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rssBREAKING : ECB emergency meeting reportedly scheduled for 0900 GMT
Adding that there has been no communication yet on whether a statement would be published, citing several sources with direct knowledge of the matter. Given the market rout since Thursday last week, I want to say that there has to be some form of formal communique or response by the ECB. As such, a statement is almost likely to be a necessity to provide calm to European bond markets.
However, I would not expect there to be any specific details on the tool(s) they would be using to counter fragmentation risks. The ECB is likely to just reaffirm their commitment and resolve to the matter while perhaps hinting at efforts to address the risks in the weeks/months ahead.
Breaking Down the Cost of an EV Battery Cell
Russia’s oil product shipments below
Closing levels: US equities chop sideways even as bond yields continue to rise
- S&P 500 -14 points to 3735 or -0.4%
- Nasdaq +0.2%
- Russell 2000 -0.3%
- DJIA -0.5%
- Toronto TSX Comp -0.9%
US stocks opened higher and made a decent push to the upside just after lunch in New York. The sellers hit shortly after that and stocks fell to the lows of the day. A late rebound erased that damage and the market closed near unchanged. That was at least a bit of stabilization after the 4% plunge yesterday and it comes with more hefty moves in bonds.
- 2-year +15 bps to 3.426%
- 5-year +12.8 bps to 3.59%
- 10-year +12 bps to 3.48%
- 30-year +6 bps to 3.43%
Thought For A Day
Taiwan: Chinese military action against Taiwan with it global trade much more than Russia
If you looking for more bad news, Taiwan’s topic trade negotiator John Deng is on the wires saying in a Reuters interview:
- Chinese military action against Taiwan would hit global trade much more than Russia’s Ukraine invasion
- There would be a worldwide shortage of the semiconductors an event of China military attack
- Taiwan is working with India on settling its tech tariffs dispute before WTO ruling
U.S. Commerce Secretary Gina Raimondo recently urged Congress to pass the CHIPS for America Act. That bill aims to incentivize investment in U.S. semiconductor manufacturing, research and development and supply chain security, providing income tax credit for chip equipment or manufacturing facility investment through 2026.
The CHIPS (Creating Helpful Incentives to Produce Semiconductors) for America Act was passed in January 2021. However, Congress has yet to agree on a bill that would appropriate resources for its various programs. This despite a rare bipartisan support for expanding domestic chip manufacturing.
Companies like Intel have pledged billions of dollars on plants in Arizona and Ohio. However, they are looking for assistance from the US government as a matter of national safety.
The invasion of Taiwan by China would certainly be another wrench in what is a very fragile economy that is exposed from a number of different fronts including oil, food, other commodities , and chips. All of which have led to higher inflation.
European equity close: Perphiery struggles ahead of fragmentation speech
- Stoxx 600 -1.2%
- German DAX -0.9%
- UK FTSE 100 -0.2%
- French CAC -1.1%
- Spain IBEX -1.5%
- Italy MIB flat
Germany May final CPI +7.9% vs +7.9% y/y prelim
- HICP +8.7% vs +8.7% y/y prelim
Slight delay in the release by the source. No change to the initial estimates as German inflation continues to run higher last month with the monthly increase also seen at +0.9%.
German inflation, ZEW survey on the agenda in Europe today
The market is in search for a bit of a relief after yesterday’s bloodbath. It was an absolute stinker of a day across all asset classes where only the dollar (and oil) came out on top in a flight to safety.
The mood today is looking calmer but that’s just a bit-part reprieve I would say, at least for now. Overall sentiment is still on a knife’s edge and the jitters since the latter stages of last week is still reverberating. That could very well stay the course at least until we get to the Fed tomorrow.
As things stand, market expectations are ramping up on a 75 bps rate hike.
The bottom line is that everyone believes the Fed is behind the curve and if they are to act even more aggressively in the months ahead, it may cause the house of cards to come tumbling down.
There will be a couple of releases in Europe to move things along but nothing that should distract from the overall focus on the Fed and risk sentiment currently this week.
0600 GMT – Germany May final CPI figures
0600 GMT – Germany May wholesale price index
0600 GMT – UK May claimant count change
0600 GMT – UK April ILO unemployment rate, average weekly earnings
0900 GMT – Germany June ZEW survey current conditions, outlook
1000 GMT – US May NFIB small business optimism index
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading!