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JUNE 13, 2023

INFLATION DECREASED

U.S. inflation rate dropped to its lowest in two years, giving a glimmer of hope for consumers, as the consumer price index rose by just 0.1% in May, resulting in a 4% annual level – the smallest since March 2021. However, inflation remains much higher than what Fed officials want, and excluding food and energy prices, core inflation increased by 0.4% – remaining up by 5.3% when compared to the same period last year. This means that although some price pressures have eased, consumers are still facing difficulties due to rising prices. Moreover, the increase is attributed to higher housing costs, as well as gas and used-car prices.

BINANCE TRADING CHANGES

Binance has stopped trading for several Binance Coin (BNB) and Ethereum (ETH) token pairs. This latest move follows the Securities and Exchange Commission’s lawsuit against the company last week, but Binance has not connected the announcement with any response to the lawsuit. Trading ended for over a dozen pairs that include BNB and the failed Binance USD (BUSD) stablecoin, with five involving ETH. However, users can still trade these currencies as part of other pairs on the platform. Furthermore, Binance US eliminated over 40 trading pairs using the Tether (USDT) stablecoin, and its banking service providers signaled that they would be pausing fiat currency withdrawals, but crypto services, including staking products, would remain operational.

FED’S MEETING STARTS

The Federal Reserve will begin their two day meeting where they will discuss whether to increase, skip, or pause interest rates. This meeting marks the first of what many are calling the ‘will-they-or-won’t-they’ era. With inflation running high, there is a lot of uncertainty about the future of the economy. As a result, the Bank of America along with many private economists predict that the Fed will decide against raising interest rates at this meeting. This is because they believe that the Fed wants more time to monitor the situation before taking further action. Conversely, Citibank economists believe that the Fed should raise interest rates in June to mitigate the strong current activity, tight labor market, and persistent inflation. Nevertheless, the majority view is with Bank of America, who predict that interest rates will only increase in July, with a target rate of 5.25%-5.5%.

OIL PRICES RISE

Oil prices rebounded after reaching their lowest point in nearly three months as China took measures to improve its second-largest economy. Beijing unexpectedly lowered interest rates and is also thinking about implementing a variety of actions to boost the economy. However, despite these efforts, the recovery of the crude industry remains unimpressive, with slow Chinese trade data and international flights still far below pre-pandemic levels. Furthermore, despite Saudi Arabia’s decision to cut production in July, weak economic conditions in the U.S. and resilient Russian exports continue to put downward pressure on the oil market. As a result, Goldman Sachs reduced its oil price forecast for the third time in six months, citing increasing supplies and declining demand. Nonetheless, there are still positive signs in the market, with U.S. sour crude prices at their strongest point in a year thanks to the nation’s commitment to refill strategic reserves. In addition, if interest rates are not increased, it could potentially support oil consumption and strengthen the market.

INTERNATIONAL NEWS

Germany saw a slight rise in investor confidence in June, suggesting that their current recession could be a mild one. However, experts were still cautious, warning that it may not signal a major recovery. The ZEW economic institute’s sentiment index increased from May to June but remained negative, as it increased from -10.7 points to -8.5 points. ZEW’s president, Achim Wambach, warned that weak export sectors would continue to face challenges from a struggling global economy. Germany’s current recession is not considered “particularly alarming,” however, there remains a possibility of further declines in growth, especially due to China’s weakening economy.

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