U.S. Wholesale Inventories Show Modest Growth, Beating Forecasts

Economic

Forex

Summary:

The latest economic data reveals a slight uptick in U.S. Wholesale Inventories, indicating a modest but steady growth in the total...

The latest economic data reveals a slight uptick in U.S. Wholesale Inventories, indicating a modest but steady growth in the total value of goods held in inventory by wholesalers. The actual figure came in at 0.2%, surpassing the forecasted stagnation.

The 0.2% increase in Wholesale Inventories, while small, is significant in that it beat the forecasted figure of 0.0%. This suggests that wholesalers are maintaining a higher inventory level than anticipated, which could be interpreted as a positive sign for the U.S. economy. It indicates a level of confidence in the market, as wholesalers are willing to hold onto more stock in anticipation of future sales.

When compared to the previous figure of 0.4%, the current 0.2% does represent a decrease. This indicates that while there has been growth, it is at a slower pace than before. The previous figure’s higher percentage could be attributed to a more robust economic climate at the time, or a higher level of confidence in future market conditions.

However, it is important to note that a higher than expected reading for Wholesale Inventories is typically seen as negative or bearish for the U.S. Dollar. This is because a build-up of inventories can indicate a slowdown in demand, which can negatively impact the economy and, by extension, the value of the currency. Conversely, a lower than expected reading is viewed as positive or bullish for the U.S. Dollar.

In this case, the actual figure of 0.2% is lower than the previous 0.4%, which could be seen as a positive sign for the U.S. Dollar. However, it is higher than the forecasted 0.0%, which could be seen as a negative. As such, the impact on the U.S. Dollar is likely to be mixed.

Overall, the latest Wholesale Inventories data paints a picture of modest growth in the U.S. economy. While the pace of growth may have slowed compared to the previous period, the fact that the actual figure beat forecasts suggests a level of resilience and confidence among wholesalers.

Source: Investing

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Michelle

Cryptocurrency

Bitcoin is approaching a critical resistance level after recovering from last week’s sharp sell-off. The cryptocurrency traded at $106,685 during early Monday trading, registering a 1.41 percent increase over the past 24 hours.

After dipping to a weekly low of $100,377, Bitcoin has now recorded four consecutive days of gains. Bitcoin moved up to a record high of $106,958 before pausing not far from $107,000. After lowering for three straight days, last week’s highest price was $106,901. This level is developing strong resistance that could impact prices soon.

Swissblock has stated that market participants are getting ready for possible swings due to important reports expected soon. The consumer price index report will come out on Wednesday, and the producer price index report will be released a few days later. These reports might have a strong impact on investors’ views of the market.

If the inflation rate surpasses forecasts, investors may again worry about tightening monetary policy. Additionally, if the economic signals are weak, this could help a rally in risk assets, including Bitcoin. Traders are keeping an eye on how the market acts, as it may decide the market’s next direction.

Support Levels and Bullish Setups Emerge Despite Caution

While short-term resistance looms, technical indicators suggest a strengthening structure on the bullish side. According to Swissblock via X, bulls appear to be regrouping and preparing for a shift in momentum. Market caution remains, but recent price behavior hints at attempts to reverse last week’s weakness.

In the upcoming period, Bitcoin could go lower, trying to reach around $104,000, before making a notable move higher. According to Glassnode, Bitcoin is well supported by essential levels, including $103,700 and $95,600. This would make it possible for companies to cope if profit-taking increases.

The current short-term holder cost basis, valued at approximately $97,100, previously played a key role in shaping short-term market expectations. Additionally, the wider view of the market reveals that the resistance lies at $114,800, and the support is at $83,200. Gains or losses beyond this range could affect Bitcoin’s future direction for some time.

This week, key attention is on inflation numbers because they may significantly influence monetary policy. Bitcoin is presently moving above $107,000 and below $104,000. Traders are on alert for signs that may confirm whether bulls are indeed regaining control or if a deeper pullback is imminent.

Source: CryptoSlate

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Warren Takunda

Economic

US Treasuries were trimming overnight gains, with modest weakness in longer dated debt as investors awaited a Thursday auction of 30-year securities that will offer a fresh test of demand for the beleaguered securities.

An early rally that mirrored moves in European bonds lost steam ahead of the Wall Street open for equity trading. Treasuries were clinging to gains on maturities out to the 10-year. That left US government bonds still nursing the bulk of sharp losses from Friday’s stronger-than-expected US jobs report that saw traders dial back Federal Reserve interest rate cut expectations.

A quieter day for economic data Monday is shifting attention to US and China trade talks in London, and events later this week, including consumer inflation on Wednesday and the debt sale the following day. While scheduled bond auctions are typically routine affairs, Thursday’s $22 billion offering will be particularly scrutinized given the recent volatility in long-dated global bonds. Yields have soared in recent weeks amid growing concern over major governments’ spiraling debt and deficits.

“The 30 year is a kind of tail risk type of rate,” said Jeffrey Klingelhofer, portfolio manager at Aristotle Pacific Capital LLC in Newport Beach. “Concerns over deficit spending” matter far more for the long end than, “the seven to 10 year and certainly the shorter part of the curve,” he said.

The US 30-year yield has been marching higher since early April, hitting a peak of 5.15% on May 22, the highest since 2023. It was up around two basis points at 4.99%, from a session low of 4.94% on Monday, while the 10-year yield hovered around 4.51%.

“This is going to be key and really set the tone into June as a whole,” said Lauren van Biljon, fixed income portfolio manager at Allspring Global Investments, on Bloomberg TV, about the 30-year Treasury auction. “We know how much anxiety there is around longer-term financing.”

Mike Riddell, a portfolio manager at Fidelity International, said he’s entered a steepener position, which profits from long-dated bonds underperforming shorter ones. Like PGIM Fixed Income, he said the forces driving ultra-long bonds have shifted away from monetary policy.

“It’s no longer about policy rates, it’s all about the fiscal story and demand supply dynamics,” Riddell said. It’s “really concerning” that there “doesn’t appear to be any change in policy on the back of these market moves,” he added.

The US will also hold auctions for three and 10-year notes on Tuesday and Wednesday, respectively. Bond traders must also navigate the May CPI report, with economists surveyed by Bloomberg forecasting the year-on-year rate ticking up from 2.3% to 2.5%.

“Signs of inflation pressure could knock risk sentiment, and it may even limit dollar upside, especially if it threatens the US’s 30-year Treasury auction on Thursday,” Kathleen Brooks, research director at XTB wrote in a note.

Source: Bloomberg

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Glendon

Political

Russia-Ukraine Conflict

Russia hit Ukraine overnight with its largest drone attack since the start of the war, causing some damage at a military airfield in the west of the country that was one of its main targets, the Ukrainian air force said on Monday.

It was the latest in Russian onslaughts since Ukraine destroyed a number of Russian bombers in drone attacks on air bases deep inside Russia earlier this month.

Ukraine's air defence units downed 460 out of 479 drones and 19 out of 20 missiles launched by the Russian forces, the air force said in a statement.

A military airfield close to Ukraine's western border was the key target, air force spokesperson Yuriy Ihnat said.

"The main strike was targeting... one of the operational air fields. There are some hits," Ihnat told Ukrainian TV, without elaborating on the damage.

The airfield is in the city of Dubno, about 60 km (40 miles) from Ukraine's border with Poland, Ukrainian regional authorities said.

Polish and allied aircraft were activated early on Monday to ensure the safety of Polish airspace, the Polish armed forces said.

Russia's Defence Ministry said the attack was another strike in response to Kyiv's attacks on Russian bases this month, adding that "all designated facilities" had been hit.

The more than three-year-old war in Ukraine has been escalating as the peace talks between Kyiv and Moscow have so far failed to yield any significant results.

The two sides remain deeply divided on how to end the war. Ukraine is pushing for an unconditional ceasefire as a first step, something Russia has repeatedly rejected.

Source: Reuters

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Adam

Economic

China–U.S. Trade War

China’s exports growth missed expectations in May, dragged down by a sharp decline in shipments to the U.S., with analysts saying effects of the Beijing-Washington trade truce will be visible in June data.

Chinese exports to the U.S. plunged 34.5% from a year ago, marking the sharpest drop since February 2020, according to Wind Information, when the Covid-19 pandemic disrupted trade. Imports from the U.S. dropped over 18%, and China’s trade surplus with America shrank by 41.55% year on year to $18 billion.

Overall exports rose 4.8% last month in U.S. dollar terms from a year earlier, customs data showed Monday, shy of Reuters’ poll estimates of a 5% jump.

Imports plunged 3.4% in May from a year earlier, a drastic drop compared to economists’ expectations of a 0.9% fall. Imports had been declining this year, largely owed to sluggish domestic demand.

That was largely offset by its shipment to the Southeast Asian bloc, which jumped nearly 15% from a year, and those to European Union countries and Africa, which rose 12% and over 33%, respectively.

China’s total trade surplus increased 25% from a year earlier to $103.2 billion in May.

Still, exports growth in May slowed significantly from an 8.1% surge in April when a jump in shipment to Southeast Asian countries offset a sharp drop in outbound goods to the U.S. Chinese shipment to the U.S. plunged over 21% in April, as prohibitive tariffs kicked in.

“The prohibitive tariffs were only lifted in mid-May, the damage was already done,” said Tianchen Xu, senior economist at Economist Intelligence Unit.

China’s exports of rare earths dropped 5.7% from a year ago to 5,865.6 tons, customs data showed, as Beijing tightened export controls of the critical minerals to gain leverage during its trade negotiation with the Trump administration.

Volumes of cars and ship exports jumped by 22% and around 5%, respectively, from a year ago, while exports of smartphones and home appliances fell around 10% and 6%, respectively.

China’s imports of soybeans surged 36.2% year on year to a record high of 13.92 million metric tons, according to Wind Information.

High-stakes trade talks

Xu expects U.S.-bound exports to see some recovery in June. “It will be the first full month for Chinese exporters to enjoy reduced U.S. tariffs,” Xu said, adding that rare earths and electric machinery shipments would rebound following Beijing’s move to ease supervision on these exports.

U.S. President Donald Trump’s prohibitive 145% tariffs on Chinese goods took effect in April, prompting Beijing to retaliate with triple-digit duties and other restrictive measures, such as export controls on critical minerals.

U.S. and China struck a preliminary deal in Geneva, Switzerland, last month that led both sides to drop a majority of tariffs. Washington’s levies on Chinese goods now stand at 51.1% while Beijing’s duties on American imports are at 32.6%, according to think tank Peterson Institute for International Economics.

Zichun Huang, China economist at Capital Economics, pointed to early signs of U.S. demand for Chinese goods picking up following the Geneva truce.

While noting that it took time for the recovering demand to feed through to actual shipments, Huang cautioned that the existing tariffs are unlikely to be reduced further, if not hiked again, and will lead to slower export growth by year-end.

Chinese Vice Premier and lead trade representative He Lifeng is expected to meet with the U.S. trade negotiation team led by Treasury Secretary Scott Bessent in London later in the day for renewed trade talks.

The second-round of meetings come after tensions flared up again between the two sides, as they accused each other of violating the Geneva trade agreement.

Washington had blamed Beijing for slow-walking its pledge to approve the export of additional critical minerals to the U.S., while China criticized the U.S. decision to impose new restrictions on Chinese student visas and additional export restrictions on chips.

China’s Ministry of Commerce said on Saturday that it would continue to review and approve applications for export of rare earths, citing growing demand for the minerals in robotics and new energy vehicle sectors.

Source: cnbc

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Adam

Stocks

China–U.S. Trade War

S&P 500 returns to 6000

Friday’s session was yet another positive one for US markets, following the latest jobs report.

The S&P 500's recovery from the April lows continues, as it touches 6000 for the first time since late February. This leaves it just 2.4% from the record highs seen in mid-February.

I’m sure that many investors around the world will be looking at stock indices like the S&P 500 and think why they didn’t take the chance to rush back into stocks at the lows of April. That’s the problem with investing, it’s always easier with hindsight.

It is hard to remember how it felt back in April, when the shock of tariffs was still being digested. Predictions of economic Armageddon abounded, providing plenty of scary economic commentary for those that lap up such things.

But that’s in the past. Where do we go from here? That, of course, is the tricky part. It’s easy to look back at a chart and pinpoint the best moments to buy and sell, but it’s an entirely different game when you’re sitting in the moment and wondering what to do now.

For the moment, the global economy isn’t showing many signs of weakness. Friday’s US jobs report indicated a healthy economy overall, and even the China trade data, which showed a slump in Chinese exports to the US, failed to have much impact.

Markets find themselves in an odd place. There may well be more data in coming weeks that shows tariffs have had an impact. But then since mid-April most of the tariffs have been paused. Will data then start to improve next month? Investors who took a bearish view on the basis of May data may find themselves caught out by improvement in June’s figures.

Can markets keep rallying?

It is not implausible to argue that there can be more upside for stock markets in the short-term, even after the huge rally from the April low.

Investors often forget that stocks go up AND down, not up OR down. We may see some further short-term gains, and then a pullback may develop. It is not a given that markets have to retest the April lows.

Admittedly, the S&P 500 is currently trading at 23 times earnings. But the price-to-earnings (PE) ratio is not a static figure. If earnings improve, then the rating will be justified. A slump into a period of weak growth may prove to be sharply negative for stocks, but at present the data does not fully support a bearish view.

What’s happening this week?

Following on from Friday’s payroll figures will be Wednesday’s inflation data for the US, in the form of the Consumer Price Index (CPI).

Any sign of faster price increases in the US will be taken as a sign that tariffs are having an impact on the US economy. But markets have ‘looked past’ such data lately (i.e. they have ignored it) on the basis of the tariff pauses. UK employment data and trading figures from Tesco will also be worth watching.

Source : ig

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Michelle

Stocks

Economic

The chances of an acceleration in inflation numbers in the coming months are growing as President Donald Trump’s aggressive tariff regime begins to drive prices higher, according to analysts at JPMorgan Chase (NYSE:JPM).

In a note to clients on Monday, the analysts led by Mislav Matejka added that this trend, along with the risk of softening growth figures, could put the Federal Reserve in a "difficult position" as it assesses the future path of interest rates.

Should the dilemma facing the Fed worsen over the summer, U.S. equities and other international markets would likely be impacted, they said.

"JPM’s call is that recession will be avoided, but at 40% our economists believe the chances are not insignificant, and the current market pricing is probably underplaying this," the strategists wrote. "We believe the above combination of softer activity and at the same time higher inflation will drive a stalling in equity rebound that was in force over the past two months."

Against this backdrop, some of the brokerage’s top picks included European names like materials group Air Liquide (OTC:AIQUY), lenders Deutsche Bank and Societe Generale (OTC:SCGLY), carrier Ryanair, and consumer staples firm Unilever (LON:ULVR).

On the economic calendar this week, all eyes will be on the release of May’s reading of U.S. consumer price, which could provide a glimpse into the impact of Trump’s aggressive tariff policies on inflation.

The Labor Department’s consumer price index is tipped to speed up slightly to 2.5% from 2.3%, while the month-on-month gauge is expected to match April’s pace of 0.2%.

Cutting out more volatile items like food and fuel, the index is seen edging up to 2.9% year-over year and 0.3% on a monthly basis.

Following the release of the data on Wednesday, further data points are due out that track producer prices and consumer expectations for inflation in the months ahead.

Separate data last week showed that the U.S. added 139,000 jobs in May, falling from 147,000 in April but above economists’ estimates of 126,000, Labor Department data showed on Friday. April’s figure had originally stood at 177,000, while March’s total was also brought down by 65,000 to 120,000.

Federal employment declined by 22,000, reflecting an ongoing push by the White House to cut away at the size of the U.S. government workforce. Employment in the sector has slipped by 59,000 since January, when Trump returned to office for a second term in office.

Hiring in the health care, hospitality, and social assistance segments were trending up, the Labor Department’s Bureau of Labor Statistics said in a statement.

The unemployment rate was 4.2%, matching the previous month’s pace, while average hourly wage growth edged up to 0.4% month-on-month from 0.2%.