END OF DAY REPORT JUNE 7th
HIGHLIGHTS- EQUITIES, FUTURES & OPTIONS
US Treasury Secretary Yellen says she sees a path to bringing down inflation while maintaining strong labour market; continue to see economic progress over the next two years in bringing inflation down - CNBC interview
Seeing some signs of easing in labour market.
US debt agreement will support Fed's efforts to bring inflation down.
Revenue needs to be part of the discussion.
Consumer spending has continued to grow in a pretty robust way but we are seeing areas of the economy slowing down. Do think there will be issues with CRE.
Banks are broadly preparing for restructuring and some difficulties going ahead. Level of capital and liquidity in the banking industry is strong. US banks should be able to handle any strain. See strength in diverse US banking system, would not want to see that threatened. Would not be surprised to see some bank consolidation.
Stanley Druckenmiller says the Fed will end up with higher terminal rates; stickier inflation increases probability of hard landing - Bloomberg interview More worried about growth than inflation.
Canadian BoC Rate Decision N/A 4.75% vs. Exp. 4.50% (Prev. 4.50%) Decided to increase the policy interest rate, reflecting our view that monetary policy was not sufficiently restrictive to bring supply and demand back into balance and return inflation sustainably to the 2% target. Governing Council will continue to assess the dynamics of core inflation and the outlook for CPI inflation. In particular, we will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behavior are consistent with achieving the inflation target.
With the surprise hike by the Bank of Canada today it does kind of solidify the priority of the "inflation fight" narrative that the Fed officials have been pedaling the last couple of weeks. Although we could indeed skip in June we are now pricing over a 90% chance that they will do something by the July meeting.
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