FED: Sen Cruz: "Robust Discussion" On Eliminating Interest On Fed Reserves
Jun-05 18:48
Senator Ted Cruz said today on CNBC (link to video: https://www.cnbc.com/video/2025/06/05/sen-ted-cr...
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US OUTLOOK/OPINION: Macro Since Last FOMC: Growth - Confidence Slumps [2/2]
May-06 18:44
- This relative resilience in the hard data, which still doesn’t yet reflect the escalation in US trade policy in April, is in firm contrast to soft data.
- The Conference Board reported consumer confidence fell for a fifth consecutive month in April to its lowest since May 2020, although its expectations component was even weaker at its lowest since Oct 2011. After a 12.5pt decline to 54.4, expectations are "well below the threshold of 80 that usually signals a recession ahead" per the Conf. Board press release. This came as "expectations about future income prospects turned clearly negative for the first time in five years".
- These findings are echoed in the University of Michigan consumer survey although it’s flash/final readings suggest the partial backtracking on reciprocal tariffs on Apr 9 after market turmoil following Apr 2 “Liberation Day” announcements prevented an even worse reading.
- Specifically, consumer sentiment fell from 57.0 in March to 52.2 as opposed to 50.8 in the preliminary reading (which had been collected Mar 25-Apr 8), although that’s still the lowest since mid-2022 and below any month for sentiment through 2008-09. Within the survey, unemployment expectations for twelve months out have seen two months with an index close to lows seen in 2008/09 (lows here being higher unemployment, and specifically the pace of increases rather than level of unemployment).
US OUTLOOK/OPINION: Macro Since Last FOMC: Growth - Solid Domestic Demand [1/2]
May-06 18:42
- Real GDP growth was technically negative in Q1 although not as bad as it could have been amidst particularly wide uncertainty in tracking estimates, not least owing to a surge in monetary gold imports that show in merchandise trade data but not national accounts.
- Real GDP fell -0.3% annualized, close to a consensus of -0.2% but one that hadn’t fully adjusted to a surge in consumer goods imports in advance March data just the day beforehand. A median of 26 analyst estimates updated the day prior expected -0.8% whilst the Atlanta Fed’s GDPNow gold-adjusted estimate was -1.5%.
- That clearly marked a sharp slowdown from the 2.45% in Q4 and 3.1% in Q3. However, hiding beneath some significant crosscurrents from net trade and inventories, private domestic demand was surprisingly robust. At 3.0% in Q1, it maintained the 2.95% in Q4 or 3.0% averaged in 2024, thanks to a surge in non-residential investment plus also firmer than expected personal consumption. Of course, there remain significant question marks over the extent to which it’s been boosted by tariff front-running.
- March's Personal Income and Outlays report showed a strong, partly tariff-related, pickup in real consumption in March (0.7% M/M after 0.1% in Feb and -0.4% M/M in Jan) that couldn't offset a weaker quarter as a whole.
- That said, personal income dynamics were fairly robust at quarter-end, suggesting that despite collapsing sentiment, there is still scope for consumer demand to remain underpinned heading into Q2.
- The least we can say is that if there is a recession looming, it did not start in March based on these data.
COMMODITIES: Crude Rebounds Amid Mid-East Tensions, Gold Recovers
May-06 18:32
- Crude has rebounded back to levels seen late last week amidst signs of rising tensions in the Middle East, while the market continues to digest oversupply risks after OPEC+ decided on a large output hike for June.
- WTI June 25 is up by 3.6% at $59.2/bbl.
- OPEC+ agreed to increase output by 411k b/d in June, following a similar rise in May.
- A medium-term bearish trend in WTI futures remains intact and short-term gains are considered corrective.
- Attention is on $54.67, the Apr 9 low and a bear trigger. Resistance to watch is $64.13, the 50-day EMA.
- Meanwhile, gold has rallied by a further 2.5% today to $3,417/oz, taking total gains this week to over 5%.
- The move comes amid a further decline in the dollar, which will have provided some support to the price of gold, along with continued haven demand stemming from ongoing tariff and geopolitical uncertainty.
- The rally in gold this week suggests that the correction between Apr 22 - May 1 is over. A continuation higher would refocus attention on key resistance and the bull trigger at $3,500.1, the Apr 22 all-time high. Clearance of this level would confirm a resumption of the primary uptrend.
- Elsewhere, copper has also rallied by a further 1.3% to $476/lb, taking total gains this week to almost 2%.
- For copper, key short-term resistance has been defined at $498.25, the Apr 23 high. A resumption of weakness would expose $436.00, the Apr 10 low.
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