US inflation shows signs of slowing, but other economic indicators slip into recession :: InvestMacro

by just forex

Inflation, which the Federal Reserve is watching closely, was 6.3% in May, unchanged from the April level. Personal spending increased 0.2% in May, missing expectations for a 0.4% increase, and the April rate was revised to 0.6% from 0.9%. Recession fears are growing after the Federal Reserve raised interest rates to combat rising inflation. Chronically high inflation has become a major threat to the economy and a political risk to President Joe Biden and Democrats. With the stock market closed yesterday, the Dow Jones (US30) lost 0.82%, and the S&P 500 (US500) lost 0.88%. The Nasdaq Tech Index (US100) fell 1.33% yesterday.

Charles Scharf, CEO of Wells Fargo, said Wednesday that the Federal Reserve will continue to raise interest rates further. Scharf praised the Fed for being so clear about future moves, but the bank’s CEO still believed the economy would be unpleasantly surprised by the consequences.

Biden said the United States plans to announce an additional $800 million in arms assistance to Ukraine.

Stock markets in Europe were trading lower yesterday. Germany’s DAX (DE30) is down 1.69%, France’s CAC 40 (FR40) is down 1.80%, Spain’s IBEX 35 (ES35) is down 1.09%, and Britain’s FTSE 100 (UK100) closed Thursday down 1.96%.

New economic data showed that the eurozone’s seasonally adjusted unemployment rate was 6.6%, down from 6.7% in April 2022. Inflation in France rose to a record 6.5% in June, with consumer prices growing 0.7% last month. Today, Europe will release a preliminary figure for Eurozone overall inflation, and analysts are leaning that consumer prices will rise from 8.1% to 8.5% y/y.

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The outlook for the Swiss economy in the coming months remains weak. The KOF economic barometer fell again in June and now stands at 96.9. It is below its long-term average for the second time in a row. The downward movement of the barometer is mainly due to a combination of external demand and production indicators.

The value of precious metals fell more than 8% in the second quarter. The decline is due to the tightening of monetary policy by the Central Bank. Precious metals prices are inversely related to the dollar index and US government bond yields. During monetary tightening, the dollar index strengthens, and government bond yields rise, causing gold and silver prices to fall.

OPEC+ countries have said they will stick to the previously announced production plan, rejecting calls to speed production. At the same time, oil prices fell by another 3%. Analysts believe that the drop in oil prices is due to US traders closing their positions ahead of the three-day Independence Day weekend in the US on July 4th. But fundamentally, this situation usually leads to higher prices in an environment where production is less than demand. . In Norway, 74 offshore oil workers at the Equinor Gudrun, Oseberg South and Oseberg East platforms will go on strike starting July 5, according to the Lederne union on Thursday, which will likely halt about 4% of Norway’s oil production.

Asian markets were trading lower on Wednesday. Japan’s Nikkei 225 (JP225) fell 1.54% yesterday, Hong Kong’s Hang Seng (HK50) ended 0.62% lower, and Australia’s S&P/ASX 200 (AU200) closed 1.97% lower. Japan’s core Purchasing Managers’ Index (PMI) fell from 53.3 in May to 52.7 in June. According to the PMI report, Japanese companies indicated that rising costs and persistent material shortages contributed to the slowdown in production, and new orders increased only partially. Constant disruptions and delays in the supply chain have led to a rapid increase in costs, resulting in a sharp rise in factory prices, the fastest in the survey’s history. However, companies are increasingly confident that these problems will dissipate next year as business confidence surged to its highest level since March.

The level of consumer prices in Tokyo increased from 1.9% to 2.1% annually. Thus, inflation is slowly consolidating above the BoJ’s 2% target.

S&P 500 (F) (US500) 3,785.39 −33.44 (−0.88%)

Dow Jones (US 30) 30775.43 −253.88 (−0.82%%)

DAX (DE40) 12,783.77 −219.58 (−1.69%)

FTSE 100 (UK100) 7169.28 −143.04 (−1.96%)

US dollar index 104.73 −0.38 (−0.36%)

Important events for today:

  • – Japanese CPI Tokyo (m / m) at 02:30 (GMT +3);
  • – Japan Index of Large Manufacturers (m / m) at 02:50 (GMT + 3);
  • – Japan’s large non-manufacturer’s index (monthly) at 02:50 (GMT + 3);
  • – Japanese Manufacturing PMI (MoM) at 03:30 (GMT +3);
  • – Chinese Caixin Manufacturing PMI (m / m) at 04:45 (GMT + 3);
  • – Spanish Eurozone Manufacturing PMI (MoM) at 10:15 (GMT +3);
  • – Swiss Manufacturing PMI (m / m) at 10:35 (GMT +3);
  • – Italian Eurozone Manufacturing PMI (MoM) at 10:45 (GMT +3);
  • – Eurozone French Manufacturing PMI (m / m) at 10:50 (GMT +3);
  • – German Manufacturing PMI for the Eurozone (MoM) at 10:55 (GMT +3);
  • – Eurozone Manufacturing PMI (m / m) at 11:00 (GMT +3);
  • – UK Manufacturing PMI (m / m) at 11:30 (GMT +3);
  • – Italian CPI for the Eurozone (monthly) at 12:00 (GMT +3);
  • – Eurozone CPI (monthly) at 12:00 (GMT +3);
  • – US ISM Manufacturing PMI (MoM) at 17:00 (GMT +3).

by just forex

This article reflects a personal opinion and should not be construed as investment advice and/or a continuing offer and/or solicitation to carry out financial transactions and/or guarantee and/or anticipation of future events.

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