- US May core PCE 4.7% y/y vs 4.8% expected
- Canada April GDP +0.3% vs +0.3% expected
- Atlanta Fed Q2 GDPNow falls to -1.0% from +0.3%
- FTX closing in on deal buy BlockFi for $25 million. Was last valued at $4.8 billion
- FTX walked away from deal with Celsius after finding $2 billion hole in its balance sheet
- OPEC+ will stick to plan on August production increases, makes no decisions beyond
- Italy, Spain, Portugal and Greece will be recipients of anti-fragmentation aid
- Biden says he will not be making an individual request to Saudis to raise oil production
Markets:
- Gold down $11 to $1805
- US 10-year yields down 7.3 bps to 3.02%
- WTI crude oil down $3.84 to $105.94
- S&P 500 down 41 points to 3780
- Nasdaq first half was worst ever
- JPY leads, USD lags
The US dollar gave back some of its hefty H1 gains (it's the best performer this year) on the final day of trading this month.The catalysts were in the PCE report as the inflation portion was a touch soft and the consumption side was decidedly weak. In turn, the scope for Fed hikes is fading with the terminal rate now pegged at 3.50% in March and declining from there.
Mixed in with that is a hefty set of quarter-end flows. The bond market had a particularly strong bid, which could also be a sign of growth concerns. Oil faded badly and crack spreads narrowed in a sign of demand destruction.
EUR/USD fell below 1.04 in Europe but made a nice turnaround from there to 1.0482. Cable tracked the same move and both accelerated after the PCE report. Compounding that was a fall into negative territory in the Atlanta Fed GDP tracker.
The commodity currencies were surprisingly strong given the soft commodity backdrop and slump in equities. Canada is on holiday on Friday and US trading will be thinned ahead of the long weekend but there are some notable data releases with ISM manufacturing and construction spending.
