Daily Comments

Weak inflation in the U.S. gave the Japanese yen a boost. China exports for June were stronger than expected. Asian markets were widely mixed. The Nikkei 225 fell back -2.45% while the Shanghai Composite eked out a gain of +0.03%. European markets rallied. The DAX Index was up a strong +1.15%. 10-year Bunds yield 2.50%. For 07/06 Baker Hughes reported the U.S. rig count at 773. The June Producer Price Index surprised on the upside, rising +0.2% (ex-food and energy +0.4% vs. +0.2% consensus) vs. +0.1% consensus, and increased at the fastest pace in 15 months. The May PPI was also revised upwards. The YoY PPI jumped from +2.2% prior to +2.6%, and beyond +2.3% estimated. July Consumer Sentiment fell from 68.2 prior to 66.0, and well below expectations of 68.5. 10-Year Notes yield 4.187%. The September US$ Index retreated -0.33% to 103.785. August Crude Oil lost -0.50% to $82.21. August Gold drifted -0.14% lower to $2,418.60. Earnings from big banks warned of upcoming credit losses. Shares of WFC, C and JPM subsequently traded deep red. NVDA and TSLA bounced after yesterday’s selloff. Ahead of the PPI stocks were quiet then after the open prices quickly regained their footing with the small and large cap stock indexes moving firmly upwards, but near the close some gains were pared.

Yesterday’s broad rally in the U.S. spilled over into Asia. The Nikkei 225 kept rising, up +0.94%, and the Shanghai Composite climbed +1.06%. European markets were green. The DAX Index rallied +0.69%. 10-year Bunds yield 2.468%. For 07/06 Initial Claims fell from 239K to 222K (largest 1-wk drop since Sept 2023), vs. est. of 239K. The June CPI fell -0.1% vs. +0.1% exp. (Owners Equivalent Rent sank to its lowest since April 2021, and energy declined). This is the first MoM dip since May 2020, and the lowest level since April 2021. Headline CPI is +3.0% YoY. Core CPI (ex-food/energy) was up +0.1% vs. +0.2% est., with the YoY rate falling to +3.27% vs. +3.5% est., lowest since April 2021. The June Treasury Statement printed at $-66.0B vs. $-83.0B est. 10-Year Note yields fell (higher expectations of a Sept. cut) to 4.198%. The Sept US$ Index plunged -0.55% to 104.155. Aug Crude Oil was +0.6% higher to $82.62. Aug Gold soared +1.8% to $2,422.30. A $22B 30-Yr T-Bond auction met poor demand and high yield of 4.405% (higher than June). Post CPI, the ES and NQ blipped higher, but the RTY shot upwards. Large cap indexes then went red (NVDA -5.6%, TSLA -8.4%) early while the RTY rallied (hedge funds unwinding). SF Fed Pres. Daly said some “policy adjustments will be warranted.” By the close big cap indexes were still deep red.

China’s consumer prices rose less than expected in June and producer prices continued to show declines. Asian markets were mixed. The Nikkei 225 added +0.61% to more new highs while the Shanghai Composite fell back -0.68%. European markets printed gains. The DAX Index rallied +0.94%. 10-year Bunds yield 2.536%. For 07/06 the MBA Mortgage Applications Index edged down -0.2% (purchases up and refinancings down) and EIA Crude Inventories went from -12.2M bbls prior to -3.4M bbls. Preliminary May Wholesale Inventories went from +0.1% prior to +0.6%, on track with consensus. Today’s $39B 10-Yr Note auction saw strong demand with a high yield of 4.276% (lower than 4.438% last mo). 10-Year Notes yield 4.280%. The September US$ index slipped -0.09% to 104.710. August Crude Oil gained +1.12% to $82.32. August Gold advanced +0.38% to $2,376.70. Bitcoin prices rode a rollercoaster today. In the last 24 hours, prices got as high as $59,409, but they ended the session lower by -0.82% at $57,404. As usual of late, US stock index futures started strong. Fed Chairman Powell said they won’t wait to see 2% inflation before cutting rates and stock bulls pressed prices still higher. The systematic rally pattern continued (on the back of 0-DTE NVDA & TSLA options trading), with the ES and NQ surging late and closing at fresh all-time highs.