monetary policy.
Huw Roberts, head of analysis at Quant Insight, said, “We knew QE was coming to an end, but they themselves started to come up with the idea of a special contingency plan to address the risk of fragmentation without providing any details.”
"Because they've been talking about contingency plans, the market wants more information, more details on what they're going to do. It's disappointing that no details were disclosed."
Goldman Sachs said it now expects the European Central Bank to raise interest rates by 25 basis points in July, followed by 50 basis points in September and October, and the rate hike will be narrowed to 25 basis points in December.
EUR/USD fell 0.9% to 1.0616 on Thursday. The dollar is up more than 1% so far this week, on track for its second straight weekly gain and its biggest weekly gain in seven.
With most of the world's central banks already moving to curb rising inflation by raising interest rates, investors will see May U.S. consumer price index (CPI) data on Friday. The consensus forecast is that the U.S. CPI rose 8.3% year-on-year in May, the same as the increase in April.
While some investors are hoping that inflation may have peaked, the recent rise in oil prices to 13-week highs has dampened that optimism and boosted the appeal of the safe-haven dollar.
The data showed that the U.S. labor market remained very tight, with initial jobless claims rising to a seasonally adjusted 229,000 in the week ended June 4, the most since mid-January, versus expectations for 210,000.
The Fed is due to release its latest policy statement next Wednesday, and CME's FedWatch tool showed the market fully priced in a rate hike of at least 50 basis points.
By contrast, the Bank of Japan has been one of the few central banks that has not acted on rising prices, sending the yen to a 20-year low against the dollar and a 7-1/2-year low against the euro. Bank of Japan Governor Haruhiko Kuroda said on Wednesday that a weaker yen is good for the economy as long as the exchange rate remains stable, adding that the BOJ is not the authority on foreign exchange policy.
The euro was up 0.53% at 142.650 on Thursday, after hitting its highest since January 2015 at 144.25 on Wednesday. The dollar rose 0.1% against the yen to 134.37, after hitting an intraday high of 134.55, the highest since February 2002.
The European Central Bank hinted that it will raise interest rates by 25 basis points in July, and there may be more action in September ① The European Central Bank announced that it will end quantitative easing on July 1, and then raise interest rates by 25 basis points on July 21, which will It was the first rate hike since 2011. The ECB said it would raise interest rates again on September 8, and possibly more, unless the inflation outlook improves in the meantime. ECB President Christine Lagarde said: “If inflation is expected to remain at 2.1% in 2024 or beyond, will the rate hikes be higher? The answer is yes.”
②The European Central Bank raised its inflation forecast again and lowered its growth forecast, as the conflict in Ukraine continued to weigh on confidence, consumption and investment.
③With borrowing costs still low, most ECB policymakers see no need to announce a new bond-buying program now to control bond yield spreads among euro zone countries, the sources said.
IMF expected to further cut global growth forecast for this year
The International Monetary Fund (IMF) is expected to further cut its 2022 global growth forecast next month, which will be the third time the IMF has lowered its forecast this year. IMF spokesman Rice said the downgrade was due to the ongoing war in Ukraine, volatile commodity prices, very high food and energy prices, a sharper-than-expected slowdown in big Asian economies, and higher interest rates in some advanced economies.
Severe street fighting in Severo Donetsk, Ukraine says progress in south ”, but the Ukrainian army faced the “catastrophic” problem of insufficient artillery fire. The battle in the ruins of Severo Donetsk has become one of the bloodiest scenes of the war, as Russian troops have increasingly concentrated there. Both sides claimed to have inflicted heavy casualties on the other.
U.S. jobless claims near five-month high last week, but labor market remains very tight It does not mark a material shift in labor market conditions, which remain very tight. Underscoring the strength of the labor market, the data also showed that the number of unemployed remained at the lowest level in more than 52 years as of the end of May.
U.S. Treasury Secretary Yellen said she doesn't think there will be a recession in the U.S. economy, but growth will "absolutely" slow slow, and gasoline prices are unlikely to fall back anytime soon. U.S. households are clearly concerned about soaring oil prices, which play a key role in influencing consumer expectations, but given the U.S. labor market is now the strongest since World War II, the level of pessimism about the economy is "surprising," she said. ".
②The Federal Reserve report showed that in the first quarter of 2022, U.S. household wealth fell for the first time in two years, as the fall in the stock market overshadowed the continued rise in house prices.
Bank of Canada Governor Says Inflation Will Determine Speed And Scale Of Rate Raise interest, or consider a move greater than 50 basis points. "What we want to show is that we may need to do more ... to get inflation back on target, or we need to move faster, or we need to do more."
U.S. energy security envoy: Soaring prices in global markets mean Russia could now earn more Overshadowed by the West's efforts to limit its sales. While Russian cargoes to China and India are being sold at discounts compared to supplies from other countries, soaring prices in the global market means Russia may now be earning more, Hochstein said.
Relations between Iran and international nuclear monitoring agencies have deteriorated sharply. The Iran nuclear deal may not be restarted.①Iran ordered international monitors to remove nearly half of the surveillance cameras used to determine the status of nuclear fuel stockpiles. be in jeopardy. The Director General of the International Atomic Energy Agency (IAEA) Grossi said on Thursday that agency inspectors were removing 27 cameras from multiple nuclear facilities in Iran. The move further restricts the IAEA's access and will hurt the ability of inspectors to restructure activities.
② Grossi estimates that diplomats currently have no more than a month to negotiate a restart of the nuclear deal, in exchange for easing sanctions on the condition of controlling Iran's nuclear activities. Failure to restart the nuclear deal "would be a fatal blow" because IAEA inspectors would no longer be able to verify many of the technical details at the heart of the deal.
"The window of opportunity is very small," Grossi said, adding that Iran's order to remove the cameras should be reprehensible. "We're in a very tense situation right now." Already tense relations between Iran and the monitors have taken a nosedive over the past 48 hours, with diplomats formally criticizing Iran for not cooperating with the IAEA's investigation. And Iran's move to limit surveillance is in retaliation for that move.
In terms of commodity closings, August Brent crude futures settled down $0.51, or 0.4%, at $123.07 a barrel; July U.S. crude futures settled down $0.60, or 0.5%, at $121.51 a barrel. U.S. gold futures were down 0.2 percent at $1,852.80.
At the close of U.S. stocks , the Dow Jones Industrial Average fell 638.11 points, or 1.94%, to 32272.79; the S&P 500 fell 97.95 points, or 2.38%, to 4017.82; the Nasdaq fell 332.05 points, or 2.75%, to 11754.23 point.
Friday ahead
List of major global market conditions
U.S. stocks ended sharply lower on Thursday as investor anxiety grew ahead of Friday's consumer price data, which is expected to show inflation remained elevated in May.
Selling intensified near the close. Growth giants led losses, with Apple and Amazon down 3.6% and 4.2%, respectively, the biggest drag on the S&P 500 and Nasdaq. All 11 S&P 500 sectors ended lower, with communications services and technology stocks falling the most.
The 10-year U.S. Treasury yield hit 3.073 percent, its highest since May 11, adding to nervousness. The recent surge in oil prices also weighed on sentiment ahead of Friday's U.S. consumer price index (CPI) report.
"We're preparing for the news that may come out tomorrow on inflation," said Peter Tuz, president of Chase Investment Counsel. "I think the data will be mixed. If headline inflation is high, but core inflation shows some sort of decline, I would I actually think the market could bounce back from that, as the data will show that inflation is pulling back slightly.”
Data is expected to show that the CPI rose 0.7% in May, while the core CPI, which excludes volatile food and energy, rose 0.5%.
As of the close, the Dow Jones Industrial Average fell 638.11 points, or 1.94%, to 32,272.79; the S&P 500 fell 97.95 points, or 2.38%, to 4,017.82; the Nasdaq fell 332.05 points, or 2.75%, to 11,754.23 .
All three major indexes posted their biggest one-day percentage losses since mid-May. The S&P 500 is down 15.7% so far this year, while the Nasdaq is down about 25%.
The higher-than-expected inflation data could add to concerns that the Federal Reserve will raise interest rates more aggressively than previously expected.
The Fed has raised short-term interest rates by 75 basis points so far this year and intends to raise rates by another 50 basis points at next week's meeting, with another 50 basis points expected in July.
precious metal
Gold prices fluctuated and fell on Thursday, falling to the 1840 mark during the session and closing at $1847.96 per ounce. The rise in US Treasury yields and the strengthening of the US dollar weakened the attractiveness of gold. The US inflation data to be released on Friday may strengthen the Fed's active closing. reasons for tighter policies. U.S. gold futures were down 0.2 percent at $1,852.80.
"The ECB signaled that it will start raising interest rates in July and continue to raise interest rates, which sent gold down a little... It feels like some risk aversion in the market has also spread to the gold market. In addition, Treasury yields have also climbed, ” said Bob Haberkorn, senior market strategist at RJO Futures.
The ECB said it would end quantitative easing on July 1, before raising rates by 25 basis points on July 21. Rates will be raised again on Sept. 8, and possibly more, unless the inflation outlook improves in the interim. (Full Story)
Rising U.S. bond yields have increased the opportunity cost of holding non-yielding gold, and a strong dollar has made gold less attractive to overseas buyers.
The survey showed that the U.S. core consumer price index (CPI) in May is expected to rise by 5.9% year-on-year, compared with a year-on-year increase of 6.2% in April. CPI data due on Friday could provide clues as to whether the Fed will continue to aggressively tighten in the second half of the year.
crude
Oil prices fell on Thursday after a resurgence of the virus outbreak in Asia added to some worries, but remained near three-month highs as a strong rally in refined products provided a persistently bullish environment for oil markets.
August Brent crude futures settled down $0.51, or 0.4%, at $123.07 a barrel; July U.S. crude futures settled down $0.60, or 0.5%, at $121.51 a barrel.
Oil prices have been recovering steadily over the past two months, led by a surge in refined products, which have been helped by tight supply and surging demand.
The peak U.S. summer gasoline demand continued to drive crude oil prices. The United States and other countries have carried out a series of strategic oil reserve releases, but so far with limited success, and global crude oil production has grown very slowly.
"I think energy prices will be higher for the rest of the year unless we see some breakout that brings a lot of crude back into the market," said Andrew Lipow, president of Lipow Oil Associates.
U.S. gasoline inventories unexpectedly fell last week, government data showed, suggesting that demand for gasoline remains resilient during peak driving periods despite high oil prices. Four-week U.S. demand is around 9 million bpd, just 1% shy of 2021 levels.
Refiners have been unable to keep pace with demand. Crude processing capacity in the U.S. is near peak, while refineries in China have been shut down due to coronavirus-related restrictions.
foreign exchange
The dollar index rose 0.73% on Thursday, rising for a second day at 103.31, after hitting a near three-week high of 103.36 during the session, while the euro fell 0.9% after the European Central Bank released its latest policy decision suggesting it will start raising interest rates.
The European Central Bank announced on Thursday that it would end a long-term stimulus program and said it would raise interest rates in July for the first time since 2011, before possibly more in September. The central bank is seeking to curb rising inflation.
However, the euro was lower against the dollar in the absence of any details on plans to deal with the fragmented funding environment. The European Central Bank said differences in borrowing costs among European countries hindered the execution of its monetary policy.
Huw Roberts, head of analysis at Quant Insight, said, “We knew QE was coming to an end, but they themselves started to come up with the idea of a special contingency plan to address the risk of fragmentation without providing any details.”
"Because they've been talking about contingency plans, the market wants more information, more details on what they're going to do. It's disappointing that no details were disclosed."
Goldman Sachs said it now expects the European Central Bank to raise interest rates by 25 basis points in July, followed by 50 basis points in September and October, and the rate hike will be narrowed to 25 basis points in December.
EUR/USD fell 0.9% to 1.0616 on Thursday. The dollar is up more than 1% so far this week, on track for its second straight weekly gain and its biggest weekly gain in seven.
With most of the world's central banks already moving to curb rising inflation by raising interest rates, investors will see May U.S. consumer price index (CPI) data on Friday. The consensus forecast is that the U.S. CPI rose 8.3% year-on-year in May, the same as the increase in April.
While some investors are hoping that inflation may have peaked, the recent rise in oil prices to 13-week highs has dampened that optimism and boosted the appeal of the safe-haven dollar.
The data showed that the U.S. labor market remained very tight, with initial jobless claims rising to a seasonally adjusted 229,000 in the week ended June 4, the most since mid-January, versus expectations for 210,000.
The Fed is due to release its latest policy statement next Wednesday, and CME's FedWatch tool showed the market fully priced in a rate hike of at least 50 basis points.
By contrast, the Bank of Japan has been one of the few central banks that has not acted on rising prices, sending the yen to a 20-year low against the dollar and a 7-1/2-year low against the euro. Bank of Japan Governor Haruhiko Kuroda said on Wednesday that a weaker yen is good for the economy as long as the exchange rate remains stable, adding that the BOJ is not the authority on foreign exchange policy.
The euro was up 0.53% at 142.650 on Thursday, after hitting its highest since January 2015 at 144.25 on Wednesday. The dollar rose 0.1% against the yen to 134.37, after hitting an intraday high of 134.55, the highest since February 2002.
international news
The European Central Bank hinted that it will raise interest rates by 25 basis points in July, and there may be more action in September ① The European Central Bank announced that it will end quantitative easing on July 1, and then raise interest rates by 25 basis points on July 21, which will It was the first rate hike since 2011. The ECB said it would raise interest rates again on September 8, and possibly more, unless the inflation outlook improves in the meantime. ECB President Christine Lagarde said: “If inflation is expected to remain at 2.1% in 2024 or beyond, will the rate hikes be higher? The answer is yes.”
②The European Central Bank raised its inflation forecast again and lowered its growth forecast, as the conflict in Ukraine continued to weigh on confidence, consumption and investment.
③With borrowing costs still low, most ECB policymakers see no need to announce a new bond-buying program now to control bond yield spreads among euro zone countries, the sources said.
IMF expected to further cut global growth forecast for this year
The International Monetary Fund (IMF) is expected to further cut its 2022 global growth forecast next month, which will be the third time the IMF has lowered its forecast this year. IMF spokesman Rice said the downgrade was due to the ongoing war in Ukraine, volatile commodity prices, very high food and energy prices, a sharper-than-expected slowdown in big Asian economies, and higher interest rates in some advanced economies.
Severe street fighting in Severo Donetsk, Ukraine says progress in south ”, but the Ukrainian army faced the “catastrophic” problem of insufficient artillery fire. The battle in the ruins of Severo Donetsk has become one of the bloodiest scenes of the war, as Russian troops have increasingly concentrated there. Both sides claimed to have inflicted heavy casualties on the other.
U.S. jobless claims near five-month high last week, but labor market remains very tight It does not mark a material shift in labor market conditions, which remain very tight. Underscoring the strength of the labor market, the data also showed that the number of unemployed remained at the lowest level in more than 52 years as of the end of May.
U.S. Treasury Secretary Yellen said she doesn't think there will be a recession in the U.S. economy, but growth will "absolutely" slow slow, and gasoline prices are unlikely to fall back anytime soon. U.S. households are clearly concerned about soaring oil prices, which play a key role in influencing consumer expectations, but given the U.S. labor market is now the strongest since World War II, the level of pessimism about the economy is "surprising," she said. ".
②The Federal Reserve report showed that in the first quarter of 2022, U.S. household wealth fell for the first time in two years, as the fall in the stock market overshadowed the continued rise in house prices.
Bank of Canada Governor Says Inflation Will Determine Speed And Scale Of Rate Raise interest, or consider a move greater than 50 basis points. "What we want to show is that we may need to do more ... to get inflation back on target, or we need to move faster, or we need to do more."
U.S. energy security envoy: Soaring prices in global markets mean Russia could now earn more Overshadowed by the West's efforts to limit its sales. While Russian cargoes to China and India are being sold at discounts compared to supplies from other countries, soaring prices in the global market means Russia may now be earning more, Hochstein said.
Relations between Iran and international nuclear monitoring agencies have deteriorated sharply. The Iran nuclear deal may not be restarted.①Iran ordered international monitors to remove nearly half of the surveillance cameras used to determine the status of nuclear fuel stockpiles. be in jeopardy. The Director General of the International Atomic Energy Agency (IAEA) Grossi said on Thursday that agency inspectors were removing 27 cameras from multiple nuclear facilities in Iran. The move further restricts the IAEA's access and will hurt the ability of inspectors to restructure activities.
② Grossi estimates that diplomats currently have no more than a month to negotiate a restart of the nuclear deal, in exchange for easing sanctions on the condition of controlling Iran's nuclear activities. Failure to restart the nuclear deal "would be a fatal blow" because IAEA inspectors would no longer be able to verify many of the technical details at the heart of the deal.
"The window of opportunity is very small," Grossi said, adding that Iran's order to remove the cameras should be reprehensible. "We're in a very tense situation right now." Already tense relations between Iran and the monitors have taken a nosedive over the past 48 hours, with diplomats formally criticizing Iran for not cooperating with the IAEA's investigation. And Iran's move to limit surveillance is in retaliation for that move.
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