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  • 🐮🐻 #3: US stocks reach 14 month highs while the dollar falls

🐮🐻 #3: US stocks reach 14 month highs while the dollar falls

Plus: Nikkei 225, UK employment, GBPUSD

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Bull & Bear
June 14, 2023

One-liner: US CPI was slightly below expectations causing US stocks to rally to 14 month highs, while UK unemployment declined unexpectedly culminating in a stronger pound versus the dollar.

📰 What’s moving markets?

  • Japan’s Nikkei 225 is up 1.4% as markets expect extra loose monetary policy from the BoJ to continue ahead of the interest rate decision on Friday. The Nikkei 225 is now up 29% ytd.

  • US CPI rose 4%, the lowest yoy increase in 2 years and below analyst expectations of 4.1%. US Core CPI, which includes energy and food prices, rose 5.3%. The S&P 500 and Nasdaq 100 rallied 0.7% and 0.8% respectively on the news.

  • The Fed is expected to hold rates in the meeting today - the market is pricing a 60% probability that hikes will resume in July.

  • UK Unemployment declined unexpectedly to 3.8% (market expectations were 4%) and wages grew by 7.2% in the 3 months to April, the fastest wage inflation in 20 years (although largely caused by a 9.7% increase in minimum wage on the 1st April).

  • GBPUSD rallied +0.5% on the UK employment data to $1.26: low unemployment implies a resistant economy which may justify additional rate hikes in the UK, which has bolstered the pound.

📊 Chart of the day

CNN’s Fear and Greed index is at its highest level since Feb 23, currently suggesting that “extreme greed” is driving US markets

Fear and Greed Index

🤔 What is Fear and Greed Index?

“The Fear & Greed Index is used to gauge the mood of the market … The theory is based on the logic that excessive fear tends to drive down share prices, and too much greed tends to have the opposite effect … The Fear & Greed Index is a compilation of seven different indicators that measure some aspect of stock market behavior. They are market momentum, stock price strength, stock price breadth, put and call options, junk bond demand, market volatility, and safe haven demand. The index tracks how much these individual indicators deviate from their averages compared to how much they normally diverge.”

CNN

📅 Coming up this week

Monday 12th June

  • India CPI expected: 4.42%, last: 4.70%, actual: 4.25%

Tuesday 13th June

  • UK Average Earnings ex Bonus expected: 6.9%, last: 6.7%, actual: 7.2%

  • German CPI expected: 6.1%, last: 6.1%, actual 6.1%

  • US CPI (core) expected: 5.3%, last: 5.5%, actual 5.3%.

Wednesday 14th June

  • UK GDP expected: 0.3%, last: -0.3%

  • US PPI (core) expected: 2.9%, last: 3.2%

  • US Fed Interest Rate Decision expected: 5.25%, last: 5.25%

  • Australia Unemployment Rate expected: 3.7%, last: 3.7%

  • China Retail Sales expected: 13.9%, last: 18.4%

Thursday 15th June

  • Russia GDP (quarterly) expected: -1.9%, last: -2.7%

Friday 16th June

  • Euro Zone CPI (core) expected: 5.3%, last: 5.3%

  • Euro Zone wages expected: 3.3%, last: 5.1%

  • Japan BoJ Interest Rate Decision expected: -0.1%, last: -0.1%

📈 The markets at a glance

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