Daily Comments

China June PPI fell -3.0% y/y while CPI rose +2.5% y/y. Led by China, Asian markets were higher. The Nikkei 225 rose +0.40% and Shanghai Composite added another +1.39%. European markets were negative. The DAX slid -0.04%. 10-yr. Bunds yield -0.463%. Initial Claims for 07/03 remained highly elevated at 1,314K. May Wholesale Trade was below consensus, with inventories down -1.20% at $642.5B vs expectations of +0.4%. Sales were +5.4% at $419.B vs. consensus of -4.0% 10-Year Notes yield 0.607%. The Sep. US$ Index gained +0.42% to 96.775. Aug. gold fell -0.68% to $1,808.30. Aug. crude sank -3.47% to $39.48. Global cases of covid-19 are now above 12 million, with nearly 550,000 deaths reported. However, the fatality rate is declining, even though 38 states see a rise in cases. Nearly 50 million Americans have now filed for first-time unemployment benefits since the covid-19 lockdowns started. What really seemed to roil markets today was the SCOTUS ruling that the NY Grand Jury can access President Trump’s tax returns. Stocks seemingly choked on the possibility that this might increase the odds of higher taxes next year.

Asian markets (except China) were mostly lower, consolidating recent gains. The Nikkei 225 fell -0.78% but the Shanghai Composite jumped again, adding another +1.74%. European markets were weaker. The DAX fell -0.97%. 10-yr. Bunds yield -0.441%. MBA Mortgage Applications for 07/03 rose +2.2%, led by purchase applications. The EIA reported that crude inventories for 07/03 rose by +5.7M barrels vs. consensus for a decrease of -3.1M barrels. For the 2nd consecutive month, May Consumer Credit was above $17B, printing at $17.1B vs. expectations of $17B. 10-Year Notes yield 0.659%. The Sep. US$ Index slid -0.43% to 96.420. Aug. gold surged to another contract high, closing up +1.00% at $1,820.00. Aug. crude was +0.85% stronger, ending at $40.96. It was reported today that yesterday had a single-day record of covid-19 cases reported, with big numbers coming out of TX and FL and AZ. Such headlines, along with reports that the Trump Administration may consider against Beijing’s “security laws” on Hong Kong (by working against the Hong Kong dollar’s peg to the U.S. dollar), were enough to keep the broader markets in knots. Stocks gained steam to close firmly higher.

After yesterday’s impressive surge, Asian markets were mixed. The Nikkei 225 pulled back -0.44% while the Shanghai Composite added another +0.37%. May German industrial production rose, but came in weaker than expected. The European Commission forecasts 2020 GDP to shrink -8.3% followed by an rebound of +5.8% in 2021. European markets were negative. The DAX slid -0.92%. 10-yr. Bunds yield -0.435. The May JOLTS – Job Openings surged to 6.5M from an April level of 4.05M. This was the largest monthly gain in history. The Layoffs rate plunged from 5.9% in April to 1.4% in May. 10-Year Notes yield 0.633%. The Sep. US$ Index was up +0.27% to 96.940. Aug. gold rallied +0.88% to $1,809.20. Aug. crude lost -0.76% to $39.90. In the overnight session, the ES was lower by nearly 30 points, perhaps due to ever-increasing covid-19 infection rates. Prices were weaker on the open. However, bulls bid up stocks after the open, especially the NQ. The NQ hit another ATH, as did TSLA. The broader indices were all stronger by mid-session. However, the sellers roared back and took charge, driving prices deeply into the red, as stocks snapped a 6-day winning streak.