U.S. core PCE prices (excluding food and fuel costs) rose 0.3% in May, as expected, but the year-on-year level was mostly lower at 4.6% versus 4.7% last month and expectations. The PCE price index fell from 4.3% to 3.8%. That was the first drop below 4% since the start of 2021. Personal consumption (adjusted for inflation) was flat after 0.2% last month. Personal income rose 0.4% from 0.3% last month. After adjusting for inflation, May spending stagnated.

Later, University of Michigan consumer sentiment topped a preliminary index of 63.9 with an increase of 64.4. The gain was much higher than last month’s 59.2. Within the report, one-year inflation expectations remained stable at 3.3% (versus 4.2% last month). 5-year inflation expectations were also steady at 3.0% (same as preliminary), down slightly from 3.1% last month.

The USD moved lower as traders focused on hopes for even lower inflation going forward. The USD ends the day as the weakest of the major currencies. The strongest is NZD.

Strongest to weakest of major currencies

It’s the end of the month and looking at the major currencies vs the USD this month the USD is mostly lower. The exception is vs. JPY, when the USD gained 3.58% against the currency.

Below is the % change of the USD against the respective currencies in June.

  • EUR: -2.06%
  • JPY: +3.58%
  • GBP, -2.07%
  • CHF, -1.71%
  • CAD -2.38%
  • AUD: -2.45%
  • NZD: -1.96%

In 1H2023, the USD was mixed with a strong 10%+ gain against the JPY. The dollar also moved higher against the AUD and NZD, but fell against the EUR, GBP, CHF and AUD. The dollar was the weakest against the GBP (down 5%):

  • EUR: -1.96%
  • JPY” +10.07%
  • GBP: -5.03%
  • CHF: -3.16%
  • CAD: -2.16%
  • AUD: +2.27%
  • NZD: +3.33%

Looking at other markets today:

  • WTI crude futures were up $0.61, or 0.4%, at $70.45. Prices were up 3.47% ($2.34) for the month.
  • Gold was up $11.95, or 0.63%, at 1,919.36. For the month, the price is down -2.21% ($43.41 down)
  • Silver was up $0.19, or 0.84%, at $22.74 today. Prices rose 3.45% ($2.36) for the month
  • Bitcoin had a volatile day as the price dropped to a low of $29,508 after trading as high as $31,268. It trades for $30,339. For the month, Bitcoin rose by 12% or $3178

Looking at US stocks today, all major indexes closed solidly higher. Gains were led by the NASDAQ, which had its best 1H in 40 years.

  • The Dow industrials rose 285.18 points, or 0.4%
  • The S&P was 53.92 or 1.23%
  • The NASDAQ index rose 196.60 points or 1.45%

For the business month:

  • Dow industrials up 4.56%
  • S&P rose 6.47%
  • NASDAQ up 6.59%

Gains in 2023 were driven by large tech stocks.

Some of the 1H big gains included:

  • Nvidia up 189.46%
  • Meta up to 1.38.47%
  • Tesla rose 112.51
  • Microsoft up 42%
  • Apple rose 49.15%
  • Amazon up 50.13%
  • Alphabet increased by 35.67%
  • Broadcom rose 55.14%
  • Chipotle is up 54.16%

Holiday trading begins next week in the US due to the 4th of July holiday on Tuesday. Stock and bond markets will close soon.

We end the week with a very important US jobs report, with non-farm payrolls expected to increase by 222k (up 339k last month). The unemployment rate is expected to fall to 3.6% from 3.7% last month, and average hourly earnings are expected to increase by 0.3%.

Canada will also release jobs data on Friday, with a limited change of 22,000 expected (vs. -17.3k last month).

Other key events include:

  • The Reserve Bank of Australia will announce its latest rate decision on Wednesday in Australia. Market participants are torn between no change and an increase of 25 basis points
  • ISM data will be released in Europe and the US on Monday.
  • The minutes of the FOMC meeting will be released on Wednesday at 2:00 p.m
  • The US Services PMI will be released on Thursday.

Thank you for your support. Enjoy the weekend.

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