MARKET MOVERS
- Dollar strength bucks inflation woes. The dollar is reaching multidecade highs against its trading partners, even with U.S. inflation at its highest level in nearly 40 years. The greenback’s climb has sent the euro, British pound, and Japanese yen tumbling. Investors contend that economic weakness worldwide, from the Covid-19 lockdowns in China and the war between Ukraine and Russia, is driving today’s strong dollar. Read more here.
- 10-year Treasury yield spikes above 3.20% as the selloff continues. A Treasury selloff has driven up yields sharply in 2022 as investors reacted to inflation running at its hottest in more than four decades and as the Federal Reserve ramps up its efforts to cool price pressures. Bond yields have continued to climb and that’s despite the fact that riskier assets, such as equities, have been on the slide.
- 25 million ton backlog of grains blocked from being exported out of Ukraine. The blocked shipment of grains could be further exacerbating high food prices across the globe, which rose at their fastest pace on record in March. It could also result in storage shortages during the next harvest in July and August, particularly if Black Sea ports remained blocked by Russian forces.
- Homebuyer demand for mortgages consistent and resilient in April. Black Knight’s monthly Originations Market Monitor showed rates on 30-year fixed-rate mortgages rising more than six-tenths of a percentage point in April, to 5.42 percent. The result was a 49.5 percent month-over-month drop in rate locks for rate-and-term refinancings, in which homeowners are typically seeking a better rate.
Read more here. - Oil under pressure as Saudis drop prices and China's exports slump. Saudi Arabian oil company Saudi Aramco said Sunday that it reduced oil prices of all types of crude for Europe, Asia, Europe, and the Mediterranean for June. The biggest cuts were seen in the Mediterranean. U.S. prices were unchanged. Meanwhile, COVID lockdowns in China hit supply chains and closed factories. Read more here.
- Rivian tumbles after Ford sells shares at a discount. Ford Motor Co. is selling 8 million of its shares in the electric-pickup maker at a discount. Ford’s sale is being handled by Goldman Sachs Group Inc. The U.S. manufacturer owns about 12% of the electric vehicle hopeful, or just under 102 million shares after taking a stake prior to Rivian going public last year.
WHAT TO WATCH
- Bitcoin breaches key support level. It broke through $34,450 and did not hold key support and now has upped chances for a large drop. Bitcoin has largely followed the negative trend in equity markets as investors across asset classes respond to signals of further interest rate rises. It shows no counter-trend signals at this time, but the equity market does look poised to rebound next week, which might carry over to cryptocurrencies. Read more here.
- Philip Morris could announce the purchase of Swedish Match this week. The deal could be valued at about $15 billion or more. Philip Morris has been ramping up its smoke-free offerings in a bid to counteract steadily declining cigarette sales. Acquiring Swedish Match would move Philip Morris closer to a smoke-free future. In 2021, smoke-free products comprised 65.5% of Swedish Match’s total revenue.
- The housing market is still hot, but there are signs of a shift. House prices are up 20% year-over-year. Inventory is near record lows. However, mortgage rates are up sharply (from 3% six months ago to 5.64% today), and we are starting to see an increase in inventory levels. And some investors appear to be pulling back due to higher cap rates, and some builders are reporting buyers actually want to negotiate on price. Read more here.
- Long-term depression would lead to more wealth disparity in crypto. If there is a long-term downturn similar to a depression due to the Fed's mismanagement, the only people who have a chance of creating opportunities are the people who are already rich. It ain’t looking good in terms of the general economy. Q2 GDP should be down y/y again which would signify a recession. Read more here.
- Defense companies face supply snags as demand for US weapons rises. Boeing, Lockheed Martin, Northrop Grumman, and others are in for a windfall as western governments increase defense spending. But as they ramp up production to meet demand, they have to navigate supply chain disruptions, labor shortages, and rising prices. Raytheon’s chief executive said it’ll be hard to find titanium that’s not from Russia. Source(0:41)
