[Platinum Insights] (7.5.23)

Good morning. 

Wall Street futures are down today, with all eyes on minutes from the Federal Reserve’s June meeting for clues about the central bank’s monetary policy path. The meeting minutes, due at 2 p.m. EST will arrive after U.S. central bank officials have spent the last three weeks following the June Federal Open Market Committee meeting sketching out their policy outlooks. 

The ISM’s manufacturing PMI dropped to 46.0 last month, the lowest reading since May 2020, from 46.9 in May. That marked the eighth straight month that the PMI stayed below the 50 threshold, which indicates contraction in manufacturing, the longest such stretch since the Great Recession. 

A separate report from the Commerce Department on Monday showed spending on residential construction rebounded 2.2% in May after dropping 0.9% in the prior month, with investment in single-family housing projects accelerating 1.7%. 

A financial stream that helped fund the world’s riskiest companies and grew into a market estimated at $1.5 trillion in the low interest rate years is drying up, as aggressive rate hikes bring tougher borrowing conditions and uncertainty. The pace of issuance of so-called collateralized loan obligations (CLOs), which bundle loans of the weakest corporates and repackage them as bonds, has stalled. U.S. companies with speculative credit ratings, who dominate global CLO loan pools, need to refinance around $354 billion of debts by end-2024, then a further $813 billion in 2025 to 2026, S&P estimates. 

WTI crude futures fell below $71 per barrel. Gold was hovering around $1,920 an ounce while the yield on the US 10-year Treasury note cut early gains to around 3.8%. 

Market volatility at the open can be caused by a number of factors, including news events, order imbalance and set stop losses. If the market is volatile at the open, it may be a good idea to wait for the dust to settle before making any trades. 

The yield on the US 10-year Treasury note rose toward the 3.9% mark in early July, the highest since early March, as markets continued to assess the latest economic data for hints on the extent of the Federal Reserve’s remaining tightening. Minutes from the FOMC’s latest policy-setting meeting are expected to show that the committee broadly agrees that more interest rate hikes are necessary to fight the recent stubbornness observed in core inflation rates.

Have a great day!