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“You speak an infinite deal of nothing.” – William Shakespeare
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While Micron reported a wider-than-expected loss and gave mixed guidance after the close last night, commentary from the company suggesting that the semiconductor market bottomed has provided a boost to futures, especially in the tech space, and that has overshadowed any hawkish commentary from Fed Chair Powell.
There’s a decent amount of economic data this morning. GDP was revised much higher coming in at 2.0% versus 1.4% expected. Personal Consumption was stronger than expected (4.2% vs 3.8%), and the GDP Price Index was lower than expected at 4.1% vs 4.2% expected. All these numbers are backward-looking from Q1, though. Timelier was jobless claims, and on both an initial and continuing basis, they came in lower than expected. Initial Claims were especially strong, dropping to 239K versus forecasts for a level of 265K, and that has pushed the yield on the 10-year from 3.74% up to 3.8%.
In Asia overnight, equities were generally flat with a negative bias, although economic data was mostly better than expected. Ironically, Europe is trading with a more positive tone even as economic data in the region hasn’t been particularly market-friendly.
Within the commodities space, one of the only bright spots in an otherwise dark sector had been precious metals, but even this area has started to weaken.
In early May, gold looked like it was on the verge of a breakout, but more hawkish commentary by the Fed and pricing out of rate cuts this year has reversed that positive momentum, and over the last two weeks we’ve seen a downside break of the uptrend off the October lows.
It’s a similar story for platinum which was also trading at 52-week highs in the spring but has since broken down in an even more dramatic way than gold. Right now, it’s on the verge of making a lower low.
Silver traditionally has a connotation of playing the bridesmaid role, but while the commodity has pulled back from its spring highs and traded at a series of short-term lower highs and lows, it is the only one of the three commodities here where the uptrend off the October lows remains intact.
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