- US May existing home sales 4.17m vs 4.07m expected
- US International trade balance for April -$55.9B vs -$56.1B estimate
- SpaceX IPO said to be almost four-times oversubscribed
- Anthropic releases Claude Fabel 5, it's "Mythos-class" model.
- Trump: Iran responsible for shooting down Apache Helicopter. Must respond militarily.
- Reports of explosions in Tehran
- Canada April trade balance +$2.72 billion vs $2.57 billion expected
- US May NFIB small business optimism index 95.3 vs 96.0 expected
Markets:
- Gold down $72 to $4256
- WTI crude oil down $2.77 to $88.54
- GBP leads, AUD lags
- US 10-year yields down 2.6 bps to 4.52%
- S&P 500 down 0.3%
It was a tough day to pin down with any one theme.
There is a tug-of-war ongoing in tech and chip names that started positively today and then rapidly soured. At one point the Nasdaq was down 2% and it was looking like a rout. There was some fishing near the bottom and then the release of Claude Mythos (called Fable 5) and indications that the SpaceX IPO are 4x oversubscribed help sentiment. At the same time, the market didn't like the news that Iran had knocked out a US Apache helicopter with drones.
What might have also cushioned the blow was that Trump appeared measured in his response to the helicopter strike, as he said the pilots were ok and indicated he was reluctantly attacking. There was one report of explosions in Tehran but it's not verified that the US struck, or how Iran will see it. There is a more-recent report that the US will launch major strikes. The official line from Iran is that the drone strike wasn't on purpose. That's hard to believe but it also shows they would rather have peace than escalation.
Outside all of that, Israel continued to strike southern Lebanon, which is a real problem in negotiations.
In terms of economic data, it was solid but inconsequential as the market is awaiting this week's CPI report.
In FX, the US dollar was generally weaker but there was a kink as USD/JPY rose as high as 160.44 and remains up 22 pips. That's well into the intervention danger zone and is a precarious spot worth watching, with CPI as a catalyst there as well.
Finally, gold and silver are near the war lows and struggled today despite falling oil prices. That looks like de-risking but it's coming at a bad time for gold and it could be a fast move lower as the 200-day moving average gives way in gold and the war lows are less than $100 away.
