LATIN AMERICA: Ecuador: Fiscal Risk and Valuations - Negative

Jul-11 19:04

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(ECUA; Caa3/B3neg/CCC+) "Ecuador Bonds Slump as Jefferies Flags Fiscal, Valuation Risks" - Bbg ECU...

Historical bullets

EURJPY TECHS: Northbound

Jun-11 19:00
  • RES 4: 170.47 76.4% retracement of the Jul 11 - Aug 5 2024 bear leg 
  • RES 3: 167.38 2.0% 10-dma envelope
  • RES 2: 166.69 High Oct 31 2024 and a key resistance        
  • RES 1: 166.29 Intraday high
  • PRICE: 166.14 @ 16:33 BST Jun 11 
  • SUP 1: 163.78 20-day EMA
  • SUP 2: 162.95 50-day EMA 
  • SUP 3: 161.78 Low May 26 
  • SUP 4: 161.09 Low May 23 and key support   

The trend set-up in EURJPY remains bullish and the latest rally reinforces current conditions. The cross has breached key resistance at 165.21, the May 13 high, and traded to a fresh cycle high today. This confirms a resumption of the uptrend and opens 166.69 next, the Oct 31 2024 high and a key resistance. Key short-term support lies at 161.09, the May 23 low, where a break is required to highlight a stronger reversal. First support lies at 163.78, the 20-day EMA.    

US INFLATION: Volatile Airfares, Portfolio Mgmt Keep Wide Range Of PCE Ests

Jun-11 18:55

There doesn't appear to be much more clarity on PCE estimates after today's CPI report, with a wide range of expectations. CPI looks to have lowered those at least somewhat, but there appears to be a wide range of opinion for PPI inputs into PCE due tomorrow, especially the volatile ones. Recall that eight pre-CPI estimates for core PCE saw a median 0.22%/ average 0.24% M/M for May. 

  • TD's initial estimate of core PCE is for 0.16% M/M (0.12% headline).
  • Goldman now sees 0.18% core PCE (was 0.23% pre-CPI).
  • Nomura now looks for 0.348%, down only slightly from their pre-CPI estimate of 0.367%. They note among other PCE-relevant factors: newspapers and magazines and prescription drug prices were strong in CPI and have a larger weight in core PCE, in addition to solid food service inflation which is in the core PCE price index but not CPI (as MNI noted earlier today).
  • As Nomura points out, the main area to watch for PCE inputs of PPI - apart from domestic airfares which look to have increased vs a -ve reading in CPI -  is portfolio management and investment advice "(which are roughly correlated with stock prices) declined sharply in April, pushing down monthly core PCE inflation by more than 10bp. However, a sharp rebound in stock prices likely pushed up that component by 4.4% m-o-m in May, after it dropped by 6.6% in April."

US STOCKS: Late Equities Roundup: Support Wanes Late

Jun-11 18:48
  • Support for stocks waned in late Wednesday trade, no obvious headline driver as major indexes traded lower. Treasury futures did extend late session highs of 110-23 (+16.5), however, through initial technical resistance (110-19+/20+ 50-day EMA / Jun 11 High).
  • Stocks had quickly pared post-CPI data highs amid cautious optimism after several US/China trade related headlines regarding rare earth supply chains rather than tariffs aired this morning. Currently, the DJIA trades up 54.44 points (0.13%) at 43046.38, S&P E-Minis down 12 points (-0.2%) at 6057.75, Nasdaq down 71.7 points (-0.4%) at 19766.81.
  • Energy and Health Care sectors outperforming in late trade, while Materials, Consumer Staples and Communication Services sectors continued to underperform.
  • Leading gainers included: GE Vernova +3.11%, Broadcom +2.94%, Palantir Technologies +2.70% and First Solar +2.45% while CVS Health +2.05%, Insulet +1.40%, McKesson +1.32% and UnitedHealth Group +1.26%.
  • Laggers included Intel Corp -6.77%, Nucor Corp -6.18%, ON Semiconductor -4.48% and Skyworks Solutions -3.08% while Delta Air Lines -4.90%, United Airlines -4.86% and Lockheed Martin -4.57%. Separately, Old Dominion Freight Line -3.38%, Ross Stores -3.23% and Best Buy Co -3.14%.