Summary of the Latest Trading Session
The financial markets witnessed a whirlwind of activity on June 14, 2024, as investors grappled with a deluge of critical economic data and the highly anticipated Federal Open Market Committee (FOMC) decision. The day began on a positive note, with the release of the Consumer Price Index (CPI) report, which showed inflation nearly flat in May, defying consensus forecasts of a 0.1% rise.
Index
Key Events and Economic Releases Impacting the Trading Session
European Central Bank (ECB) Governing Council Member's Comments: According to the provided information, European Central Bank Governing Council member Joachim Nagel highlighted the persistent nature of underlying consumer price growth in Europe, adding to the global inflation concerns.
Bank of Japan Policy Decision: The Bank of Japan (BOJ) delayed a reduction in bond buying, keeping its benchmark interest rate steady. The BOJ said it would outline plans for reducing bond purchases at its July meeting, while leaving its quantitative easing program unchanged until then. This decision came days after the Fed dialed back rate cut expectations, weighing on the Japanese yen.
BoJ
Producer Price Index (PPI) for May 2024: The Producer Price Index (PPI) data released on June 15 was substantially softer than expected. The headline PPI was down 0.2% in May versus April, compared to consensus expectations for a 0.1% monthly rise. The core PPI, excluding food and energy, was flat, contrary to the 0.3% rise anticipated by economists.
Initial Jobless Claims: Initial jobless claims rose by 13,000 to 242,000 in the week ending June 10, marking the highest level since August 2023. This potentially worrisome employment data tempered optimism from the inflation reports.
Market Scenario
- The Japanese yen weakened after the Bank of Japan delayed a reduction in bond buying, exacerbated by the Fed's hawkish stance on rate cuts.
- Producer energy costs declined by a massive 4.8% in May 2024, resetting costs almost all the way back to post-pandemic lows of mid-2023, according to PNC Senior Economist Kurt Rankin. This could further ease cost pressures on producers and support the Fed's 2% inflation goal by year-end.
- U.S. equities closed at fresh all-time highs, with the $S&P 500(.SPX)$ and $NASDAQ(.IXIC)$ both notching their fourth consecutive record close. Technology shares, including $Tesla Motors(TSLA)$ Tand $NVIDIA Corp(NVDA)$ , were key drivers of the rally.
- $Apple(AAPL)$ overtook $Microsoft(MSFT)$ to regain its title as the world's most valuable company, reflecting improving investor sentiment over its growth prospects and position in artificial intelligence.$
$AAPL $MSFT
- JPMorgan's asset management division expects U.S. stocks to continue powering on into the second half of 2024.
Volatility Markets:
- Implied volatility in E-mini Nasdaq-100 options declined and remains at multi-year lows, reflecting low volatility expectations in the tech-heavy index.
- CVOL (Crude Oil Volatility) in CME's WTI Crude Oil options fell to a 5-year low before being bid up slightly, indicating low volatility expectations in the energy market.
- In CME's Treasury options, CVOL increased, and the skew in yield terms moved toward the Puts, suggesting a potential shift in market sentiment toward lower yields.
Conclusion
The financial markets find themselves at a pivotal juncture, with the battle against inflation taking center stage…
The market scenario and implications presented are based on current available information and are subject to change as new data emerges and economic conditions evolve. Investors are advised to conduct thorough research, consult with professional advisors, and exercise caution when making investment decisions in this highly volatile and uncertain environment.
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