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Perspective: Morning Commentary for June 20

By: Arlan Suderman, Chief Commodities Economist

Perspective: Morning Commentary
 
Arlan Suderman
Chief Commodities Economist

 

Guest Commentary by Matt Zeller, Senior Market Intelligence Analyst

 

June 20 – Stock market futures are pointing higher yet again this morning after two straight up days before the holiday break; that would mean fresh highs yet again for the NASDAQ and S&P 500, while the Dow Jones is more subdued in its recovery back towards May record highs. Weak retail sales numbers yesterday and housing data today are giving the equities market more hope of a Fed pivot, despite sticky inflation and persistent Fed language. More Fed officials are speaking at various events later today and their remarks will be closely monitored.  

 

The Swiss National Bank cut their key interest rate by 25 basis points this morning to just 1.25%, a move generally expected by the majority of traders; they see that rate leading to inflation dropping to 1.3% in 2024, 1.1% for 2025, and 1.0% for 2026 after holding steady at 1.4% in May. The central bank only estimates economic growth of 1% for 2024 but that figure is seen rising to 1.5% in 2025 – all of that a much different situation than we see here in the U.S. Switzerland was the first major country to cut rates – back in March – and they have the second-lowest rate of the Group of Ten democracies behind Japan. The Bank of England left rates unchanged today at 5.25%.

 

Jobless Claims for the week ending June 15 came in at 238k, very close to the average trade estimate of 235k, with the previous week revised only slight as well, from 242k to 243k. Continuing claims for the week ending June 8 beat expectations at 1828k (above the 1810k guess), though prior-week continuing claims were revised lower from 1820k to 1813k.

 

Housing Starts for May disappointed at 1277k, below the average 1370k estimate, with April starts revised lower as well from 1360k to 1352k. The May figure was below all but one estimate in a Bloomberg survey, and marked the slowest pace in four years as continued “elevated” interest rates and high prices slow the industry’s momentum. May building permits also fell short of expectations at 1386k, down from the 1450k guess and 1440k in April.

 

Wheat continues to drag the grain markets lower as we re-start the trading week, with the July Chicago wheat contract hitting almost a two-month bottom and the spot MN contract reaching its own 3+ year low. The trade is content with its estimation of Russian wheat damage, after IKAR stabilized their estimate yesterday, and optimistic for further increases in U.S. output as the winter wheat harvest advances and ratings rise. U.S. spring wheat ratings are also benefitting from warm and wet weather. Corn and soy are happy to oblige the bears for that same reason, with more than a week to go until the potential surprises that the June acreage and stocks numbers can provide.

 

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