US stock futures remain steady as traders await critical US jobs data, which may solidify predictions on Federal Reserve's policy easing. Global market trends, central bank activities, and key corporate developments are highlighted in this newsletter.
Market Overview
US Stock Futures Steady Ahead of Jobs Data
US stock futures are flatlining as traders await the release of US jobs data later today, which is expected to provide clues on the timing of Federal Reserve's policy easing. The dollar remains unchanged, while treasury yields are edging higher. The May employment report is anticipated to show that employers added 180,000 jobs, with average hourly earnings rising by 3.9% over the past year. This data could reinforce expectations of a gradual cooling in the labor market, despite a potential rebound in hiring from April.
Interest Rate Speculations
Growing Optimism Over Fed Rate Cuts
Rate-cut expectations have surged, spurred by weaker-than-expected US economic data and recent policy easing by the Bank of Canada and the European Central Bank. Swap markets are now pricing in a full Fed rate cut by November, with a high likelihood of one occurring in September. Major banks like JPMorgan and Citigroup predict the Fed may start easing next month. This optimism has led global government bonds to experience their longest rising streak since November, with potential to continue the best run since May 2022. However, Bank of America warns that Fed easing could signal economic trouble, increasing the risk of a hard landing if market confidence in lower rates grows.
Global Central Banks and Commodities
China's Gold Purchasing Spree Ends
China’s central bank did not buy any gold last month, ending an 18-month purchasing spree that contributed to gold reaching record highs. Since November 2022, China had been significantly increasing its gold reserves, leading a trend among global central banks amid rising geopolitical tensions. This cessation raises concerns for gold bulls about potential shifts in demand, potentially making the precious metal vulnerable.
Commercial Property Concerns
Distress in Multifamily Real Estate
While much focus has been on the US office market, multifamily buildings constitute the largest share of potentially distressed properties, with over $56 billion worth of real estate at financial risk. The spike in interest rates over the past two years has significantly reduced property values, affecting primarily personal investors.
Key Corporate Developments
GameStop Speculation and Major Corporate Moves
GameStop Speculation: Meme stock enthusiasts may experience volatility as Keith Gill, known for driving the GameStop mania in 2021, returns to YouTube.
Saudi Aramco Sale: Saudi Arabia is poised to earn $11.2 billion from the sale of Aramco.
Trump Tax Cut Renewal: Wall Street supports the renewal of Trump’s tax cuts, which could cost $4.6 trillion.
UK Tech Mogul's Legal Victory: UK tech mogul Mike Lynch defeats HP in a US fraud case.
Apple's New App: Apple plans to launch a new passwords app, challenging 1Password and LastPass.
Noteworthy Headlines
Additional Insights
US Jobs Data Impact: The US employment report for May is crucial for predicting Federal Reserve's policy decisions.
Goldman Sachs and Citi Predictions: These banks are among the few forecasting imminent Fed easing.
Bonds Rally: Global government bonds are on track for their longest rising streak since November.
Commercial Property Risks: Multifamily real estate faces significant financial distress risks.
Corporate Movements: GameStop's potential volatility, Aramco’s sale, and Apple's new app are key corporate highlights.
Stay informed with our market insights and the latest economic and corporate news shaping the financial landscape.