Game Ahead: 5/29/23

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Nvidia's earnings report made the NASDAQ go up. The share price for Nvidia closed 24.73% higher. The share price was $379.80. This added ~US$200 billion to the company's market capitalisation.

Nvidia earnings made some equity markets ignore bad news about the "UNITED STATES AAA RATING MAY BE CUT BY FITCH". However, bond bulls couldn't avoid the US 2-year Treasury Note yield increasing for the tenth time in a row.

US yields went up because of strong economic data and more serious talk from the Fed. People who bet on rates now think there's a good chance of a rate hike in June. They think there's a 50/50 chance the Fed will raise rates by 25 basis points then.

US yields going up and people being cautious about risk helped the US dollar a lot. However, the Aussie dollar didn't do so well and dropped below .6500c for the first time in seven months.

The upcoming week will have significant events like Australian CPI Monthly, China's PMIs, and Europe's inflation data. There's also a vital jobs report in the US to watch out for. Don't forget to stay updated on the US debt ceiling negotiations too.

On Wednesday, May 31, there will be an event at 11:30 am AEST.

This month, the RBA increased the cash rate by 25bp to 3.85% and surprised the market. The RBA said that there could be another rate increase in June. The decision depends on the development of the economy and inflation.

The wages and employment data are not as strong as predicted. Retail sales in April were also not great. Now, people are waiting for the Monthly CPI release to see what it says.

The CPI indicator went up by 6.3% in March. This is less than the increase in February. The indicator has been going down for three months now. At its highest, it was up by 8.4% in December. The decrease in March is because housing and transport prices grew more slowly.

The CPI is set to go up by 6.3% in April. It's the same as March. If the number is less than expected, the RBA might not do anything in June.

. On Thursday, June 1 at 7.00 pm AEST there will be an event.

Euro Area inflation went up in April to 7%, after a decrease for five months. This is higher than the March inflation rate of 6.9%. The increase happened because of the increase in energy and service costs. But there was a decrease in food price growth. Core inflation also decreased, going from 5.7% in March to 5.6%.

By May, the inflation might drop to 6.2% from 7%. The decrease is thought to be caused by the decline of energy bills, fuel costs, and food prices. Core inflation is also expected to fall from 5.6% to 5.4%.

The inflation is still higher than the 2% target of the ECB. The deposit rate has been increased by 3.75%. The market thinks that there will be two more rate hikes of 25 basis points each. If it happens, the final rate will be 3.75%.

On Friday, June 2, at 10:30 PM AEST, something happened that we want to talk about.

Europe and China might experience a slowdown while the US economy remains strong. Several members of the Fed, like Bullard, Mester, Kashkari, Logan, and Bowman, have been sounding hawkish. This means that there is a higher likelihood that the Fed will increase rates at the FOMC meeting in June.

The Non-Farm payrolls report is very important. People expect payrolls to go up by 180k in May. This is less than April's 253k. Unemployment rate may go up to 3.5%. It was 3.4% in April. The participation rate should stay the same at 62.6%.

Hourly pay is going up by 0.3% per hour. The yearly rate will go down from 4.4% to 4.3% in April.

Times will be reported in AEST (UTC+10), unless specified otherwise.