Market News Report:
📈 Powell maintained his cautious tone while indicating that the recent inflation numbers point towards a return to the Fed’s goal inflation rate of 2%.
🗣️ Powell stated, “In the second quarter, actually, we did make some more progress” in controlling inflation during a gathering at the Washington Economic Club. “We’ve had three better readings, and if you average them, that’s a pretty good place.”
He also said that he does not believe there will be a significant downturn in the US economy or a formal recession.
📊 Realted Markets:
The market response has been positive, the SP500 continues to squeeze its new highs of 5700 points, but without surpassing them for the time being. Nasdaq100 experienced some volatility yesterday, moving more than 1.4% during the session, possibly motivated by the news of Donald Trump’s vice-presidential nomination and right-hand man, JD Vance, who is closely linked to the technology sector, which we will discuss in more detail below.
The dollar remains relatively weak, the DXY is at the early June supports around 104 points, rising to 104.25 at the moment.
US bonds undoubtedly discounting the impending rate cut. The 2 year bond yield has fallen to 4.4%, continuing the slide initiated by last week’s data and comments.
🇺🇸 Trump announced the selection of Ohio Senator JD Vance as his Vice Presidential pick on his Truth Social platform. The selection of the younger and more hardline Vance aims to energize Trump’s base, but Democrats will attack their policies as economically damaging in key swing states. He aligns closely with Trump on issues like trade, immigration and China, and shares his populist and protectionist views.
🇺🇸 President Biden labeled JD Vance as a “clone” of Donald Trump, saying he sees no difference between their positions. VP Kamala Harris would debate Vance, as Biden’s campaign has accepted a CBS News proposal while Trump wants Fox News to host.Democrats want to define Vance on his first day as Trump’s running mate by questioning his independence and casting him as an extreme loyalist who would harm middle-class Americans.
🇺🇸 Major Silicon Valley investors hailed the pick. Elon Musk calling it a “great choice” that “resounds with victory.” Vance has ties to Peter Thiel’s venture firm Founders Fund and worked briefly at Thiel-backed Mithril Capital, gaining tech backing. As a venture capitalist, Vance understands tech and innovation which some see as a positive, though he’s criticized big tech’s influence. However, his criticism echoes startup complaints about power of giants like Facebook and supports some antitrust enforcement.
🇨🇳 After statistics on Monday revealed that China’s GDP growth had unexpectedly fallen to the lowest rate in five quarters, investors’ fears about the country’s economy increased. According to recent study from UBS Group, additional tariffs of 60% on all Chinese exports to the US would more than half China’s annual growth rate, highlighting the risks for Beijing if US President Donald Trump wins reelection.
🇨🇳 China: New research from UBS Group AG shows that if Donald Trump imposed a flat 60%, as is being speculated if He becomes president, tariff on all Chinese exports to the US, it would significantly impact China’s economy. A 60% tariff is estimated to cut China’s annual GDP growth rate by 2.5 percentage points in the following year. UBS forecasts China’s growth would slow to 3% in both 2026 and 2027 even with stimulus, compared to current projections of 4.6% and 4.2% respectively.
📊 Related Markets:
Chinese stock markets continue to show weakness. The Shanghai SSE composite index is still below 3000 points. The Hang Seng HSI index, which had a spectacular rise at the end of last week, has lost more than 3.5% since then and is back to 17,750 points.
