EQUITY
Condition
DOW 24,715.09 (-0.47%) / S&P 2,712.97 (-0.54%) / NASDAQ 7,354.34 (-0.66%)
With continued good condition of US real economy, economic cycle sectors like Metal, Chemical,
Construction rose although US Giants like Apple, JPMorgan Chase, Bank of America or Chevron
went down. And Tech sector also went down with correction from recent strongest recovery, and
rising interest rate. The impact of rising interest rate became much weaker than before, but still left.
From this corrections of Tech and other Giants, overall indices went down.
Comment
Taper tantrum which gave huge impact to the markets becomes much weaker. But It still left. I think
the market is adjusting to the impact successfully and will be fine for a left year. I believe that inconstant
flattening and strong USD could be also grounds for this strength. But we need to keep eyes on Tech
companies which couldn't generate enough profits now. Their leader, Amazon, couldn't show enough
momentum during May, until yesterday, although other Tech companies show good performance. But
real economic momentum is very good, and my target S&P500 is still 2,800.
-
Fixed Income
Condition
(yields, Generic) 2y 2.5467% (+0.0118%) / 5y 2.8881% (+0.0599%) / 10y 3.0559% (+0.0864%) /
30y 3.1974% (+0.0933%)
Yield flattening was reversed to yield steepening, widening 2s10s to be more than 50bp. The longer
maturity got the higher rise of yield. Taper Tantrum kept going, and a few players mentioned that
3% yield for US T 10y isn't hot-issue anymore, targeting 4%. a strong recovery happened at Friday.
Comment
Yield of 10y T-Note skyrocketed even if there wasn't a event. It was just traditional bear market and
natural thing. What real surprise me is the weakest 30y. I think that it means that yield flattening will
not go that easy.
-
Currencies
Condition
Dollar Index 93.637 (-1.19%) / EURUSD 1.1772 (-1.43%) / USDJPY 110.78 (+1.27%)
Last week was temporal correction for USD as expected. in this week, USD was showing its strength
with rise of yield of US T 10y. The movement was also unconventional like last week considering relative
weakness of US stock market.
Comment
I believe Strong USD is being continued based on strong US real economy. This will be applied to the stock
market favorably. I believe that strong USD will keep going, But there will be a limitation for the speed with
correction for the steep rise. My first target for Dollar Index is 95, but it will take a little more time than we
think now.
-
Oil / Gold
Condition
WTI $71.28 (+0.82%) / Brent $78.51 (+1.80%) / Gold $1,290.20 (-2.18%)
Strong WTI kept going even if the speed wasn't that good. It looks like the momentum isn't dead yet
considering USD was strong. But not live vividly too, the rise of 0.82% even if there were a bunch of events
in middle east. Gold plunged at May 15 to 1,290, and wasn't showing exceptional movement after that day.
It's surprise that Gold didn't go lower even though market yield skyrocketed.
Comment
WTI endure much better than I thought. But I believe that it lose the momentum. The market participants
overestimate the event. the economic fundamental isn't support 70 for WTI, Chinese slowdown. The dealers
of spot oil don't think that real demand to WTI can't support 70. It's just based on speculative demand. Even
if there are overflown speculative demands, WTI isn't go very well. And time passed enough after applied, I
believe the effect will perish in near future. Gold, which pierced last low point, showed no recovery in this week.
I believe real weak movement of Gold started already.