Global Market Overview

Fixed Income Market Overview

The yield on the 10-year Treasury surged by 14 basis points to 4.422% on Friday after a strong nonfarm payrolls report for May, raising concerns that the Federal Reserve may delay rate cuts. The 2-year Treasury yield also rose by 14 basis points to 4.862%. Nonfarm payrolls increased by 272,000, surpassing estimates, while the unemployment rate edged up to 4%. Despite hopes that the  data would show a slowing labor market, the Fed is expected to keep rates unchanged at its upcoming meetings, with a 68% chance of a rate cut by September. El-Erian emphasized that the robust  job market precludes any rate cut in July. Following the data, US Treasury yields surged, and the market pulled back from pricing in two quarter-point cuts for the year. The Fed’s upcoming policy meeting will update economic projections based on this data. Meanwhile, the European Central Bank cut rates for the first time since 2019 amid ongoing inflationary  pressures.

Credit Suisse bondholders sue Switzerland in the U.S. over $17 billion write down of AT1 debt.

Oracle $16 Billion VA Health Software Scores Badly in Internal Report.

China’s exports grow more than expected in May, up by 7.6%.

Crude oil heads for third straight weekly loss as supply and demand weigh on market.

TDR Capital to acquire majority stake in Asda as Issa brothers split empire.

Major Indicies

Bonds

Futures & Commodities

Equity Market Overview

Saudi Aramco

Saudi Arabia is poised to collect over $11.2 billion from its secondary public offering in state-controlled oil giant Aramco, priced at 27.25 Saudi riyals ($7.27) per share, slightly below its expected  range. Despite a 4% drop below the public stock’s last settlement, investors anticipate a discounted price as new shares enter the market. The offering, backed by strong international demand,  indicates ongoing investor interest in Aramco, renowned for its significant dividend payouts and appealing yield of 6.81%. The proceeds will provide relief to the Saudi government amid financing  high-cost infrastructure projects under its Vision 2030 economic diversification program, spearheaded by Crown Prince Mohammed bin Salman.

Gold

Gold experienced its sharpest decline since April following the release of a robust US jobs report, dampening expectations of imminent Federal Reserve rate cuts. The US dollar and Treasury yields urged while bullion slumped as much as 2.6%, with investors reevaluating their anticipation for monetary policy shifts. China’s recent halt in gold purchases, ending an 18-month spree, further  contributed to gold’s downward trajectory, signaling potential shifts in demand dynamics. Despite market fluctuations, gold’s allure remains intertwined with geopolitical tensions and central  bank actions, underlining the metal’s enduring role as a hedge against economic uncertainties. At $2,321.72 an ounce, spot gold reflected a 2.3% decline, highlighting the intricate interplay between macroeconomic indicators and gold’s valuation.

Toyota

Japan’s top two banks, Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMFG), are set to divest their strategic shareholdings in Toyota Motor, totaling $8.5  billion, and aim to sell into the automaker’s planned buybacks. This move reflects a shift in corporate governance, aligning with government and stock exchange pressures. Cross-shareholdings,  long employed in Japan to solidify business relationships, face scrutiny for potentially shielding management from activist investors, prompting adherence to the governance code’s assessment  requirements. The gradual sale of Toyota shares by the banks over several years corresponds with the automaker’s recent announcement of a substantial buyback plan. Despite this development,  Toyota’s shares experienced a 2.0% decline, while the banks’ shares remained relatively unaffected.