Global Economic Daily - 06/02/2024

NEWS AND MARKET COMMENTARY

Global Equities

• US Stocks Close Lower as Early Rate Cut Hopes Fade
• European Markets Close Slightly Lower as Investors Ponder Fed Powell’s Comments; Unicredit Jumps 8%

Global Fixed Income

• Bonds Fall After ‘One-Two Punch’ of ISM, Fedspeak
• Treasury Yields Surge on Fed Comments

Currencies

• Dollar Surges to 11-Week High as Fed Rate Cut Bets Diminish
• Eur/USD Finds Further Room on the Low End, Extends Recent Declines

Energy

• Europe Sours on Middle Eastern Crude Oil
• Crude Continues to Look for Buyers

Metals

• Gold Struggling as Dollar Strengthens, Treasury Yields Soar
• Silver Bracing for Steep Break Amid Hawkish Fed, Strong Dollar

Global Politics/News

• Fed on Track to Cut Rates This Year With Inflation Slowing and the Economy Healthy, Powell Says
• Senate Releases $118 Billion Bipartisan Aid Proposal for Israel, Ukraine Border Security?

Financial

Closing Commentary

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Quote of the Day: What we really are matters more than what other people think of us. – Jawaharlal Nehru

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Equities: Stocks?fell Monday?as Treasury yields spiked higher on concerns that the Federal Reserve may not cut rates as much as expected. The?Dow Jones Industrial Average?dropped 274.30 points to settle at 38,380.12. The?S&P 500?slipped 15.80 points to close at 4,942.81. The index hit a record high last week as Big Tech stocks moved higher. The?Nasdaq 100?edged down 29.70 points to end at 17,613.04. The yield on the 10-year Treasury note was last up more than 13 basis points to 4.166% as investors assessed a fresh batch of?strong economic data?that suggested rates may stay elevated for longer than anticipated. The benchmark yield traded around 3.81% last week. Fed Chair Jerome Powell on Sunday reiterated comments made after last week’s January policy meeting, suggesting that a rate cut in March was unlikely.?Expectations for cuts?have eased since the remarks, with the probability of a cut next month last at 16.5%. TECHNICAL OUTLOOK - The Dow and S&P are above the 14, 21 day moving average.

Crude Oil: Oil prices rose about a dollar a barrel on Monday on concerns that tensions in the Middle East and Russia's ongoing invasion of Ukraine could curb global supplies. Traders have been closely following the situation in the Middle East, where progress on ceasefire negotiations between?Israel and Hamas?appeared elusive, indicating tensions in the oil-producing region are set to linger. The United States also continued its campaign against Houthis in Yemen, whose attacks on shipping vessels have?disrupted global oil trading?routes. In Russia, two Ukrainian?drones struck?the largest oil refinery in the country's south on Saturday, a source in Kyiv told Reuters, in the latest in a series of?long-range attacks?on Russian oil facilities, which has reduced Russia's exports of naphtha, a petrochemical feedstock. Monday's gains come after oil prices slumped 7% in the previous week on concerns about weak economic activity in China and fading hopes of imminent interest rate cuts in the United States. Limiting oil's gains, data on Monday showed U.S. services sector growth picked up in January, dampening hopes of rate cuts even more and pushing the U.S. dollar to its highest in almost three months against other major currencies. Rising oil supplies are also keeping oil prices in check. U.S. crude stockpiles likely rose last week. TECHNICAL OUTLOOK - The crude is above the 14, 21 day moving average.

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Metals: Gold and silver prices are solidly lower in midday U.S. trading Monday, as the key “outside markets” are in bearish daily postures for the precious metals: the U.S. dollar index is firmly higher and U.S. Treasury yields are rising. The dollar strength and rise on bond yields is mostly due to the surprisingly strong U.S. jobs report on Friday that has hawkish implications on Federal Reserve monetary policy. Technically, April gold futures bulls have the slight overall near-term technical advantage but are fading again. Bulls’ next upside price objective is to produce a close above solid resistance at $2,100.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $2,000.00. March silver futures bears have the firm overall near-term technical advantage. A two-month-old downtrend is in place on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00. The next downside price objective for the bears is closing prices below solid support at the October low of $21.17. TECHNICAL OUTLOOK – Gold remains above the 14, 21 day moving average, while silver remains below?

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DISCLAIMER: The Information and data contained herein was obtained from sources deemed reliable. The accuracy and completeness are not guaranteed

Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

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