Fixed Income Market Overview
U.S. Treasury yields dropped on Thursday following June’s inflation data, hinting the Federal Reserve might lower interest rates this year. The 10-year Treasury yield fell 10 basis points to 4.174%, and the 2-year Treasury yield dropped 14 basis points to 4.49%. The consumer price index (CPI) decreased by 0.1% in June, reducing the annual rate to 3%, its lowest in over three years. Core CPI rose 0.1% monthly and 3.3% annually. Wall Street expects this inflation improvement might prompt the Fed to ease monetary policy by fall, with a September rate cut probability exceeding 80%. Fed Chair Jerome Powell noted rate cuts might occur before reaching the 2% inflation target.
Apple Avoids EU Antitrust Threat With Tap-and-Pay Probe Settlement.
US regulators fine Citi $136 million for failing to fix long standing data issues.
Oil prices rise as inflation eases, bolstering market hopes for Fed rate cut later this year.
Tesla’s share of US EV sales falls below 50% for the first time.
Inflation falls 0.1% in June from prior month, helping case for lower rates.
Major Indicies
| Symbol | Price | Change | %Change |
|---|---|---|---|
| DJIA | 39,753.75 | 32.39 | 0.08%↑ |
| NASDAQ | 20,211.36 | -464.02 | -2.24%↓ |
| S&P 500 | 5,584.54 | -49.37 | -0.88%↓ |
| NIKKEI | 42,224.02 | 392.03 | 0.94%↑ |
| HSI | 17,832.33 | 360.66 | 2.06%↑ |
| VIX | 12.92 | 0.07 | 0.54%↑ |
Bonds
| Name | Yeild | CHG |
|---|---|---|
| US 10-YR | 4.22% | -0.07 |
| US 30-YR | 4.43% | -0.06 |
| US 5-YR | 4.15% | -0.10 |
| JPN 10-YR | 1.08% | 0.00 |
| UK 10-YR | 4.08% | -0.06 |
Futures & Commodities
| Name | Last | Change | %Change |
|---|---|---|---|
| WTI CRUDE | 82.62 | 0.52 | 0.63%↑ |
| NAT GAS | 2.282 | -0.063 | -2.69%↓ |
| GOLD | 2,421.90 | 42.20 | 1.77%↑ |
| SILVER | 31.67 | 0.66 | 2.12%↑ |
| COPPER | 4.507 | -0.102 | -2.21%↓ |
Equity Market Overview
Delta Air Lines
Delta Air Lines forecast lower-thanexpected Q3 profits due to discounting pressures, causing a 9% drop in shares, with rivals United and American Airlines also down. Transatlantic bookings were hit by travelers avoiding Paris due to the Olympics. Delta’s Q3 profit forecast of $1.70 to $2.00 per share fell short of analysts’ $2.05 expectation. Despite a summer travel boom, excess capacity has undermined pricing power, with main cabin revenue flat but premium cabins up 10% year-on-year. Delta expects non-fuel operating costs to rise and annual seat capacity growth to moderate. The airline reaffirmed its 2024 profit and free cash flow forecasts.
PepsiCo
PepsiCo reported mixed quarterly results with declining North American demand for drinks and snacks, leading to a narrowed revenue outlook for the year. The company now expects around 4% organic revenue growth, down from its previous forecast of at least 4%. Q2 earnings per share were $2.28, exceeding expectations, but revenue was slightly below forecasts at $22.5 billion. Net income rose to $3.08 billion. PepsiCo faced challenges in the U.S. market due to product recalls and reduced consumer demand, though international business remained strong. Despite falling volumes in North America, the company is implementing strategies to attract budget-conscious consumers.
Costco
Costco announced it will increase membership fees by $5 in the U.S. and Canada starting September 1. Annual memberships will rise to $65 from $60, and “Executive Membership” fees will increase to $130 from $120. The fee hike affects approximately 52 million memberships. This is Costco’s first rate increase since June 2017. The decision comes after previously holding off due to high inflation. Membership fees are crucial for Costco’s revenue, helping maintain low merchandise prices. Competitors like Sam’s Club and BJ’s Wholesale have also raised their membership fees recently. Costco has also tightened enforcement on membership use.
