US STOCKS: Tread Water As Market Digests New Tariffs
The ESU5 overnight range was 6262.50 - 6289.00, Asia is currently trading around 6265. US Stocks traded sideways overnight as the market tries to digest the tariffs announced and the ones to still be announced. This morning has seen US futures open a little lower, ESU5 -0.10%, NQU5 -0.10%. Stocks have had an unbelievable run forcing an underweight market to get back in. In the short term it looks a little stretched now and the shorts have been carried out making positioning less of an issue. Could these tariffs and the threat it poses to global growth be the catalyst now for some reversion back to the mean ? Support seen back towards the 6000 area.
- Barchart on X: “S&P 500 has traded above its upper Bollinger Band for the past 8 days. The last time it did that was in July 2024 and then SPY promptly corrected by 10%.”
- Lance Roberts on X: “Good chart of asset class returns. However, what happened in the first half, doesn't mean that is what will happen in the second half.” See Graph Below.
- Bloomberg - “The Worst Is Past' Must Be the Message This Earnings Season. Wall Street expects very little from S&P 500 companies this earnings season, forecasting just 2% growth and a margin dip for 2Q. While it's a very low bar -- indeed, the weakest growth in two years -- the market may still need confirmation that profit momentum will only get better in the second half. Our guidance model suggests earnings should easily clear consensus, reinforcing the case for a recovery narrative to take hold."
- Short-term this is starting to look a little overdone. Could the risks to global growth from the new tariffs give the market some pause ? First support is back towards the 6000 area.
Fig 1: 1H25 Asset Returns & Drawdowns
Source: MNI/@LanceRoberts/J.P.Morgan
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FOREX: CFTC Data Mixed, JPY Leveraged & Asset Manager Shifts Offset Each Other
CFTC positioning shifts were mixed across the major currencies in the week ending June 3, see the table below. For yen, we saw leveraged contracts rise, but this was offset by a contraction in asset manager positioning in the currency. Still, asset managers remain long from an outright standpoint, so too do leveraged players.
- For EUR we saw little shift in the leveraged space (with an outright short still present), while asset managers added modestly to existing longs.
- GBP small net purchases for both asset managers and leveraged players. Assets managers are almost back to a net long position.
- AUD and NZD saw leveraged names add modestly to existing shorts. There was little net change in asset manager positioning for these currencies.
Table 1: Weekly Change & Outright Positioning Per Major Currency - CFTC
| Leveraged Contracts | Asset manager Contracts | |||
| Weekly Change | Outright Position | Weekly Change | Outright Position | |
| JPY | 4728 | 23315 | -4945 | 109920 |
| EUR | 684 | -15355 | 5393 | 344880 |
| GBP | 1257 | 46475 | 1618 | -1283 |
| AUD | -2371 | -19493 | -491 | -32356 |
| NZD | -1235 | -8234 | 639 | -18407 |
| CAD | -888 | -43405 | 2481 | -67496 |
| CHF | 1611 | 2969 | -2167 | -31191 |
| MXN | -150 | -9601 | 3408 | 37251 |
Source: Bloomberg Finance L.P. / MNI
GOLD: Positive US Jobs & Trade News Weigh On Bullion
Gold prices fell on Friday after the better-than-expected US payroll data, which showed the labour market holding up in the face of elevated trade uncertainty and reducing the chance of a near-term Fed rate cut. They rose to a high of $3375.65/oz and then fell to a low of $3307.18 after the US release. It finished down 1.3% to $3310.42 as the stronger US dollar added pressure (USD BBDXY +0.3%) but was still up 0.6% on the week. Bullion is currently lower again at around $3310.7.
- The moderate increase in gold over last week is consistent with the bullish theme remaining intact. Moving average studies remain in a bull-mode position. Initial resistance is at $3403.5, 5 June high, while initial support is at $3313.2, 20-day EMA.
- China increased its gold reserves again in May, the seventh consecutive monthly build, according to Bloomberg. The PBoC added 60k troy ounces.
- US-China trade talks are scheduled to take place in London on Monday and progress on an agreement is likely to be negative for gold as it would reduce uncertainty and the negative risks to global growth.
- Silver rose 0.9% to $35.98 on Friday to be up 9.1% last week and is currently around $36.02. These gains reinforce the impulsive bull wave. It continues to trade above the key bull trigger at $34.903.
- Equities rallied with the S&P up 1.0% and Euro stoxx +0.4%. The S&P e-mini is little changed so far in Monday’s APAC session. Oil prices rose sharply on Friday with Brent +2.0% to $66.65/bbl. Copper fell 2% and iron ore is lower at around $95/t.
US TSYS: Futures Track Sideways, Tsy Yields Little Changed
US Tsy futures have started Monday's session tracking sideways. We were last at 109.31, +02, for the September 10yr future. Cash Tsy yields have opened up a little mixed, with back end slightly firmer in yield terms. The 10yr yield was last near 4.51%. We have seen some softness in the front end, the 2yr last around 4.02%, off close to 2bps versus end Friday levels.
- The US 2/10s Tsy curve was last around +49bps, slightly stepper versus end Friday levels, but still well within recent ranges.
- Weekend news flow was focused on US protests in major cities, along with planned US-China trade talks, which resume in London today. US equity futures were around flat in latest dealings.
- The main data focus will be on Wednesday's CPI print.
