Daily Market Outlook, June 13, 2024

Munnelly’s Macro Minute…

“Moderating US Inflation Steals The Show As Stocks Surge ”

On Thursday, Asian stocks surged, and bond yields declined as investors assessed the impact of moderating U.S. inflation in contrast to the Federal Reserve's more aggressive stance. Japanese stocks lagged behind, and the yen slightly weakened against the dollar as the Bank of Japan commenced its two-day policy meeting.

During the U.S. session, Wall Street experienced a strong rally, with the dollar and Treasury yields falling sharply. This was in response to the CPI report, which revealed that core prices had grown at their slowest annual pace in over three years last month. Investors seem to believe that despite the Fed's rate outlook, the mild U.S. inflation will lead to gains in Asian equities, and possibly in Europe as well. The initial surprise at the projection of only one U.S. rate cut this year, despite a very low CPI reading, was lessened by Fed Chair Jay Powell's remarks that many officials were undecided about a second rate cut and had only added an extra one for 2025. With the focus still on data dependence, the U.S. producer price readings later today will be closely watched. Following the conclusion of the Fed meeting, policymakers will resume speaking engagements, with New York Fed President John Williams starting off by moderating a discussion with Treasury Secretary Janet Yellen at an event hosted by the Economic Club of New York. Williams, like Powell, believes that policy is in a good position to steadily bring down inflation to the target level

European releases include Spanish inflation data and eurozone industrial production. Meanwhile, political drama continues in Europe, with Eric Ciotti claiming he is still the leader of France's Republicans despite being ousted for seeking a deal with the far right. President Emmanuel Macron also faced veiled criticism from his Renaissance party, with his former prime minister and potential successor Edouard Philippe expressing doubts about the president running a legislative campaign.

Overnight Newswire Updates of Note

Fed Projects Just One Cut This Year Despite Mild Inflation Report
US Scrambling To Stop Israel-Hezbollah War Amid Ceasefire Push
BoJ To Weigh Bond Buying As Investors Seek Hints For July Hike
Australian Unemployment Falls As Economy Keeps Adding Jobs
Bank Of Canada Head Says Can Still Diverge From Fed On Rates
UK Housing Market Loses Momentum As Rate Cut Hopes Shrink
ECB’s Nagel Says Euro-Zone Core Inflation Is ‘Still Very Sticky’
Banxico Says It Can Step In If Peso Volatility Becomes Extreme
OPEC+ Unlikely To Up Oil Output In 2024, Energy Aspects Says
Boeing To Face Enhanced FAA Scrutiny For ‘Foreseeable Future’
Broadcom Gains After AI Computing Demand Fuels Sales Growth

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

FX Options Expiries For 10am New York Cut

(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

EUR/USD: 1.0740-50 (1.8BLN), 1.0760-70 (1.7BLN), 1.0775-80 (3.7BLN)
1.0795-1.0810 (2.5BLN), 1.0825-30 (643M), 1.0835-40 (1.3BLN)
1.0845-50 (1BLN)
USD/CHF: 0.8900 (705M), 0.8950 (1.3BLN), 0.9000 (849M)
EUR/CHF: 0.9660 (289M), 0.9675 (610M), 0.9825 (519M)
GBP/USD: 1.2700 (494M), 1.2750 (594M), 1.2775 (254M), 1.2795-1.2800 (274M)
AUD/USD: 0.6630 (1BLN), 0.6650 (1.3BLN), 0.6690-0.6700 (670M), 0.6750 (451M)
NZD/USD: 0.6170 (340M)
USD/CAD: 1.3670-75 (1.7BLN), 1.3700 (1BLN), 1.3750 (1.5BLN), 1.3775 (725M)
USD/JPY: 156.00 (1.4BLN), 156.20-25 (816M), 156.45-55 (716M), 156.80 (703M) 158.00-10 (1.2BLN)

CFTC Data As Of 07/06/24

Bitcoin net short position is -1,119 contracts
Swiss Franc posts net short position of -45,763 contracts
British pound net long position is 43,210 contracts
Euro net long position is 67,870 contracts
Japanese yen net short position is -132,101 contracts
Equity fund managers cut S&P 500 CME net long position by 23,186 contracts to 954,821
Equity fund speculators increase S&P 500 CME net short position by 2,269 contracts to 332,326
Gold NC Net Positions up to $237.3K from previous $236.6K