Friday's Markets Update (June 30, 2023)

02 Jul 2023 by rate3

On Friday, core PCE decreased, driving the NASDAQ (o: 13,719, c: 13,787) up. Meanwhile, BTC (c: 31,100, o: 30,372) closed the day lower on the SEC's rejection of BlackRock's Bitcoin ETF.

Details:
The core personal consumption expenditure (PCE) price index, excluding food and energy, matched expectations, rising 0.3% in May, down from 0.4% the previous month. Yearly change was 4.6%, slightly lower than April's 4.7%. Including food and energy costs, the PCE price index rose 0.1% from the previous month and 3.8% YoY.

Other Markets Updates:
Brazil: The unemployment rate fell to 8.3% in the three months leading to May 2023. This is in line with market estimates and is the lowest level since December 2022. The unemployed population fell by 280,000 people, while the employed population was unchanged. The labor force participation rate was also unchanged at 56.4%. Real earnings were broadly stable at R$2,901 per month.

Commodities
Gas: Natural gas futures in Europe rose 39% in June, the largest monthly increase in a year. The rise was driven by supply disruptions from Norway and Russia, as well as forecasts for hotter-than-usual weather next month. Norway has replaced Russia as one of the biggest sources of natural gas imports in the European Union. Gas imports from Russia to the European Union have been significantly reduced since the invasion of Ukraine, but still represented about 25% last year. Europe's gas storage is almost 77% full, a record level for this time of the year.

Currencies
EURO: The euro fell below $1.09 at the end of Q2, as investors digested mixed inflation data and the ECB's pledge to continue raising rates. Headline inflation eased to 5.5% in June, but the core rate rose to 5.4%. Inflation is moving in different directions across the Eurozone, with Germany seeing an acceleration to 6.4%, while Italy and France saw a slowdown. Spain's inflation fell to 1.9%, making it the first country in the region to meet the ECB's target of 2%. The ECB is expected to raise rates again in July and September, with traders anticipating a peak rate of 4%. The euro is set to finish Q2 little changed, only slightly below $1.1.

Key economic data to watch next week:

United States: ISM Manufacturing PMI for June (previous: 46.9, consensus: 47) on Monday; FOMC Minutes on Wednesday; June's ISM Services PMI (previous: 50.3, consensus: 51) and May's JOLTs Job Openings (previous: 10.103M, consensus: 9.9M) on Thursday; June's Unemployment Rate (previous: 3.7%, consensus: 3.7%) on Friday.
Global: S&P Global Manufacturing PMI for India, Russia, Spain, Italy, Switzerland, South Korea, and Canada, along with Services PMI for Spain, Italy, and Brazil.
Others: Inflation rates for Indonesia, Switzerland, South Korea, the Philippines, Turkey, and Mexico.
Also: Australian interest rate decision, Canada employment data, China Caixin Services and Manufacturing PMI, and Japan Tankan Manufacturers Index.
Investors will be closely watching these data releases for signs of how the global economy is faring. The payrolls report is the most important economic data release in the United States, and it will be closely watched for signs of how strong the labor market is. The FOMC Minutes will be released after the Federal Reserve's meeting next week, and they will provide insights into the central bank's thinking on monetary policy. The ISM Manufacturing and Services PMIs are also important indicators of economic activity, and they will be watched for signs of growth.

The data releases next week will also provide insights into inflation pressures around the world. Inflation rates are rising in many countries, and investors will be looking for signs that inflation is starting to peak. The Australian interest rate decision will be closely watched, as it will be the first rate hike by the Reserve Bank of Australia in more than a decade.

As BTC continues to hold its ground, hovering near its yearly highs, some traders might try to push it further up despite adversities. However, crypto markets remain highly volatile due to the bombardment of all-directional news and very low liquidity, making them contingent to sudden drops.