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BlogsEND OF DAY REPORT JUNE 2nd

Citi (C) CEO Fraser says economic outlook is more negative in Europe than in the US; worried about competitiveness in Europe There's a lot of growth and potential in India. China economy is more sluggish than expected. Felt benefit of being in strong position during turmoil. Handful of banks in idiosyncratic situation and the rest are sound. FDIC replenishment is manageable. Hopes regulatory response is thoughtful and targetedECB's Lagarde says rate hikes are being transmitted forcefully to financing conditions for firms and households The full effects of our monetary policy measures are starting to materialise. Effects of monetary policy tightening on real activity and inflation can be expected to strengthen in the coming years. Price pressures remain strong. No clear evidence that underlying inflation has peaked.

Darren Krett

Friday 2 June 2023

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ECB's Lagarde says rate hikes are being transmitted forcefully to financing conditions for firms and households The full effects of our monetary policy measures are starting to materialise. Effects of monetary policy tightening on real activity and inflation can be expected to strengthen in the coming years. Price pressures remain strong. No clear evidence that underlying inflation has peaked. facebookECB's Lagarde says rate hikes are being transmitted forcefully to financing conditions for firms and households The full effects of our monetary policy measures are starting to materialise. Effects of monetary policy tightening on real activity and inflation can be expected to strengthen in the coming years. Price pressures remain strong. No clear evidence that underlying inflation has peaked. twitterECB's Lagarde says rate hikes are being transmitted forcefully to financing conditions for firms and households The full effects of our monetary policy measures are starting to materialise. Effects of monetary policy tightening on real activity and inflation can be expected to strengthen in the coming years. Price pressures remain strong. No clear evidence that underlying inflation has peaked. linkedin

END OF DAY REPORT JUNE 2nd

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closing report

HIGHLIGHTS

Saudi Energy Minister Abdulaziz decision to ban various news sources from OPEC meeting stemmed from his perception that his market view was not being given a fair airing, he believed that was contributing to falling oil prices, according to FT sources

White House says debt ceiling bill may be signed as soon as Saturday

Goldman Sachs continue to expect a pause at the June FOMC meeting, reflecting the mixed household survey, the softness in hours worked, and the decline in average hourly earnings growth

Iraq minister says OPEC+ wants to maintain stability in the oil market; OPEC+ has proven it reads the market in the right way

Fitch says despite debt limit agreement US 'AAA' rating remains on negative watch Although the resolution of the US debt limit impasse allows the government to meet its obligations, 
Fitch Ratings maintains the Rating Watch Negative. Consider the full implications of the most recent brinkmanship episode and the outlook for medium-term fiscal and debt trajectories.

WSJ Timiraos, "Friday’s jobs report does little to clarify the Federal Reserve’s debate over whether to hold rates steady this month. But it underscores the prospect that, if officials do so, they could favor raising rates later this summer." A continuing strong labour market could lead officials to hike rates higher than anticipated. Officials who already favoured a rate hike in June are likely to be more convinced of the need. But some who have argued that the Fed should slow down hikes to study the effects of past moves, could still lean toward skipping a June hike and moving rates up in July if economic activity remains solid.

SUMMARY

Stocks skyrocketed Friday after the solid +339k (exp. +190k) NFP additions. The Treasury curve bear-flattened, while June Fed pricing was little changed (c. 30% implied hike probability) this is mostly down to this skip idea being bandied around this week because the chances of another hike when including the July meeting increased by 14% to an 80% chance that the Fed will raise rates “one more time”. With the NFP data, although the headline number once again beat expectations the soft earnings growth and the spike in the unemployment rate serving a dovish offset to the headline figure, hike pricing ramped further out the curve, with the 2s10s spread reaching its most inverted levels post-SVB. The Dollar surged on the improved economic outlook and rate differentials. But, that didn't stop the commodity rally, with the improved demand outlook post-NFP accentuated by the Bloomberg reports that China is mulling stimulus for the property sector. For oil, note late Reuters source reports that OPEC+ is mulling a 1mln BPD cut for its confab on Sunday, underpinning the strength.

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