INFLATION EASED
As stated by the Labor Department, the monthly inflation rate decreased in June, offering potential leeway for the Federal Reserve to reduce interest rates later this year. The consumer price index (CPI), which tracks the cost of goods and services across the U.S. economy, fell by 0.1% from May, bringing the 12-month rate to 3%, its lowest level in over three years. In May, the all-items index rate remained flat at 3.3%, and excluding the unpredictable prices of food and energy, the core CPI saw a modest increase of 0.1% monthly and 3.3% annually, both slightly below forecasts. Furthermore, the annual rise in the core rate was the smallest since April 2021, and there was a notable 3.8% drop in gasoline prices – this played a key role in curbing inflation for the month, counterbalancing 0.2% increases in both food and shelter costs. Moreover, given that housing-related expenses comprise about one-third of the CPI’s weighting and are typically a persistent inflation driver, their slower rate of increase is a positive sign.
STILL STRONG
The Labor Department has also reported that by the end of last week, fewer Americans filed for unemployment benefits. Jobless claims for the week ending July 6 dropped by 17,000 to 222,000 from 239,000 the previous week, and the total number of people collecting unemployment benefits also declined for the first time in ten weeks. In addition, it is worth remarking that for the week of June 29, about 1.85 million Americans were on unemployment benefits, which is around 4,000 fewer than the week before. Thus, there seems to be a continuous downward trend on unemployment claims. Let’s remember that these weekly unemployment claims are typically viewed as a significant indicator of layoffs, and as for this latest report it seems like the labor market remains sturdy despite high interest rates. Moreover, the four-week average of claims, which helps to even out some of the volatility from week to week, also decreased by 5,250 to 233,500.
INVENTORY DROP BOOST
Oil prices have been climbing as recent data revealed a reduction in U.S. oil inventories coupled with an upward revision in global economic growth estimates by OPEC, according analysts from Swissquote Bank. The price of Brent crude rose by 0.5% to reach $85.53 per barrel, while WTI also saw a 0.5% increase, hitting $82.50 per barrel. This surge in crude prices follows the U.S. Energy Information Administration’s latest report, which indicated a significant 3.4 million barrel decline in U.S. oil inventories over the past week. Additionally, OPEC adjusted its global economic growth forecast to 2.9% from a previous 2.8%, a factor that also contributed to the upward momentum in oil prices, as highlighted by the Swissquote Bank. Moreover, as a result of the latest U.S. consumer price index inflation data oil prices could bolster further, therefore, there may be continued volatility and potential gains in the oil market.
PUSH FOR REGULATION
The head of the U.S. Commodity Futures Trading Commission (CFTC), Rostin Behnam, is pushing for his agency to oversee Bitcoin and Ethereum, the top cryptocurrencies, by classifying them as commodities. Last Tuesday, Behnam testified before the U.S. Senate Committee, referencing a recent court ruling in Illinois that found Bitcoin and Ethereum to be commodities under the Commodity Exchange Act. This ruling came from a case involving a $120 million Ponzi scheme and also applied this classification to cryptocurrencies Olympus (OHM) and KlimaDAO (KLIMA). Behnam cited a 2022 report from the Financial Stability Oversight Council that highlighted regulatory gaps in the oversight of digital assets that are not considered securities. He argued that the CFTC should play a bigger role in regulating these digital commodities to protect investors and the financial market. Moreover, Behnam stressed the urgent need for federal legislation to establish a regulatory framework, and he proposed five legislative priorities for the CFTC: crafting rules that address cryptocurrency risks, creating a permanent funding model, requiring detailed disclosures from registrants, and improving the CFTC’s Know Your Customer (KYC) and Anti-Money Laundering (AML) capabilities.
MASSIVE GROWTH TARGETED
The largest bank in the U.S., JPMorgan Chase, has set its sights on growing even larger as it has been revealed that the bank aims to capture 15% of the nation’s consumer deposits – up from 11.3% from June 2023 – and expand its credit card market share to account for 20% of national spending, currently at 17%. Marianne Lake, CEO of Consumer and Community Banking, emphasized that gaining market share is a gradual but powerful process and highlighted strategies focused on long-term growth. As of the first quarter, JPMorgan held $1.1 trillion in U.S. retail deposits and $1.96 trillion overall, edging out its nearest competitor, Bank of America, and to sustain its leading position, the bank is investing heavily in advanced technologies such as artificial intelligence and streamlined payment systems. Moreover, i is worth noting that last year, JPMorgan acquired the failed First Republic Bank, thereby adding $92 billion in deposits. This move was allowed under federal rules that permit acquisitions of failed banks even for firms holding more than 10% of U.S. deposits. Furthermore it has been stated that while there are hopes for fewer bank failures, JPMorgan is still prepared to intervene again if necessary.
