US core PCE prices (excluding food and fuel costs) for the month of May rose 0.3% as expected but the YoY level was mostly lower at 4.6% versus 4.7% last month and expected. The PCE price index fell from 4.3% to 3.8%. That was the 1st decline below 4% since early 2021. Personal consumption (adjusted for inflation) was flat after 0.2% last month. Personal income increased 0.4% versus 0.3% last month. Adjusted for inflation, May’s spending was flat.
Later the University of Michigan consumer sentiment exceeded the preliminary index of 63.9 with a rise 64.4. The gain was much higher than the 59.2 last month. Within the report, the 1-year inflation expectations remained steady at 3.3% (versus 4.2% last month). The 5-year inflation expectations was also steady at 3.0% (same as the preliminary) and down marginally from 3.1% last month.
The USD moved lower as traders focused on the hopes for even lower inflation going forward. The USD is ending the day as the weakest of the major currencies. The NZD is the strongest.
It is month end and looking at the major currencies vs the USD this month, the USD is mostly lower. The exception is vs the JPY with the USD gaining 3.58% vs that currency.
Below are the % changes of the USD vs the respective currencies in June.
- EUR: -2.06%
- JPY: +3.58%
- GBP, -2.07%
- CHF, -1.71%
- CAD -2.38%
- AUD: -2.45%
- NZD: -1.96%
For the 1H of 2023, the USD was mixed with a strong 10%+ gain vs the JPY. The greenback also moved higher vs the AUD and the NZD, but was down vs the EUR, GBP, CHF, and AUD. The dollar was the weakest vs the GBP (down 5%) :
- EUR: -1.96%
- JPY” +10.07%
- GBP: -5.03%
- CHF: -3.16%
- CAD: -2.16%
- AUD: +2.27%
- NZD: +3.33%
Looking at other markets today:
- WTI crude oil futures rose $0.61 or 0.4% $70.45. For the month prices are up 3.47% (up $2.34).
- Gold rose $11.95 or 0.63% at 1919.36. For the month, the price fell -2.21% (down $43.41)
- Silver today rose $0.19 or 0.84% at $22.74. For the month prices are up 3.45% (up $2.36)
- Bitcoin had a volatile day with the price moving down to a low of $29,508 after trading as high as $31,268. It is trading at $30,339. For the month bitcoin rose 12% or $3178
Looking at the US stocks today, the major indices all closed solidly higher. The gains were led by the NASDAQ index which had its best 1st half of the year in 40 years.
- Dow industrial average rose 285.18 points or 0.4%
- S&P index was 53.92 or 1.23%
- NASDAQ index rose 196.60 points or 1.45%
For the trading month:
- Dow industrial average rose 4.56%
- S&P index rose 6.47%
- NASDAQ index rose 6.59%
The gains in the 2023 have been propelled by large cap tech stocks.
Some of the 1H big gainers included:
- Nvidia rose 189.46%
- Meta up 1.38.47%
- Tesla rose 112.51
- Microsoft rose 42%
- Apple rose 49.15%
- Amazon rose at 50.13%
- Alphabet rose 35.67%
- Broadcom rose 55.14%
- Chipotle rose 54.16%
Next week, starts with holiday trading in the US due to the 4th of July holiday on Tuesday. The stock and bond markets will close early.
The week will end with the all-important US jobs report with Non Farm Payroll expected to add 222K (last month plus 339K). The unemployment rate is expected to dip to 3.6% from 3.7% last month and average hourly earnings are expected to rise by 0.3%.
Canada will also release jobs data on Friday, with limited change of 22,000 expected (versus -17.3 thousand last month.
In between, the other key events include:
- Reserve Bank of Australia will announce its latest rate decision on Wednesday in Australia. Market participants are torn between no change and a 25 basis point hike
- ISM data will be released on Monday in Europe and the US.
- FOMC meeting minutes will be released on Wednesday at 2 PM
- US Services PMI will be released on Thursday.
Thank you for your support. Have a great weekend.