Thursday's Markets Update (June 29, 2023)

30 Jun 2023 by rate3

On Thursday, GDP increased above expectations, core PCI rose and jobless claims fell leading to NASDAQ (o:13592, c:13591) and BTC (o:30623, c:30584) sidetracking.

Details
US economy grew 2% in Q1 2023, above 1.3% est., driven by strong consumer spending (+4.2%) and exports (+7.8%). Nonresidential fixed investment (+0.6%) and government spending (+5%) were revised lower. The Fed sees 1% growth this year.

Weekly jobless claims fell to 239K, lowest since October 2021. Continuing claims fell to 1.742M, lowest in 4 months. Labor market resilient to Fed tightening.

Also, core PCE rose 4.9% in Q1 2023, the strongest since Q1 2022. Excluding food and energy, inflation remains elevated.

Other Markets Updates:
China: Factory activity contracted for the third straight month in June, with the manufacturing PMI rising to 49 from 48.8 in May. New orders, buying activity, and export sales all declined, while employment fell for the fourth straight month. Input cost fell at a softer pace, while output charges dropped for the fourth successive month. Business sentiment remained upbeat but hit its lowest level in six months, suggesting country’s post-enclosure recovery lost momentum.

Japan: Tokyo's core inflation rate remained at 3.2% in June, below expectations but still above the BOJ's target. Pressure on the central bank to tighten policy remains, but Governor Ueda says there is still work to do in sustainably achieving 2% inflation accompanied by sufficient wage growth.

What a contrast to the short-sighted and misinformed Fed's rate politics of shutting down the economy and suppressing wages before they adjust to increased prices, driven up by corporations according to the new economic realities of the divided and belligerent world.

Commodities
Oil: Brent crude futures edged up (above $74 per barrel), supported by tightening global supply and Saudi Arabia's output cuts. US crude inventories fell by 9.6 million barrels, while the Fed's tightening and China's factory activity weighed.

Copper: Prices fell to a one-month low due to a stronger dollar and weak manufacturing demand. The Chinese government has not provided support to its struggling manufacturing sector, while central banks around the world are raising interest rates, which could further dampen industrial output. However, some market participants are still concerned about copper supply. Copper inventories at the LME and COMEX fell 7% in the past week, and Chile's output is expected to decline by 7% this year. Peru's central bank has also cut its expectations for mining investment this year, which is set to fall by nearly 20%.