Good Afternoon on this fantastic Thursday,
Not much going on in the markets.
Bonds are bouncing back a bit on some unexpectedly inflated unemployment claims. You know the Fed is watching employment closely and currently markets see an 80% chance the Fed will pause on rate hikes at the next meeting. The 10-yr had reached 3.83% and was flashing warning signals before it pulled way back to 3.71%. We do need to close below 3.368% to be able to take a breath but this is a good step. There is no data coming out tomorrow and the important stuff next week is later on.
The other thing the Fed is watching is inflation. While domestic inflation has been a bit sticky and not falling as quickly as everyone would like (it has come down substantially), inflation starts with the global markets and specifically China which is a mass exporter to the world.
Some interesting data from China:
Chinese exports fell at a steeper-than-expected pace in May, fueling concerns that the country’s post-reopening recovery is sputtering and global trade activity is cooling. Overseas shipments in May were down 7.5% from a year earlier, China’s General Administration of Customs said Wednesday, the first contraction in three months. Imports dropped 4.5%. The weak figures underline the extent to which the global goods trade has softened this year, as central banks in the U.S. and other Western countries raised interest rates and more consumers switched to services spending after years of pandemic-induced restrictions, Stella Yifan Xie reports.
The Organization for Economic Cooperation and Development said Wednesday that it expects world trade will grow by 1.6% this year, a significant slowdown from the 5% increase recorded in 2022.
More on Global markets from the Eurozone, Inflation Drags Eurozone Economy Into Recession
The Eurozone’s economy slipped into recession at the start of the year as high energy and food prices following Russia’s invasion of Ukraine hit household spending. The European Union’s statistics agency Thursday said the combined gross domestic product of the countries that share the euro fell at an annualized rate of 0.4% during the three months through March. This left the region with two consecutive quarters of shrinking output, matching one definition of an economic recession, Paul Hannon reports.
And how about this (I have read it ten times as I cannot believe this would become a public story)? China and Cuba have reached a not so secret agreement for an electronic eavesdropping facility on the island, in a brash new challenge by Beijing to the U.S., according to U.S. officials familiar with highly classified intelligence. A facility in Cuba, roughly 100 miles from Florida, would allow Chinese intelligence services to scoop up electronic communications throughout the southeastern U.S., where there are many military bases, and monitor U.S. ship traffic. The Chinese Embassy in Washington had no comment, and Cuba’s Embassy didn’t respond to a request for comment.
Please remain safe and stay healthy, make today great!
