FED hiked 25bps as expected, highest levels in 16years, should be the last one, though it remains pretty open for June. FFR back to 2006 levels. "We don't think it's going to be a smooth process. We're going to need to stay at this for a while" --Powell, on getting down to 2% inflation, "People did talk about pausing, just not at this meeting", one of the most striking to me was "we have raised by 500bp and unemployment is still at a 50 year low" and finally '“we on the committee have a view that inflation is going to come down not so quickly, it will take some time. In that world, if that forecast is broadly right, it would not be appropriate to cut rates.”
Citibank: Raised Base Lending Rate to 8.25% From 8.00%, Effective today...which probably means some of the credit card rates are nearer to 30%..
The US Treasury announced the 1st buyback scheme in almost 20years to improve market functioning
Brexit ‘idiocy’ blamed for shrinking London stock market. EU departure has hurt London Stock Exchange's reputation, claims Arm founder
“Kremlin UAV attack” (most) probably a false flag -propaganda / Thread below
Three failed US banks had one thing in common: KPMG
April ADP Payrolls +296k surpassing expectations of +150k.. No Recession on this basis >> As ADP's Chief Economist Nela Richardson put it, “The slowdown in pay growth gives the clearest signal of what's going on in the labor market right now,” said Nela Richardson, chief economist, ADP. “Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines. Our data also shows fewer people are switching jobs.”
Carl Icahn’s fortune sank by an unprecedented 41% after Hindenburg Research accused him of using a “ponzi-like” economic structure
Many grumblings about various short-selling of U.S regional banks...Sheila Bair to CFA event: “European banks are in better shape than US banks to my embarrassment.”
Eli Lilly & Co.'s experimental drug for Alzheimer's slowed the progress of the disease in a final-stage trial, paving the way for the company to apply for US approval
Denmark announced that it will cost some 1.5% of GDP to bring its defence up to scratch, probably low end of estimate...most of Europe will have to to the same!
Markets :
Next FED move is on the table, we may have seen the last hike, but it hard to cuts so soon, given Powell's risk of sticky inflation and still pretty strong employment data (ADP y'day)
USD/JPY weakens, gives up all post BoJ gains (pretty much), GOLD tested 2075$ on lower UST yields AND the PacWest news after the close. EURNOK next 12!
BCOM vs USD - reverse correlation - intriguing ! USDollar going south and so are commodities >>> market pricing in a bigger risk of US slowdown, recession
Equity markets risk lower - systematic funds/CTA's been buying HUGE on these low vols lately, longest position is over 1year, watch out if we head lower ( #convexity etc)
Crude crushed, together with other commods, higher rates increasing chance of recession WTI chart : Crude oil - 2023 Data - 1983-2022 Historical - 2024 Forecast - Price - Quote - Chart (tradingeconomics.com)
Fed Funds futures' pricing :
-5.09% in June and July
-4.41% by January 2024
-3.9% by April 2024
-3.2% by August 2024
-2.95% by November 2024
-2.75% by Feb 2025
Warning of summer water shortages after dry winter - BBC News good grief - here we go again...have you installed a few water tankers for the garden yet ?..
what a story
Another Bank On The Brink: PacWest Stock Crashes 53% As It Reportedly Weighs Sale (forbes.com) markets go from one target to the next, FED WILL have to be creative about it all or there is a long list of casualties possible there!
That's fast !
have a great day
Team PVM
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