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JUNE 14, 2023

WHOLESALE INFLATION SLOWS

According to the latest data from the Bureau of Labor Statistics, wholesale inflation has once again shown a slowdown, dropping below pre-pandemic levels, as the producer price index (PPI), which measures price changes at the producer level, indicated a significant decline in annual price increases. Over the 12 months leading up to May, the PPI increased by only 1.1%, marking the 11th consecutive month of deceleration in inflation. Furthermore, on a monthly basis, prices fell by 0.3%. This outcome was lower than what investors anticipated, with expectations of a 1.5% increase for the 12-month period and a minor 0.1% decline on a monthly basis.

FED’S EXPECTED OUTCOME

The Federal Reserve is expected to keep its key lending rate unchanged as its two-day policy meeting concludes later today. Investors continue to assume that the Fed will not increase the rate at this meeting due to a softer-than-expected inflation reading for May. Fed’s Chairman, Jerome Powell, has previously explained that they need to assess the effects of previous policies before making any decisions about additional steps. The Fed’s decision will be released at 1:00 PM CST, followed by a press conference given by Powell 30 minutes later.

MORTGAGE RATES FALL

Mortgage rates in the U.S. fell for the second time in a row, leading to a 7.2% increase in mortgage applications from potential homeowners compared to the previous week. However, despite this increase, rates are still more than twice as high as they were before the pandemic. Applications to refinance a home loan dropped by 41% from the same period last year, while applications for buying a home rose by 8%.

BINANCE AND SEC NEGOTIATIONS

The Securities and Exchange Commission (SEC) and Binance, are close to reaching an agreement on the recent request made by the SEC to freeze assets held by Binance’s U.S. entities, as they have until Thursday to conclude negotiations. The SEC has proposed freezing the assets of Binance U.S. affiliates, BAM Trading Services and BAM Management, during the ongoing lawsuit that accuses Binance and its founder, Changpeng Zhao, to have illegally combined customer assets, misled customers, and violated registration laws. In response, Binance has argued that freezing its assets would negatively impact its U.S. businesses and harm crypto market participants globally, as the company highlighted the important role it plays in serving millions of users in over 100 countries, especially in providing alternate banking services to unbanked, underbanked, or those who reside in countries with unstable currencies. Binance.US, has been given until Wednesday morning to provide a list of “ordinary course expenses”.

OIL CONTINUES RISING

Oil prices have risen for the second consecutive day, with Brent crude hitting over $75 a barrel while West Texas Intermediate reached $70, thanks to China’s recently increased crude import quotas. This news improved the outlook for consumption in the world’s second-largest economy and followed Beijing’s announcement of potential measures to revive its economic recovery. In addition, the U.S. plan to purchase 12 million barrels of oil to refill emergency reserves has also contributed to the positive market outlook. Nonetheless, despite the current optimistic outlook for oil prices, the International Energy Agency predicts a tapering off in global oil use over the next few years due to high prices and the transition away from fossil fuels.

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