METALS SLID
Metal prices have experienced a decline, particularly in gold, which decreased by 0.65% to $2,334 per troy ounce, alongside a strengthening U.S. dollar. This uptick in the greenback is attributed to expectations of fewer interest rate cuts by the Federal Reserve, following hawkish commentary. The market is also optimistic about lower-than-expected inflation figures from last week. The prospect of higher interest rates, if realized, tends to hinder gold prices as it diminishes investor interest in non-interest-bearing assets like gold. Additionally, copper saw a decline of 1.3% to $9,649 per ton, and aluminum dropped by 1.05% to $2,496.5 per ton. Providing further context, the Chinese National Bureau of Statistics reported a notable increase in monthly primary aluminum production in May, growing by 7.2% year-over-year to reach a new peak of 3.65 million tons. Analysts from ING attribute this surge to smelters restarting dormant capacities.
DATA DOMINATES BONDS
The U.S. bond market is demonstrating the increasing significance of economic data over Federal Reserve announcements. Recent events, such as a drop in the consumer price index and positive economic projections, have sparked a strong rally in Treasury bonds. This indicates that investors are placing more emphasis on economic indicators than on the Fed’s guidance. As a result, the bond market is expected to remain volatile as it reacts to incoming data, particularly in light of unexpected economic trends and the potential for a rate cut by the Fed. Investors are showing optimism towards rate cuts later this year, despite some disparities between market expectations and Fed forecasts. The market’s response to data is leading to fluctuations in bond prices, with the long-term outlook remaining uncertain.
CRYPTO FUNDING MIXED
Over the years, cryptocurrency startups have attracted significant venture funding, amounting to approximately $100 billion since the industry’s inception. Recent investment influxes, coinciding with a surge in the value of Bitcoin and other major tokens, have bolstered the sector. However, the outcomes for investors have been varied, with traditional exits proving to be more protracted than expected. Notable exceptions, like Coinbase’s $86 billion direct listing, have been overshadowed by struggling startups such as FTX and BlockFi. The retreat of prominent investors like Tiger Global and Temasek further reflects the caution pervading the industry. After a period of excess in 2021 and 2022, fundraising by crypto startups has tapered off, aligning with a broader decline in fintech venture investments. Although tokens offer the potential for speedy returns, the landscape remains unpredictable. To mitigate uncertainty, some venture capitalists opt for more long-term, venture-style investment strategies. As IPO and M&A activities gather pace, market analysts foresee a positive trajectory for the digital asset sector, contingent on regulatory clarity and market maturity.
INTERNATIONAL NEWS
Australia has recently followed the lead of the U.S. by approving its inaugural Bitcoin exchange-traded fund (ETF) on the Australian Securities Exchange (ASX). The VanEck Bitcoin ETF (VBTC), issued by investment firm VanEck, is scheduled to commence trading on June 20, marking a significant milestone as the ASX’s first spot Bitcoin ETF approval. The decision reflects the mounting interest in Bitcoin investments within Australia and underscores the country’s commitment to providing regulated avenues for such investments. This move is in line with the success of similar ETFs launched in the U.S. and highlights the growing recognition of Bitcoin exposure as a desirable investment choice in the Australian market, as mentioned by VanEck’s CEO for the Asia-Pacific region, Arian Neiron. Neiron emphasized the importance of facilitating access to Bitcoin through regulated and transparent investment vehicles like VBTC, eliminating the need for investors to navigate the intricate technicalities of acquiring, storing, and securing digital assets. Furthermore, the approval of the VBTC ETF comes after the introduction of two other Bitcoin ETFs in Australia, including the Global X 21 Shares Bitcoin ETF (EBTC) launched in April 2022 and the Monochrome Bitcoin ETF (IBTC), which recently began trading on June 4 on the Cboe Australia exchange, the country’s second-largest stock exchange.
KEY EVENTS HAPPENING THIS WEEK
Monday: Speeches from Philadelphia Fed President Patrick Harker and Fed Governor Lisa Cook.
Tuesday: U.S. retail sales, retail sales minus autos, industrial production, and business inventories reports for May, and speeches from Richmond Fed President Tom Barkin, Fed Governor Adriana Kugler, Dallas Fed President Laurie Logan, St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee.
Wednesday: Home builder confidence index report for June.
Thursday: Initial jobless claims for week ending on June 15, U.S. current second quarter account, housing starts and building permits reports for May, and Philadelphia Fed manufacturing survey for June.
Friday: Existing home sales and U.S. leading economic indicators reports for May, and S&P flash U.S. services PMI report for June.
