Market 07/01: ISM Manufacturing PMI continues to contract

ISM Manufacturing PMI continues to contract for the 3rd consecutive month

• ISM Manufacturing PMI virtually unchanged at 48.5 (previous month: 48.7; estimate: 49.1), continuing in contraction territory (below 50) for the 3rd consecutive month.

  • Meanwhile, S&P Global Manufacturing PMI rises to 51.6 (from 51.3 previous month)

Of which, PMI (ISM) components:

• New Orders rise to 49.3

• Prices Paid fall to 52.1

• Employment falls to 49.3, back into contraction territory

New Orders/Inventories Index (typically a leading indicator signaling recovery) rose in June

Statement by New York Fed President: Williams

• Confident that the Fed is on track to achieve the 2% inflation target steadily

Update on French Round 1 Election (06/30): Far-right dominates

French Round 1 Election Results:

• Le Pen's National Rally party (RN): 34.2% of votes

• New Popular Front bloc: 29.1%

• Macron's Alliance: 21.5%.

• Projections show RN and allies winning the most seats in the National Assembly and potential dominance in the final round on 07/07

• 59% of voters turned out (2022: 39%) – making this year the highest voter turnout at this stage since 1986

Market Reaction:

• French 10Y government bond yield falls early morning (Europe time) — narrowing vs German bund yield (yield premium drops ~-7bps).

• CAC 40 index rises nearly +3% as Le Pen's opponents begin strategy to block far-right takeover.

  • However, CAC40 has not yet recovered to levels before Macron called snap election.

Market News: Nvidia faces antitrust charges from France; Oil prices rise on geopolitical risks and weather

• Nvidia prepares to face antitrust charges from France

• Tesla partners with Contact Energy - New Zealand utility - to build massive 100 MW battery storage system worth 163 million NZD

• Merck and Orion convert opevesostat development collaboration agreement - prostate cancer inhibitor - into exclusive license for Merck.

• Merck receives European CHMP approval for pulmonary arterial hypertension PAH drug Winrevair

• Boeing agrees to buy Spirit AeroSystems for over $4 billion, $37.25/share

• Oil prices rise above $82/barrel as traders worry about escalating geopolitical risks in Europe and Middle East as well as storm sweeping through Caribbean.

Key economic events for the week 07/01 - 07/07

1. June ISM Manufacturing PMI - Monday

2. Fed Chair Powell Speech - Tuesday

3. JOLTs Job Openings - Tuesday

4. Fed Meeting Minutes - Wednesday

5. Markets Closed - Thursday

6. June Jobs Report - Friday

• Earnings release schedule this week:

Other news: US construction spending declines - BOJ may not raise rates in July

1. US construction spending in May down -0.1% M/M (previous month: +0.3%; estimate: +0.2%)…

   • — continuing events showing the housing market is quite sluggish as home buying demand cools due to high interest rate environment.

   

2. "Roaring Kitty" discloses ownership of 9,001,000 shares of Chewy, ~6.6% of the company's stake. Stock up 11% after this news.

Gamestop stock also down 7% after this news as investors speculate whether "Roaring Kitty" is now less interested in or not

3. BOJ's Tankan report shows the June sentiment index among the largest companies in the country rose to 13 from 11 in March.

• Japan revises down Q1 GDP due to lower construction orders adjustment,

  • => Weak economic growth may prevent BOJ from raising rates in July as expected