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No one was naïve enough to expect an agreement on the US debt ceiling yesterday, when US President Joe Biden met Kevin McCarthy.
US treasuries remain under a decent selling pressure especially at the short end of the yield curve as investors dump US short term papers due to the rising US default risk. Gold gained, as equities slid.
The US will reveal a much-important update to its CPI today, and the data could also shake sentiment at today’s trading session.
Core inflation is expected to have slightly eased from 5.6% to 5.5% in April, headline inflation is seen steady...

The week started on a mixed note. Bank stress further eased with PacWest and Western Alliance, which were the two banks that were on the chopping block after the First Republic Bank got swallowed by JPM, rallied, but gave back most of earlier gains.
Federal Reserve’s (Fed) senior loan officer opinion survey came in worse than expected. The data showed that the banks who tightened credit conditions were higher than expected, around 46%, versus 44.8% expected.
On the political front, tensions regarding the US debt ceiling impasse remain high as US President Joe Biden meets congressional leaders today to discuss...

Strong jobs data reversed expectation of a Federal Reserve (Fed) rate cut in July on Friday.
The US 2-year yield rebounded from last week’s lows, but the dollar index remained offered at session highs, on the unresolved US debt ceiling debate, and despite some relief on regional banks front.
US President Biden will meet some congressional leaders this week but will unlikely compromise on spending.
On the economic calendar, investors will focus on US CPI report, due this Wednesday, and Bank of England (BoE) rate decision, due Thursday.
Cable tests the ceiling of a long-term down-trending channel, as economists and...

The ECB slowed the pace of rate hikes to 25bp this month, bt left the door wide-open to more rate hikes in the coming months.
The growing divergence between the ECB and the Fed policy outlooks builds a stronger case for a significantly higher euro against the US dollar; price pullbacks continue to be interesting opportunities to strength long positions in the single currency.
In the US, stress around the US regional banks don’t seem to be abating. Lately on the chopping block are PacWest and Western Alliance, that lost 50% and 38% respectively yesterday.
US banks slid close to...

As expected, the Federal Reserve (Fed) raised the interest rates by another 25bp yesterday, and hinted at an eventual pause ‘to wait and see’ what happens from now.
Fed Chair Powell said that ‘conditions in the banking sector improved since early March’.
BUT PacWest, another US regional bank, saw its share price slump by more than 50% in the afterhours trading, after the bank announced that it considers strategic options like a breakup, capital raising or a sale.
Equities and oil sold off, as US yields tumbled and gold rallied.
Today, the European Central Bank (ECb) is also expected to...

Banking relief after JP Morgan swallowed the First Republic Bank on Monday remained short-lived, SPDR’s US regional bank ETF was down by more than 6%.
It means that, no, the US regional banking crisis is hard to wane, high interest rates are truly being felt and the latter will likely have a sizeable impact on credit lending, hence on economic activity.
On the data front, the job openings data released yesterday in the US showed that the job vacancies in the US fell for the 3rd month, to 9.6mio.
Bank stress and soft economic data fueled safe haven demand, and...

JP Morgan swallowed the First Republic Bank (FRC) on Monday and will assume all its deposits.
Capital flew out of US treasuries yesterday as bank stress waned, the S&P500 closed slightly lower yesterday, but it made a positive attempt to the 4186 mark, the highest since February this year. Nasdaq 100 advanced to the highest level this year despite the rising US yields yesterday.
The Federal Reserve (Fed) begins its two-day policy meeting in relatively calmer conditions.
Many think that this week’s 25bp hike will mark the Fed’s tightening cycle, but the surprise hike from the Reserve Bank of Australia...

Sentiment on Friday’s trading session was surprisingly resilient to further deterioration in the First Republic Bank’s (FRC) situation. The FRC dived another 43% on Friday as no solution to save the bank popped up by magic.
But the S&P500 rallied to 4170, to the highest level since February, as surprise record earnings from Exxon Mobil and Chevron stole attention from the FRC for a moment.
Exxon announced a profit of more than $11bn in Q1 thanks to effective cost cutting. That’s more than double the profit it announced the same time last year, while Chevron topped estimates as well, despite...

US equities rallied on Thursday, as technology stocks led gains. Meta jumped nearly 14% to the highest levels in a year.
Then, Amazon jumped more than 10% in the afterhours trading as earnings topped estimates in Q1. Revenue from both physical and online stores did better than expected. But most of the early gains were rapidly given back as executives revealed in the conference call a bit later that the revenue growth in AWS slowed.
The US futures are in the red this morning as the combination of soft US growth, higher-than-expected inflation, and mixed earnings beyond the FAANG stocks...

Wednesday was a good trading session for Big Tech, but a bad session for the rest.
Microsoft jumped more than 7% and Facebook’s Meta jumped 12% in the afterhours trading after the company announced better-than-expected sales.
Nasdaq 100 eked out a 0.64% advance, but the S&P500 slid 0.38% as the continued selloff in First Republic Bank (FRC) and the mounting stress regarding what will happen to FRC and how the other banks will be impacted led to a risk-off selloff in all sectors except the technology.
The probability given to a 25bp hike for next week’s FOMC meeting is being...