Financial Markets
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US stocks struggled to find direction in subdued trading on Monday. US500 is down 0.03% at 4,150 points. The US100 (NASDAQ) recovered from early losses. The Nasdaq Index is up 0.15% to 13,347 points driven by gains in AI-capable chipmakers like Advanced Micro Devices, Nvidia, and Google-parent Alphabet. Tech stocks have been trading at a 49% premium compared to the rest of the S&P 500, supported by earnings growth expectations and expectations of interest rates cut later this year.
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The US dollar slipped for the fifth consecutive day. EURUSD is trading above 1.10 level with -0.05% change. The last few weeks have been relatively calm for the Euro against the US Dollar. The major forex pair continues to trade near this year's highs, but with difficulties.
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Futures based on the German DAX index (DE30) are trading higher today and are once again testing the region of resistance levels set by recent local peaks (zone just above 16,000 points).
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Amid mixed sentiment on exchanges, cryptocurrencies are losing today. Bitcoin has retreated below $28,000. The Bitcoin network now has nearly 450,000 transactions still outstanding, and sentiment among risky assets was also weighed down by last Friday's surprisingly strong NFP report, which increased the chance of possible further Fed hikes and more difficult-to-manage inflation in the US. Along with Bitcoin, smaller cryptocurrencies like Ethereum, Cardano and Polygon also lost ground.
Speeches
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Treasury Secretary Janet Yellen sees limited options for resolving the debt limit stalemate in Washington without Congress raising the cap, warning against resorting to the 14th Amendment to avoid a constitutional crisis.
Macro data
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US Wholesale Inventories: although wholesaler inventories showed no change from the last reading (a 0.1% m/m increase was forecast), wholesale sales showed a sharp monthly decline of 2.1% (a 0.4% increase was expected). The reading of recessionary data temporarily supported the quotations of US indices.
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Swap contracts suggest the Fed may start cutting interest rates at its July meeting, with at least two quarter-point cuts expected by the end of the year. However, recent strong economic data indicates that a significant shift in Fed sentiment is unlikely, given the conditions required for a rate cut. Consumer inflation data on Wednesday will provide further insights into the Fed's rate trajectory.
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10 year interest yields rise by 1.6% to 3.86%
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