US Weekly Wrap Up 17 - 21 June : Week of Consolidation and DXY Strength

"If you can trust yourself when all men doubt you, But make allowance for their doubting too; If you can wait and not be tired by waiting.....

If you can fill the unforgiving minute, With sixty seconds’ worth of distance run,

Yours is the Earth and everything that’s in it...." ~ Rudyard Kipling

Let's Quickly review the U.S Economic Data released over the week.

The GDPNow Model estimate for real GDP growth in Q2 was revised downwards to 3% after the release of the data this week. CBO estimates show that U.S Budget Deficit will be around $ 400 bn larger this year at $ 1.90 trn.

USTs consolidated last week's gains in a 9.50 bps range and US2s10s closed relatively unchanged for the week at - 48 bps and DXY continued to climb higher after taking support at the 103.00 level at the start of the month and S&P 500 made fresh highs at 5517. On the DXY, 106.25 is a crucial resistance zone for DXY bears and an important point of reversal. So keep a watch on the levels with SL above 106.75.

May Retail Sales data came in below consensus expectations at 0.10% and the prior month reading was revised downwards to -0.20%. Real Retail and Trade Services Sales was down 1% yoy.

While the Initial Jobless Claims data came in 5K lower than previous week but the Continued Jobless Claims was near the highest levels for 2024 and the 4W Moving Average of Continued Jobless Claims rose 10K over the week. The data shows the demand and supply of labor coming into better balance.

The data across Permits / Starts and Completion showed a decelerating trend which is attributed to rising interest rates and affordability concerns and lower existing home sales.

May Industrial Production data showed strength in manufacturing activity and came in above estimates at 0.90% following a flat reading the previous month and capacity utilization was seen higher at 78.70%. S&P PMI data showed a beat across Services / Manufacturing and Composite PMI coming in at 55.10 (prev 54.80), 51.70 (prev 51.30) and 54.60 (prev 54.50) respectively.

Next week Economic Calendar includes the ISM PMI data and then the onset of Jobs data with JOLTS data on Tuesday, ADP on Wednesday and NFP data on Friday.

Now if you go back to the earlier articles, you would see the mention about the divergence between the Household Survey and the Establishment Survey.

Economist also published an article on the same subject , give it a read here

One of the reasons behind the divergence stems from multiple jobholders which are counted as one in case of household survey but counted "as is" in case of Establishment survey, i.e. if I hold 2 jobs, Establishment survey counts it as 2 but household survey counts it as 1. Household survey shows employment increased only 376K over 12 months but NFP shows employment increased 2.756m over the 12 months period. There are a lot of questions around the divergence which makes the release more crucial.

On that note, hope you have a good week trading !!

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The Moment of Reckoning is here !! 25 or 50 Bps and the SEP || Benign PCE Expectations || USDJPY 145.75 or 137.50 ??

“Every once in a while, an up-or-down-leg goes on for a long time and/or to a great extreme and people start to say "this time it's different." They cite the changes in geopolitics, institutions, technology or behaviour that have rendered the "old rules" obsolete. They make investment decisions that extrapolate the recent trend. And then it turns out that the old rules still apply and the cycle resumes. In the end, trees don't grow to the sky, and few things go to zero.” ~ Howard Marks Bonds continued to rally this week with yields on US2s printing a high and low range of 3.71% - 3.55% to close the week at 3.584% and US10s printing a high and low range of 3.76% - 3.6050% to close the week at 3.655%. I highlighted in my blogpost on Aug 31, the triangle breakout target at 15.50 bps on US2s10s. We dipped to -0.004% on the CPI release and closed the week at 0.0710%. On Crude Oil prices we dipped to lows of $ 68.71 but closed the week higher at $ 72.09. ECB annou...

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One of my favorite poem is by Kahlil Gibran and thought I'd share a couple of lines with you all... Do not live half a life and do not die a half death If you accept, then express it bluntly, Do not mask it If you refuse then be clear about it for an ambiguous refusal is but a weak acceptance Do not accept half a solution, Do not believe half truths, Do not dream half a dream, Do not fantasize about half hopes To reach and not arrive, Work and not work The half is a mere moment of inability, but you are able for you are not half a being You are a whole that exists to live a life not half a life” On that note, quick weekly roundup for the US markets below: The Fed Fund Futures are pricing in 88% probability of a rate cut by September Policy. The Atlanta FED GDPNow Estimates for Q3 growth readings are running at 2.8%. The Cleveland Fed estimates for Core CPI and Core PCE are running at 0.27% and 0.22% respectively mom. In the last blog piece...

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