S&P 500 Surpasses 4,300 Mark, Achieving First August High and Poised for Four-Week Winning Streak
On Friday, the S&P 500 rose modestly to reach its highest closing level of the year. This marked the index's fourth consecutive weekly gain, its longest winning streak since August. The Nasdaq also saw a 0.5% increase, extending its own winning streak to seven weeks. Investors took note of a broader range of stocks, including small-cap equities, participating in the recent rally. However, some market participants expressed caution, questioning the sustainability of these gains. Next week's Consumer Price Index (CPI) numbers and the Federal Open Market Committee meeting are highly anticipated, with markets predicting a 75% probability of the central bank pausing its rate-hiking campaign.
Markets Indicate Victory in Inflation Battle, Easing Pressure on Fed
Bond prices are suggesting that the Federal Reserve has succeeded in its fight against inflation, creating a favorable backdrop for the central bank's upcoming decisions. The five-year breakeven rate, which reflects the expected annual rise in the Consumer Price Index (CPI), currently aligns with the Fed's 2% inflation target. Bond investors anticipate a growth slowdown that would lead to receding inflation, indicating a more optimistic outlook than that of ordinary Americans. However, while market prices are influential, they are not foolproof indicators, and the Fed remains vigilant, considering the higher inflation expectations held by ordinary citizens.
SEC's Jurisdiction Push: Binance.US Faces Banking Setback Amid Regulatory Scrutiny
Binance.US, the American arm of cryptocurrency exchange Binance, announced that its banking partners will be pausing their relationship with the exchange. The move comes as Binance and its billionaire owner, Changpeng Zhao, face legal charges filed by the Securities and Exchange Commission (SEC). The SEC has raised concerns about Zhao's ownership of Binance subsidiaries and has sought to prevent asset flight through an emergency motion. The banking partners' decision to pause their services indicates the increasing significance of the SEC case and poses challenges to Binance's operations in the United States.
Commercial Real Estate Market Adds Fragility to US Economy
The US economy faces the looming risk of a commercial real estate market crash as about $1.5 trillion in commercial mortgage debt is due by the end of 2025. Steeper borrowing costs, tighter credit conditions, and declining property values due to remote work have increased the likelihood of default. Experts predict that office and retail property valuations could plummet up to 40% this year, impacting investor refinancing and posing challenges to small and regional banks that hold the majority of outstanding debt. While some remain optimistic, concerns about tightening lending standards and the need for renegotiating a significant amount of commercial mortgages raise cautionary flags for the industry's future.
Gold Prices Recover, Set for Weekly Gain Amid Weaker Dollar and Jobless Claims
Gold futures settled higher, rebounding from losses and reaching their highest level in over a week. The weaker U.S. dollar, prompted by an increase in jobless claims, supported the precious metal. Gold for August delivery rose by 1% and is on track for a weekly gain of around 0.5%. Meanwhile, July silver climbed by 3.5%. The rise in jobless claims raised expectations that the Federal Reserve may not increase interest rates at their upcoming policy meeting. Despite some analysts projecting a decline in gold prices, its resilience and proximity to all-time highs indicate a bullish trend.
Silver Rises on Weaker Dollar, Jobless Claims Concerns
Silver prices rose by 2.71% as the dollar weakened slightly. The higher-than-expected initial jobless claims reading raised concerns about the US economy, signaling a slowdown in the labor market and potential recession risks. Despite the surge in unemployment benefit applications, job growth in sectors such as services, leisure, and hospitality remains strong, with the economy adding 339,000 jobs in May. The CME FedWatch tool indicates a 70.2% probability of a rate pause and a 29.8% probability of a 25 basis points rate hike in the upcoming review. From a technical standpoint, silver is experiencing fresh buying with increased open interest and has support at 72350, while resistance is likely at 74432.
Next Week’s Slew of High-Impact Economic Data
Brace yourself as we gear up for a week loaded with high-impact economic data that will likely shape financial forecasts and markets for the weeks to come. Here's a breakdown of the economic reports you should keep an eye on, day by day:
Monday, June 12
There are no scheduled reports for this day.
Tuesday, June 13
The day will begin at 8:30 am ET with the release of several data reports, including the Consumer Price Index (CPI) and Core CPI for May. The prior values for both indices stood at 0.4%. The CPI year over year, which was last reported at 4.9%, will also be released along with the Core CPI year over year, previously reported at 5.5%.
Wednesday, June 14
At 8:30 am ET, the Producer Price Index (PPI) and Core PPI will be released. These indicators previously stood at 0.2%. Additionally, the PPI year over year (last reported at 2.3%) and Core PPI year over year (last reported at 3.4%) will be announced. The Federal Reserve's decision on interest-rate policy will come out at 2:00 pm, followed by a press conference with Fed Chairman Powell at 2:30 pm.
Thursday, June 15
The day kicks off at 8:30 am ET with the Initial jobless claims for the week ending June 10. Following this, May's U.S. Retail Sales report, which was last reported at 0.4%, will be released. The Empire State Manufacturing Survey and Philadelphia Fed Manufacturing Survey results for May will also be disclosed, which were last reported at -31.8 and -10.4 respectively. At 9:15 am, the Industrial Production for May and Capacity Utilization rate will be released, the latter previously standing at 79.7%. The final report for the day will be the Business Inventories data for April, last reported at -0.1%.
Friday, June 16
At 10:00 am ET, the Consumer Sentiment Index will be announced, which was last recorded at 59.2.
Stay tuned for these figures as they hold significant implications for economic policies and market movements.
