US Consumer Confidence Drops On Broad Concerns About Economy

Economic

Summary:

US consumer confidence unexpectedly declined in June on concerns about prospects for the economy, labour market and personal finances due to trade policy.

The Conference Board’s gauge of confidence decreased 5.4 points to 93, data showed Tuesday. The figure was below all estimates in a Bloomberg survey of economists.

A measure of consumer expectations for the next six months dropped 4.6 points to 69, while a gauge of present conditions fell 6.4 points to 129.1.

The retreat in confidence erased nearly half of the prior month’s rebound, underscoring lingering anxiety about the potential impacts on the economy from higher US import duties. While inflation over the past three months has been modest, some consumers have become more guarded about their spending.

“Consumers were less positive about current business conditions than May. Their appraisal of current job availability weakened for the sixth consecutive month but remained in positive territory, in line with the still-solid labour market,” Stephanie Guichard, senior economist at The Conference Board, said in a statement.

The cutoff date for the Conference Board survey was June 18, five days after Israel launched a series of strikes on Iranian targets. References to geopolitics increased only slightly in write-in responses, according to the survey.

The share of consumers expecting higher interest rates in the year ahead increased to 57%, the highest since October 2023, the Conference Board data showed.

Source: Theedgemarkets

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Michelle

Commodity

Russia’s crude exports slid to the lowest since mid-April as maintenance work interrupted loadings at a key Pacific port while flows from the Baltic also declined.

Seaborne crude shipments averaged 3.19 million barrels a day in the four weeks to June 22, a drop of 4% from the period to June 15. The more volatile weekly figure fell by 220,000 barrels a day for a second straight decline.

The lower cargoes may prove to be temporary. Loadings at Kozmino had returned to normal by the end of the week after a three-day gap in activity at the Pacific port. But a slowdown in shipments from the Baltic port of Primorsk is less easy to explain, with nothing to suggest similar work there.

The lower flows partly offset the biggest jump in four-week average prices since August 2023 to leave the gross value of Moscow’s crude exports up just 2%. Weekly average prices gained by almost $7 a barrel last week as Israel and Iran traded missile attacks, culminating in the US strikes on the country’s nuclear facilities at the weekend. But global prices have fallen back sharply this week after Iran, Israel and the US agreed a ceasefire.

Exports are also likely being eroded by rising refinery runs, with Russia’s processing plants completing seasonal maintenance. Crude-processing rates averaged 5.42 million barrels a day in the first 18 days of June, and will reach the highest level this year if they’re maintained at this level for the rest of the month.

A total of 28 tankers loaded 20.89 million barrels of Russian crude in the week to June 22, vessel-tracking data and port-agent reports show. The volume was down from 22.42 million barrels on 30 ships the previous week.

Crude flows in the period to June 22 stood at about 3.19 million barrels a day on a four-week average basis, down by 120,000 barrels a day from the period to June 15. Using more volatile weekly figures, they slumped by about 220,000 barrels to 2.98 million barrels a day.

The drop in flows was driven by lower shipments from the Baltic port of Primorsk and the Pacific outlet at Kozmino, where a three-day gap in loading operations suggests maintenance work closed the port. Those declines offset another surge in flows from the Arctic port of Murmansk.

There was one shipment of Kazakhstan’s KEBCO crude during the week from the Black Sea port of Novorossiysk and one from the Baltic port of Ust-Luga.

The gross value of Moscow’s exports rose by about $40 million, or 3%, to $1.38 billion in the week to June 22. The drop in flows partly offset higher average prices.

Weekly average export prices of Russian crude rose to their highest in five months in the seven days to June 22, driven up by the continued hostilities between Israel and Iran.

Urals crude from the Baltic and Black Sea rose by about $6.70-6.80 a barrel to average about $65 a barrel during the week, while the price of key Pacific grade ESPO rose by $6.20 to average $69.32 a barrel. Delivered prices in India were up by $6.50 at $74.95 a barrel, all according to numbers from Argus Media.

On a four-week average basis, the export price of Russia’s crude shipments rose for a fourth week, with Urals from both the Baltic and the Black Sea and Pacific ESPO all up by $3.10-3.30 a barrel.

Using this measure, the value of exports rose by 2% in the period to June 22 to average about $1.31 billion a week.

Observed shipments to Russia’s Asian customers, including those showing no final destination, slipped to 2.77 million barrels a day in the 28 days to June 22, down from 2.86 million barrels a day in the four weeks to June 15.

The figures include about 440,000 barrels a day on ships from Western ports showing their destination as Port Said or the Suez Canal, or those from Pacific ports with no clear delivery point and a further 30,000 barrels a day on tankers yet to signal a destination.

Flows to Turkey in the four weeks to June 22 averaged about 370,000 barrels a day, slipping back from their highest in almost five months. That propelled a similar drop of about 20,000 barrels a day in overall shipments to the eastern Mediterranean, where Moscow has also been supplying crude to Syria.

Source: Bloomberg Europe

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Warren Takunda

Economic

The U.S. current account deficit widened to a record high in the first quarter as businesses front-loaded imports to avoid President Donald Trump's hefty tariffs on imported goods.

The Commerce Department's Bureau of Economic Analysis said on Tuesday the current account deficit, which measures the flow of goods, services and investments into and out of the country, jumped $138.2 billion, or 44.3%, to an all-time high of $450.2 billion. Data for the fourth quarter was revised to show the gap at $312.0 billion instead of $303.9 billion as previously reported.

Economists polled by Reuters had forecast the current account deficit increasing to $443.3 billion last quarter.

The deficit represented 6.0% of gross domestic product, the highest since the third quarter of 2006 when it peaked at 6.3%. That was up from 4.2% in the October-December quarter.

Economists have warned that the widening current account gap and ballooning federal government budget deficit could pose a risk to the dollar in the long term. Trump's sweeping tariffs have taken some of the shine off the dollar's safe haven status.

Imports of goods surged $158.2 billion to a record $1.00 trillion, driven by nonmonetary gold and consumer goods, mostly medicinal, dental and pharmaceutical products. Imports of services dropped $1.8 billion to $217.8 billion, weighed down by declines in charges for the use of intellectual property such as licenses for the use of outcomes of research and development.

Goods exports increased $21.1 billion to $539.0 billion, the highest since the third quarter of 2022, lifted by capital goods, mainly civilian aircraft and computer accessories, peripherals and parts.

Exports of services decreased $4.4 billion to $293.2 billion, pulled down by declines in government goods and services like military units and agencies. Personal travel also decreased as did professional and management consulting services.

The goods trade deficit widened to a record $466.0 billion from $328.9 billion in the fourth quarter. The import flood has, however, since subsided as the front-running of merchandise ran its course. Goods imports slumped by a record 19.9% to $277.9 billion in April, the government reported this month.

Receipts of primary income decreased $22.9 billion to $355.1 billion last quarter. Payments of primary income also fell $13.7 billion to $362.7 billion. Receipts and payments of primary income were both restrained by declines in direct investment income, mostly earnings.

Receipts of secondary income increased $2.3 billion to $49.6 billion, lifted by fines and penalties. Payments of secondary income dropped $8.4 billion to $101.5 billion amid decreases in government transfers.

Source: Reuters

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Adam

Commodity

Middle East Situation

Gold prices are sharply down in early U.S. trading Monday, as the geopolitical situation in the Middle East has taken a rapid and surprising turn toward de-escalation of military conflict—at least for now. August gold was last down $61.10 at $3,333.90. July silver prices were last down $0.092 at $36.095.

News that Iran and Israel have agreed to a ceasefire, and notions that Iran probably won’t continue to retaliate against the U.S., have put keener risk appetite back into the marketplace today. President Trump wrote on social media: “On the assumption that everything works as it should, which it will, I would like to congratulate both countries, Israel and Iran, on having the stamina, courage, and intelligence to end, what should be called, the 12-day war.”

Asian and European stocks were mostly higher overnight. U.S. stock indexes are pointed to sharply higher openings today in New York.

In other news, China slightly eased its monetary policy today by injecting liquidity into its financial markets.

The key outside markets today see the U.S. dollar index lower. Nymex crude oil futures prices are lower and trading around $66.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently at 4.33%.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook retail sales report, international transactions and the current account, the monthly house price index, the S&P Case Shiller home price indexes, the Richmond Fed business survey, and the consumer confidence index. Federal Reserve Chair Jerome Powell also speaks to a House panel on U.S. monetary policy.

Strong price pressure on gold as Middle East tensions ease_1

Technically, August gold futures bulls have the overall near-term technical advantage but are fading a bit. Bulls’ next upside price objective is to produce a close above solid resistance at the June high of $3,476.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,300.00. First resistance is seen at the overnight high of $3,385.00 and then at $3,400.00. First support is seen at $3,313.10 and then at $3,300.00. Wyckoff's Market Rating: 6.5

Strong price pressure on gold as Middle East tensions ease_2

July silver futures bulls have the overall near-term technical advantage. However, a bearish broadening pattern has formed on the daily bar chart, which begins to suggest a market top is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at the June high of $37.405. The next downside price objective for the bears is closing prices below solid support at $35.00. First resistance is seen at $36.50 and then at $37.00. Next support is seen at last week’s low of $35.515 and then at $35.00. Wyckoff's Market Rating: 7.0

Source: kitco

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Adam

Commodity

Oil held losses but continued to fluctuate as a fragile ceasefire between Israel and Iran helped cool a conflict that’s rocked the energy-rich Middle East.

Brent futures, the international benchmark, were down 3.7% in London, remaining near $69 a barrel. Prices pared some of their earlier losses as US President Donald Trump accused both sides of violating the truce and called on Israel to stop dropping bombs, while insisting the accord would ultimately hold.

In a move that has surprised many market watchers, crude has declined sharply this week — including a 7% rout on Monday — despite the arrival of a long-feared clash that saw America bomb Iran’s nuclear program and the Islamic Republic retaliate against US bases.

The conflict appears to be moving toward a de-escalation phase, with oil supplies from the Persian Gulf continuing unabated and no interruption to the region’s Strait of Hormuz, which traders had feared could be blocked.

The price slump brings the market back to where it was before Israel attacked Iran on June 12. Traders are looking toward a looming surplus later in the year, with a supply surge from producers both inside and outside the OPEC+ alliance set to outpace growth in demand. The pullback also offers a fresh reminder that geopolitical disruptions to crude prices can ultimately be short-lived.

“The geopolitical risk premium built up since the first Israeli strike on Iran almost two weeks ago has entirely vanished,” said Tamas Varga, an analyst at brokerage PVM. “There are growing hopes that investors will be able to focus on economic policies instead of geopolitics.”

A sustained market retreat will alleviate fears about elevated inflation, fulfilling one of Trump’s key aims just hours after he took to social media calling for lower oil prices. Still, lower crude dents the economies of producer nations, particularly in the Middle East, and will refocus discussions around the financial health of major oil companies.

In a sign of reduced tensions, Brent’s prompt spread — the difference between its two nearest contracts — narrowed to 99 cents a barrel in backwardation. While that’s still a bullish pattern, with nearer-term prices above those further out, it’s down from last week’s closing peak of $1.77. The key December-December spread fell back into contango — the opposite, bearish pricing structure.

In wider energy markets, European natural gas fell by as much as 13% as fears of disruptions to traffic through the Strait of Hormuz — a conduit for 20% of seaborne gas shipments — started to fade. Meanwhile, US liquefied natural gas exports are ramping up after maintenance, which will add supply to the market.

The Mideast crisis erupted about two weeks ago as Israel attacked Iran in a bid to eradicate its nuclear program, decimate its leadership and degrade its military, with Tehran firing missiles in reply. In a major escalation, Trump ordered a strike against the Islamic Republic’s nuclear sites, prompting Iran to launch a limited missile salvo against a US airbase in Qatar.

OPEC+ Supply

The OPEC+ alliance — which includes Iran — has been reactivating idled capacity at a rapid clip in a bid to recapture market share. The group is due to hold a video-conference July 6 to consider a further supply hike in August. Trump has made plain he favors cheaper energy to buttress his economic agenda, including his aggressive trade policy.

“In a week and a half, OPEC+ will agree to increase production by another 400,000 barrels a day,” said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. “As we move into the third quarter — and global production rises and demand wanes, driving inventory sharply higher — we will see prices probing the lower end of the previous $60-to-$65 range.”

Source: Bloomberg

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Glendon

Economic

Forex

The Conference Board (CB) released its latest Consumer Confidence figures, indicating a decline in the sentiment of U.S. consumers towards economic activity. The actual number came in at 93.0, a significant drop from both the forecasted and previous figures.

This number starkly contrasts with the forecasted figure of 99.4, underscoring a pessimistic outlook not anticipated by economists. The reading not only fell short of predictions but also revealed a decline from the previous figure of 98.0, further emphasizing the downward trend in consumer confidence.

Consumer confidence is a leading indicator of economic activity, with higher readings pointing to increased consumer optimism and potential spending. As such, this unexpected dip could potentially predict a slowdown in consumer spending, a major driver of the economy.

The lower than expected reading is seen as negative or bearish for the U.S. dollar. It suggests that consumers may be less willing to make significant purchases, which could lead to a decrease in overall economic activity. This could, in turn, impact the strength and global standing of the U.S. dollar.

While the reasons behind the drop in consumer confidence are not immediately clear, it’s possible that various economic uncertainties or geopolitical tensions may have contributed to the decline. This drop in confidence could impact various sectors, from retail to real estate, as consumer spending plays a significant role across the board.

It’s worth noting that despite the drop, the figure remains relatively high in a historical context, indicating that while confidence may have dipped, it is not at alarmingly low levels. Economists and investors will be closely monitoring future releases for signs of either a continued downward trend or a rebound in consumer optimism.

In conclusion, the unexpected drop in CB Consumer Confidence to 93.0 from a forecasted 99.4 and a previous 98.0 is a development of concern for the U.S. economy. The impact of this decline on consumer spending and the U.S. dollar will be closely watched in the coming months.

Source: Investing

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Adam

Bond

U.S. Treasury yields added to gains Tuesday after Federal Reserve Chair Jerome Powell said he is in no hurry to push for interest rate cuts as the impact of tariffs plays out.

In remarks that he will deliver to separate congressional committee’s this week, Powell repeated his expectation that policymakers are “well positioned to wait” before approving adjustments to the Fed’s policy rate.

The 10-year Treasury yield was up 3.3 basis points to 4.355%, the 2-year yield up 2.2 basis points to 3.851%, and the 30-year up 4.3 basis points to 4.9%. One basis point is equal to 0.01%, and bond yields and prices move in opposite directions.

“The FOMC’s obligation is to keep longer-term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem,” Powell said in remarks that underscored the Fed’s commitment to keeping prices in check.

Yields had risen earlier after U.S. President Donald Trump said that a ceasefire was in effect, soon after Iranian state-linked media announced Tehran had fired its “last round” of missiles at Israel.

“THE CEASEFIRE IS NOW IN EFFECT. PLEASE DO NOT VIOLATE IT!” Trump said in a post on Truth Social around 1 a.m. ET.

The Israel Defense Forces confirmed that a ceasefire with Iran “came into effect this morning,” adding that it and its branches nevertheless remain on a “high level of alert and readiness to deliver a powerful response to any violations of the ceasefire.”

However, the Israel Defense Forces accused Iran of violating the ceasefire announced by Trump.

“In light of these severe violation of the ceasefire carried out by the Iranian regime, we will respond with force,” the IDF’s Chief of the General Staff Eyal Zamir said, according to a statement on the Israeli military’s Telegram channel.

Earlier, the IDF had reported it was working to intercept missiles launched by Iran toward Israel, with sirens blaring in the north of the Jewish state. CNBC could not independently verify developments on the ground.

Trump also has been hounding the Fed to cut its benchmark interest rate, but to no avail.

Investors will also be closely monitoring Powell’s semiannual testimony to Congress, which kicks off Tuesday morning at 10 a.m. ET. The central bank leader also will take questions from the House Financial Services Committee. In a separate Truth Social post, Trump said he hopes “Congress really works this very dumb, hardheaded person, over.”