After a long holiday weekend in a number of countries on Monday, and a conclusion of the debt ceiling negotiations over the weekend, the GBP is the strongest and the USD is the weakest at the start of the North American session. US yields are lower despite the thought that the Fed is more inclined to now tighten especially after the higher core PCE inflation on Friday (the Fed’s favored measure of inflation, but they may skip too and revisit in July). Stocks are mixed with the Dow trading above and below unchanged. The Nasdaq is higher. Oil is lower despite the lower yields and lower USD. Worries about China’s lackluster recovery have the price falling in trading today

What next in Washington?

The U.S. House Rules Committee is set to review the recently proposed debt ceiling deal, which has sparked disagreement among some conservatives seeking deeper spending cuts. Meanwhile, the most left Democrats are displeased with President Biden’s concessions. However, both Biden and Republican House Speaker Kevin McCarthy expect Congressional approval before the critical deadline of June 5 (or hope) This anticipation boosted US stock futures in the premarket, following the closure yesterday for Memorial Day.

HP Inc is set to announce its Q2 earnings after a post-pandemic dip in PC demand, with projections suggesting a decrease in revenue. Other earnings this week includes CrowdStrike, Salesforce on Wednesday after the close, and Broadom, Lululemon, and Dell on Thursday. Meanwhile, Cathie Wood, founder of ARK Investment Management, voiced skepticism over Nvidia’s ambitious sales target for 2023. Wood had previously divested her Nvidia holdings from the ARK Innovation ETF earlier in the year. Nvidia shares are trading at $404.50 up $15.12 or 3.88% in premarket trading. The market capitalization on Friday reached $961.96 billion and is above $1T in pre-market trading. HMMMM?

European Central Bank (ECB) policymaker Gediminas Šimkus was speaking this morning and expects two 25 basis points rate hikes in June and July. Despite the fluidity of the current economic situation, he predicts a pause in rate hikes following these two increases. The market is anticipating a peak in rates at approximately 3.68%, which aligns with Šimkus’s outlook of at least two more rate hikes.

The USDJPY moved to the highest level since November 23 earlier today. Japan’s top currency diplomat, Kanda, emphasized the importance of stable currency movements that reflect economic fundamentals, following an emergency meeting with the Bank of Japan (BOJ), Ministry of Finance (MOF), and Financial Services Agency (FSA). He said, that while not focusing on specific forex levels, they closely observe forex movements and will react as necessary. Kanda also indicated that matters such as the U.S. debt ceiling were discussed in the meeting. Following Kanda’s remarks, the USD/JPY (after initially moving higher) has seen a move to the downside and is falling back below the 100-hour MA at 139.926 for the first time since May 12 (there was a brief peak below the MA on May 24 but that was quickly reversed). Although these comments hint at potential interventions, Kanda suggests that such measures are not immediately necessary.

Today:

• At 9:00am:

  • The Housing Price Index (HPI) month over month (m/m) is expected to show an increase of 0.2%, lower than the previous increase of 0.5%.
  • The S&P/Case-Shiller Composite-20 Home Price Index (HPI) year over year (y/y) is expected to decrease by 1.7%, a sharp decline from the previous increase of 0.4%.

• At 10:00am:

  • The Conference Board (CB) Consumer Confidence Index is expected to come in at 99.1, lower than the last recorded figure of 101.3.

Remember, on Friday the US jobs report will be released. The JOLTs data will be released tomorrow. The Challenger layoffs and the ADP employment report will be released on Thursday ahead of the BLS numbers on Friday. Nonfarm pay jobs are expected show a gain of 190K on Friday versus 253K last month.

A snapshot of the markets is showing:

• Crude oil is trading -$0.72 or -1% at $71.94
• Gold is trading up $17.40 or 0.90% at $1961.31
• Silver is trading up $0.18 or 0.79% at $23.22
• Bitcoin is trading higher from Friday ($26,718). The price currently trades at $28,021

in the pre-market for US stocks, the major indices are mixed:

• Dow industrial average -6.34 points after Friday’s 328.69 point rise
• S&P index up 26.7 points after Friday’s 54.17-point rise. The S&P index closed above its 100-week moving average on Friday at 4200.26
• NASDAQ index is up 221 points after Friday’s 277.59-point rise.

In the European equity markets, the major indices are mixed:

• German DAX +0.49%
• France’s CAC -0.37%
• UK’s FTSE 100 -0.49%
• Spain’s Ibex +0.54%
• Italy’s FTSE MIB +0.65%

Japan’s Nikkei index closed up 0.3% at a new high going back to 1990

in the US debt market:

• 2 year yield 4.503% -8.5 basis points
• 5 year yield 3.838% -11.2 basis points
• 10 year yield 3.711% -10.9 basis points
• 30 year yield 3.895% -8.1 basis points

in the European debt market, the benchmark 10-year yields are also trading lower.

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