Daily Comments

In another relatively quiet news day, Asian markets were mixed. The Nikkei 225 eased -0.03% and the Shanghai Composite lost -0.58%. European markets posted gains. The DAX index was higher by +0.78%. 10-year bunds yield -0.273%. Preliminary June Consumer Sentiment printed at 86.4 compared to expectations of 84.0. Zerohedge notes, “inflation expectations for both the 1-year and 5-10 look ahead periods dropped slightly...chief economist, Richard Curtin said namely that since ‘Rising inflation remained a top concern of consumers’, the spontaneous references to market prices for homes, vehicles, and household durables fell to their worst level since the all-time record in November 1974. And as Curtin adds, ‘these unfavorable perceptions of market prices reduced overall buying attitudes for vehicles and homes to their lowest point since 1982.’” Baker-Hughes reported that the U.S. oil rig count for 06/05 was up by 5 to 461. Yields on 10-year Notes are 1.452%. The Sep US$ Index gained +0.48% to 90.465. July crude oil added +0.73% to 70.81. August gold sank -0.94% to $1,878.50. The ES closed at a record high in light volume.

In relatively quiet trade, Asian markets were mostly higher. The Nikkei 225 rose +0.34% and the Shanghai Composite added +0.54%. Despite rising inflation data, the ECB announced that it would hold steady on rates and purchases. European markets traded up and down. The DAX index dipped -0.06%. 10-year bunds yield -0.258%. Initial Claims for the week of 06/05 eased slightly to 376K, but nearly double pre-pandemic levels. Over 11M Americans receive pandemic-related unemployment, with 9M job openings. May CPI came in at the high end of expectations, up +0.6% (or +5.0% YoY vs. +4.7% expected), and the hottest since 2008. Core CPI, which is ex-food and energy, gained +0.7%, or +3.8% YoY, the hottest print since 1992 Good prices gained +6.5% YoY, the biggest gain since 1982. The May Treasury Statement printed at $-132.0B. Yields on 10-year Notes are 1.44%. The June US$ Index lost -0.09% to 90.040. July crude oil added +0.29% to 69.71. August gold rallied +0.31% to $1,901.50. Before the open, equity prices as well as bond yields immediately jumped higher after the release of today’s CPI. The ES then hit and closed at a record high, with the NQ gaining as well.

China May PPI jumped +9.0% from a year ago while CPI was only up +1.3% over the same period. The World Bank revised its growth forecast for 2021 up to +5.6%. Asian markets were mostly lower. The Nikkei 225 slipped -0.35% but the Shanghai Composite rose +0.32%. European markets posted mixed results. The DAX index lost -0.38%. 10-year bunds now yield -0.247%. For the week of 06/05, the MBA Mortgage Applications Index fell another -3.1% and the EIA reported that Crude Inventories declined by -5.241M bbls vs. a forecast of -2.036M. April Wholesale Inventories printed at 0.8%, on target with consensus. Today’s $38B 10-yr auction met strong demand For the 1st time since May 7, yields fell below 1.50%, closing at 1.489%. The June US$ Index gained +0.08% to 90.145. July crude oil faded -0.49% to 69.71. August gold slipped by -0.14% to $1,891.80. The odds of Biden’s infrastructure program passing have greatly diminished, and the odds of a reflating economy diminished. Near the open the ES traded above it’s all-time closing high. By the close only the NQ managed to eke out a gain.