MARKET WRAPS
Watch For:
No major economic data and corporate events expected
Opening Call:
European stock futures point to gains at the open. Asian stock benchmarks were mixed; the dollar steadied; Treasury yields rebounded slightly; oil futures and gold declined.
Equities:
Stock futures advanced early Monday as investors continue to parse economic data and talk by central bank officials for indications on the path ahead for interest rates.
U.S. stocks held their ground Friday, capping a week of strong gains on a cautious note.
Minneapolis Fed President Neel Kashkari said Sunday that it's a "reasonable prediction" that the Fed will wait until December to cut interest rates.
Money markets are still pricing in a high chance of a rate cut in September, according to Refinitiv data. U.S. retail sales data and industrial output figures for May due Tuesday will be closely watched.
Across the Atlantic, focus will be on the Eurozone final inflation data for May and Germany's ZEW economic expectations survey for June due Tuesday. U.K. inflation data on Wednesday and a Bank of England decision on Thursday are the other highlights this week.
Meanwhile, data released earlier today showed that China's consumption expanded at a faster pace in May as Beijing moved to boost domestic demand, while investment was weighed by sluggishness in the property sector.
Forex:
The dollar was steady early Monday. A combination of slower Fed cuts and dimmer ex-U.S. growth prospects imply more moderate DXY declines by 4Q to 104.4, CIMB Treasury & Markets Research said, versus its earlier sub-100 projections.
Translating these DXY estimates across USD pairs it sees JPY as the frontrunner among major currencies for near-term gains on an expected shift in its monetary policy in 3Q.
It expects the EUR to lose ground in the near-term with the ECB embarking on its rate cut journey before the Fed.
Bonds:
Treasury yields rose slightly, rebounding after ending lower for a fourth straight session on Friday.
Treasurys rallied on what BMO Capital Markets strategists Ian Lyngen and Vail Hartman described as a "regime shift" - fueled by cooler-than-expected consumer-price and producer-price reports for May, as well as strong demand at recent 10- and 30-year government auctions.
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Gilt yields could fall through the remainder of 2024 and in 2025--barring any surprises in the coming U.K. elections on July 4, HSBC Global Research rates strategists said.
While the elections are likely to have limited impact on the gilt market, a surprise result or unexpected developments after the elections could raise volatility in the gilt market, they said.
Energy:
Brent oil futures tracking between $80-$85/barrel are likely to stick around that range in second-half of 2024, with supplies from OPEC+ expected to offset any shifts in global oil-demand growth, according to Commonwealth Bank of Australia analyst Vivek Dhar.
The CBA remains concerned the International Energy Agency will continue to downgrade its oil demand growth expectations of 3%-4% for China in 2024. However, rising tensions in the Middle East could push prices higher than forecast "especially if Iran becomes more directly involved in conflict with Israel," he said.
Metals:
Gold fell in Asia but may continue to benefit from the ongoing political uncertainty with the coming elections in Europe and the U.S., Pepperstone said.
Gold's shallow correction to date suggests investors are actively buying dips in prices, despite a pause in gold purchases from China's central bank, Saxo Bank said.
"Support around US$2,275 [is] still a major line in the sand, and one that continues to attract buy-on-dip activity," it said.
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Copper edged lower after China data showed new home construction and home prices fell in more cities in May. Cracks are emerging in the long-term bullish outlook for copper, analysts at StoneX Market Intelligence said.
Signs of future demand in the EV market may have been overdone, they said, while the short-term outlook also appears weak amid China's economic growth risks and property market woes.
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Iron ore fell following the latest China home sales data. Rising supplies and softening demand will likely see iron ore prices move lower through 2H, Westpac said.
Given declining Chinese steel production but record imports in April, Chinese iron-ore port inventories have continued climbing, pressuring prices, it added.
TODAY'S TOP HEADLINES
China Economic Data Paints Mixed Picture
China's consumption expanded at a faster pace in May as Beijing moved to boost domestic demand, while investment was weighed by sluggishness in the property sector.
Retail sales, a key metric of consumer spending in the world's second-largest economy, rose 3.7% from a year earlier in May, better than a 2.3% year-over-year increase in April, according to data released Monday by China's National Bureau of Statistics. Economists polled by The Wall Street Journal had projected retail sales to rise 3.3% last month from a year earlier.
Kaskhari says it's 'reasonable' to predict Fed won't cut rates until December
It's a "reasonable prediction" that the Federal Reserve will wait until December to cut interest rates, Minneapolis Fed President Neel Kashkari said Sunday.
Appearing on CBS's "Face the Nation" on Sunday morning, Kashkari noted that the Fed's latest forecast calls for only one rate cut this year, less than what many economists - and investors - had been expecting.
Investors Fear Long Stretch of Calm in Markets Can't Last
Markets are unusually calm-and that's making Wall Street nervous.
Stocks have been on a steady climb, with the S&P 500 up 14% nearly halfway through 2024 and closing at 29 records along the way. One-day index changes of 1% in either direction have been rare, and there has been just one 2% move, the fewest since 2017 through this point in the year.
Fisher Investments Strikes Deal With Advent
Advent International struck a deal to acquire a minority stake in money-management firm Fisher Investments.
How Taylor Swift May Stand in the Way of Bank of England Rate Cuts
The Bank of England is on the brink of lowering interest rates. But one very entertaining factor could get in the way, strategists at TD Securities predicted this week: Taylor Swift.
An estimated 1.2 million Swift fans, or Swifties, from around the world are gathering in the United Kingdom this summer to watch the entertainer put on 15 of her Eras Tour shows. Swift's shows have boosted economies around the world before. And they could boost inflation in the UK, too, as fans compete for hotel rooms in the cities where she's playing.
Houthis Use Sea Drones to Attack Vessels as U.S. Aims to Secure Red Sea
Crew members of a Greek-owned coal vessel were forced to abandon ship after Yemen's Houthi rebels launched an attack using a remote-controlled sea drone, according to the U.S. military.
Analysts said it appeared to be the first time the group has successfully used such a device, marking a way for the Iran-backed group to evade U.S.-led efforts to thwart missiles and aerial drones it has been using to attack vessels in the Red Sea.
Activist Starboard Value Has Stake in Autodesk
Starboard Value has a roughly $500 million stake in Autodesk and is pushing for changes at the design-software maker, according to people familiar with the matter.
Starboard met with Autodesk executives in recent weeks to discuss concerns related to the company's operations, corporate governance and the handling of a recent accounting probe that tanked the stock. The activist thinks the company should improve its margins and make changes to its board, the people said.
Wells Fargo Bet on a Flashy Rent Credit Card. It Is Costing the Bank Dearly.
When Charlie Scharf took over as CEO of Wells Fargo, one of his priorities was to expand the bank's credit-card business. Now, a flashy partnership with a startup is complicating a high-profile part of that strategy.
In 2022, Wells launched a credit card with Bilt Technologies, a fintech startup with big-name backers including Blackstone and Mastercard. The co-branded card came with a rare perk: Users can pay for rent with it without incurring fees from their landlords while also earning rewards points. More than one million accounts were activated in the first 18 months, many by young adults.
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Expected Major Events for Monday
06:00/NOR: May External trade in goods
07:00/SPN: Apr Trade Balance
07:00/SVK: Apr New orders in industry
07:00/CZE: May PPI
08:00/ITA: May CPI
08:30/UK: 1Q Business Finance Review
09:00/CRO: May CPI
09:00/EU: 1Q Labour Cost Index
10:00/IRL: Apr Goods Exports and Imports
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
06-17-24 0016ET
