As the North American session begins, the CHF is a stronger and the GBP is the weakest.
The Bank of England (BOE) became the latest central bank to cut rates after reducing its bank rate by 25 basis points to 5.00% in a decision marked by close voting, with the vote split at 4-0-5.
The four dissenting members, including Pill, Mann, Haskel, and Greene, preferred to maintain the current rate until there was stronger evidence that inflation pressures would not materialize. The decision was finely balanced, highlighting the BOE's cautious approach in managing the rate cut.
The BOE emphasized that while domestic inflationary persistence is expected to diminish over the next few years, there is a risk that second-round effects might sustain inflationary pressures in the medium term. The BOE aims to avoid cutting rates too quickly or by too much, ensuring the bank rate remains restrictive for a sufficiently long period to achieve a 2% inflation target sustainably. The degree of policy restrictiveness will be assessed at each meeting, reflecting uncertainty about the interaction between rate cuts and quantitative tightening.
The five policymakers who voted for the rate cut—Bailey, Breeden, Dhingra, Lombardelli, and Ramsden—found it appropriate to slightly reduce the policy restrictiveness. However, some members noted that inflationary persistence had not yet conclusively dissipated, posing upside risks to the outlook.
The Swiss National Bank initiated the policy-easing cycle among developed nations in March, followed by the European Central Bank. Central banks in Sweden and Canada have also reduced their rates recently. In contrast, the Bank of Japan deviated from this trend, abandoning its ultraloose monetary policy in late April and raising its benchmark interest rate to 0.25% this past Wednesday.
In market reactions, GBPUSD was lower on the day going into the meeting reflecting earlier positioning for a dovish outcome. The price initially dipped to a low of 1.2751 but has rebounded with the current price trading near 1.2790 as Bailey press conference commences. The 200 bar MA on the 4-hour chart is overhead resistance at 1.28018 currently. If the price were to move back above that level - and also the low from Monday at 1.2706 - the sellers may be forced to cover on the failure of the break technically. NOTE also that the low today tested a swing area between 1.2754 and 1.2777 along with the 38.2% of the move up from the 2024 low in April at 1.2759, but could not sustain downside momentum. Getting and staying below the 38.2% of a trend move is key to show the sellers (in this case) are serious about the shift in direction. The sellers could not keep the momentum going. Instead buyers stalled the fall near the area.
The US stocks moved higher yesterday after Chair Powell reiterated the rate path is lower and kept the door open for a rate cut in September, despite the fact he couldn't explicitly say it was a certainty. The market remains 100% sure a September cut is coming and sees nearly 3 cuts between now and the end of the year.
After the close Meta Platform did not disappoint and traded sharply higher after the close (+6.86%) and has helped to push pre-market gains in the broader indices. Meta shares are currently up even more with a pre-market gain of near 8%.
Today Amazon, Apple, Intel, Coinbase and DraftKings highlight the releases after the close. A snapshot of the earnings (and how they did relative to expectations shows:
ConocoPhillips (COP) Q2 2024:
- Adjusted EPS: $1.98 (expected $1.96) BEAT
- Adjusted Net Income: $2.3 billion (expected $2.35 billion) MISS
Sirius XM Holdings Inc (SIRI) Q2 2024: Shares are up 2.03%
- EPS: $0.08 (expected $0.08) BEAT
- Revenue: $2.18 billion (expected $2.2 billion) MISS
Hershey (HSY) Q2 2024: Shares are down -4.47% in premarket
- Adjusted EPS: $1.27 (expected $1.43) MISS
- Revenue: $2.07 billion (expected $2.31 billion) MISS
Biogen Inc (BIIB) Q2 2024: Shares are up 0.26%
- Adjusted EPS: $5.28 (expected $4.03) BEAT
- Revenue: $2.47 billion (expected $2.38 billion) BEAT
- Guidance: Raising FY24 financial guidance
Moderna Inc (MRNA) Q2 2024: Share are down -11% in premarket
- EPS: -$3.33 (expected -$3.39) MISS
- Revenue: $0.24 billion (expected $0.13 billion) BEAT
Regeneron Pharmaceuticals Inc (REGN) Q2 2024: Shares are down -0.85%
- Adjusted EPS: $11.56 (expected $10.61) BEAT
- Revenue: $3.55 billion (expected $3.38 billion) BEAT
Cigna Group (CI) Q2 2024: Shares are down -1.06%
- Adjusted EPS: $6.72 (expected $6.41) BEAT
- Revenue: $60.523 billion (expected $58.33 billion) BEAT
Today,
- At 8:30 AM ET, initial jobless claims or expected at 236K versus 235K last week. Productivity for Q2 will also be released with invitations of 1.7% versus 0.2% in the Q1. Unit labor costs are expected at 1.8% versus 4.0% last quarter.
- At 9:45 AM, the S&P global manufacturing PMI final is expected. The preliminary came in at 49.5 down from 51.6 last month.
- At 10 AM, construction spending (estimate 0.2% versus -0.1% last month) and the ISM manufacturing PMI will be released. The ISM manufacturing in my is expected at 48.8 versus 48.5 last month. Prices paid is expected at 51.8 versus 52.1 last month, and employment is expected at 49.0 versus 49.3 last month. The US jobs report will be released on Friday at 8:30 AM.
A snapshot of the other markets as the North American session begins shows:
- Crude oil is trading up $0.50 or 0.69% at $78.42. At this time yesterday, the price was at $37.34
- Gold is trading near down $5.50 or -0.22% at $2442.07 . At this time yesterday, the price was trading at $2421
- Silver is trading down five cents or -0.17% at $28.94 . At this time yesterday, the price is trading at $28.62
- Bitcoin trading at $64,689. At this time yesterday, the price was trading at $66,062. Earlier this week the price extended above $70,000
- Ethereum is trading at $3190. At this time yesterday, the price was trading at $3318.90
In the premarket, the snapshot of the major indices is mostly higher
- Dow Industrial Average futures are implying a gain of 17.5 points . Yesterday, the Dow Industrial Average rose 90.46 points or 0.24% at 40842.80
- S&P futures are implying a gain of 21.2 points . Yesterday the S&P index closed higher by 85.84 points or 1.58% at 5522.29. It was the largest gain since February 22.
- Nasdaq futures are implying a gain of 87 points . Yesterday the index closed higher by 451.98 points for 2.64% at 17599.40. The gain was the largest since February 22
- Yesterday, the Russell 2000 index rose 11.34 points or 0.51% at 2254.48.
European stock indices are trading lower .
- German DAX, -1.03%
- France CAC, -1.11%
- UK FTSE 100, unchanged
- Spain's Ibex, -0.65%
- Italy's FTSE MIB, -1.23% (delayed 10 minutes).
Shares in the Asian Pacific markets closed mostly lower:
- Japan's Nikkei 225, -2.49%
- China's Shanghai Composite Index, -0.22%
- Hong Kong's Hang Seng index, -0.23%
- Australia S&P/ASX index, +0.28%
Looking at the US debt market, yields are continuing to move lower with the 2 and 10-year yields trading at their lowest levels since early February:
- 2-year yield 4.290%, -4.8 basis points. At this time yesterday, the yield was at 4.356%
- 5-year yield 3.946%, -5.0 basis points. At this time yesterday, the yield was at 4.027%
- 10-year yield 4.058%, -4.7 basis points. At this time Friday, the yield was at 4.133%
- 30-year yield 4.327%, -4.1 basis points. At this time Friday, the yield was at 4.390%
Looking at the treasury yield curve, the spreads are little changed from yesterday
- The 2-10 year spread is at -23.2 basis points. At this time yesterday, the spread was at -22.4 basis points.
- The 2-30 year spread is at +3.9 basis points. At this time yesterday, the spread was +3.4 basis points.
In the European debt market, the benchmark 10-year yields are lower:
