Week in Review: 8-12 July 2024

Financial Markets

Week-on-week, the main stock market indices were positive, with the S&P500 gaining 0.86%, the NASDAQ 100 nearly unchanged (minus 0.3%), while the RUSSEL 2000 was up by 6.3%, hitting an important resistance level.

Gold's price is only slightly higher (+0.8%) and is still around ~2400$/oz. If gold breaks below the 2300$ level, it could fall until ~2150$/oz. Silver dropped 1.4% for the week but is still holding the 30$ level. Silver has some support around 28$ and resistance at 34-35$.

The barrel of WTI was little changed and is staying at ~82$ per barrel. It looks like WTI could continue in the range of 75-85 USD/bbl over the next weeks.

Bitcoin recovered 5.2% and is around 58700$. Bitcoin seems to be on a downward trend with the next support around 52000$.

The relative strength of the US dollar (DXY) is slightly down (-0.8%), and has been stable in the range 104-106 since April 2024.

Financial conditions (NFCI) have loosened by ~0.8% relative to the previous week, supporting the stock market and other risk assets.

June M2 money supply (USM2) values are not available yet.

US bond yields lowered this week, and now sit at 4.46% for the 2-year and 4.19% for the 10-year.

Comment Section

The main US stock market index (S&P500) continues climbing the wall of worry, while its equal-weight cousin (the RSP) is below its March 2024 historical maximum, indicating a narrow bull trend. The Russel 2000 was very positive for the week, but is now hitting a resistance level, so it is very important to watch what happens over the next weeks.

The VIX (volatility index) remains historically low, indicating that investors are not seeking puts for protection (expiring in the next ~25-30 days). High yield bond spreads are still small, indicating low stress on the credit markets (good credit availability).

On the macroeconomic front, the week was marked by the release of various inflation prints around the world. In China, year-over-year inflation is essentially zero, in Brazil around 4.2%, 2.2% in Germany and France, and 3% in the US. The US month-over-month inflation rate was -0.1%, lower than expected, but on Friday the PPI was in line with expectations (0.2%). Inflation is not dead in the Western world, but it seems under control.

Take care, and good luck.

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