With the big news of gold reaching six-year highs (paralleling the rise in the broader stock market) and the biggest anticipation being the G20 summit, the global reflation scenario remains on track, with easier credit conditions from most of the world’s central banks, including the Federal Reserve, to be expected in the near future, a fundamental dominant force that may support indices for the long term.
- Indices are lower as President Trump threatens to impose 5% tariffs on Mexican imports, increasing them each month up to as high as 25% by October should Mexico fail to stem the flow of illegal immigrants entering the U.S.
- May PMI came in at consensus at 50.5.
- May Institute for Supply Management index came within consensus range at 52.1.
- Indices rose after China’s Commerce Ministry said it believed trade disputes can be resolved through dialogue.
- Mexico’s Foreign Minister Marcelo Ebrard also mentioned that he expected to find mutual understanding at talks with U.S. officials over immigration.
- Markets rallied hard after Jerome Powell’s statement that inflation shortfalls can lead to a “downward drift” in the Fed’s inflation expectations, supporting hopes of continuing rate cuts.
- Powell also suggested that the central bank would reduce borrowing costs if financial conditions showed indications of weakening due to tariff tensions.
- Indices pared gains as the May ADP jobs report showed private employers added 27,000 jobs in May, falling far short of economists expectations. Economists had forecast the ADP National Employment Report would show a gain of 180,000 jobs.
- ISM’s non-manufacturing index topped consensus range at 56.9, supported by strong acceleration in hiring.
- Indices are rallying for a third consecutive day on hopes of further Fed rate cuts.
- Markets are rallying despite President Trump’s threat of additional tariffs on Chinese goods worth $300 billion.
- Initial jobless claims were 218,000 in the week ended June 1; economists had forecast claims would be unchanged at 215,000.
- S. unit labor costs were weaker than initially reported in the first quarter, suggesting inflation could remain subdued for a while.
- A disappointing jobs report was celebrated by investors with a rally on hopes that the Fed will be cutting interest rates.
- Indices are higher for a fifth consecutive day after the U.S. and Mexico reached a deal to avoid tariffs.
- Trump announced on Sunday that the proposed tariffs on Mexican imports would be suspended indefinitely.
- April job openings came in at a higher-than-expected 7.449 million.
- Markets opened higher as China announced new stimulus measures to support the Chinese economy (they’re the 2nd largest economy in the world).
- The index of small business optimism from the National Federation of Independent Business increased to 105.0 in May when economists had forecast 102.0.
- PPI advanced a seasonally adjusted 0.1% in May from a month earlier and food and energy categories increased 0.2% from the prior month. Both readings matched economists expectations.
- US-China’s continuing trade tensions dragged down US indices, with three weeks to go before the proposed US-China trade talks.
- Consumer price index (CPI) increased to a seasonally adjusted 0.1% in May from the previous month, as expected, and the index, excluding volatile food and energy prices, were up .1%, which compares to the anticipated .2% gain.
- S. stock indices rose despite reports that oil tankers were attacked by an unknown entity in the Gulf of Oman.
- Expectations for resolutions to the US-China trade war are low with less than three weeks to go before proposed talks between the two leaders.
- Initial jobless claims increased by 3,000 to 222,000 in the week ended June 8.
- Indices opened lower as investors reacted to weaker-than-expected factory data in China (industrial output at 5.0% growth which is a 17-year low), and escalating tensions in the Gulf region.
- Retail sales increased a seasonally adjusted 0.5% in May from a month earlier, below the 0.6% economist expectations.
- Industrial production rose a seasonally adjusted 0.4% in May, beating economists’ 1% increase expectations.
- Markets slightly lower as the June Empire State manufacturing index posted its largest ever decline into negative territory, plummeting 26.4 points to negative 8.6 in June, according to the New York Federal Reserve. Economists were expecting a reading of positive 10.
- Home builders may be moderately less optimistic as June’s Housing market index came in at 64, three points below consensus.
- Indices advanced due to comments from European Central Bank President Mario Draghi indicating the possibility that the central bank will embark on a new round of interest rate cuts or asset purchases.
- S. housing starts in May were 1.269 million, which compares to expectations of 1.239 million and residential building permits were 1.294 million when 1.290 million were anticipated.
- Also, renewed hopes for a U.S.-China trade agreement supported today’s rally.
- The Fed’s target rate remains unchanged at 2.25 to 2.50 percent.
- But slowing economic growth and lack of price pressures underscored by rising uncertainties set the backdrop for a Federal Reserve policy statement that points squarely at rate cuts in coming meetings.
- Follow-though gains in the market remained limited until the FOMC statement which supported the market’s continuing advance.
- Stocks reached a new record high as investors digested yesterday’s Fed announcement of a new round of rate cuts to counter economic headwinds in the coming months.
- New jobless claims came in below consensus at 216,000; economists had expected 220,000.
- Indices are lower today after the S&P 500 spot index hit a record yesterday.
- Existing home sales came in at a favorable 5.340 million.
- Indices are closing in on record highs.
- Traders are looking ahead to the upcoming G-20 meeting in Osaka, Japan on Friday and Saturday, where President Trump and China’s President Xi are set to hold trade talks.
- The Chicago Federal Reserve national activity index came in at negative .05, which compares to the estimate of minus .18.
- The big news is that gold advanced to 6-year highs.
- Massive gold buying among central banks was a man theme in 2018 and it looks like this trend may continue.
- Also, considering that around $13 trillion of world debt is yielding below zero percent, gold, which yields nothing, in comparison, has a “positive” yield.
- Traders are looking ahead to the upcoming G-20 meeting in Osaka, Japan on Friday and Saturday, where President Trump and China’s President Xi are scheduled to hold trade talks.
- Durable goods orders came in at -1.3%, within consensus range of -4.8% to 0.6%.
- Net exports do not seem to be improving. The US deficit in cross-border goods trade came in at a much deeper-than-expected $74.6 billion masking, however, there was a strong 3.0 percent rise in exports to $140.2 billion.
- S. GDP increased 3.1%, a level that was more or less expected. The rate of growth in the first quarter was much stronger than the 2.2% pace in the fourth quarter of last year.
- Initial jobless claims increased 10,000 to 227,000 in the week ended June 22, a figure greater than the 219,000 that economists had expected.
- Traders await the coming weekend’s G20 summit.
- President Trump said he hoped for productive talks with President Xi, despite not making any promises of reprieve from further (increasing) trade tariffs.
- Personal income in May shot up by a .5% when only a .3% gain was expected
- Consumer spending increased .4%, in alignment with economist expectations.
Market Strategist | Halifax America
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