After a strong month, the macro market has entered a period of consolidation, with the SPX index rising nearly 3% in May despite weak economic data and rising US bond yields. In the past few days, the US first-quarter GDP has been significantly revised downward (1.6% to 1.3%), with a sharp decline in consumption (2.5% to 2%) and a downward revision in core PCE (3.7% to 3.6%). Meanwhile, China’s economic data has returned to its old path, with the May manufacturing PMI dropping significantly below 50, well below market expectations (50.5). Production, demand, new orders, exports, and imports are all weak, and the Hang Seng Index has quietly fallen 5% from its recent high, remaining mostly flat this month.
In terms of the macro aspect, there is a lack of clear conviction, and price movements are mainly driven by end-of-month rebalancing funds. Commodities and stocks saw a sharp decline yesterday, with the US stock market closing down about 1% on Thursday. Tech stocks such as Dell (-15%), Salesforce (-20%), and even Nvidia (-4%) saw massive sell-offs. Due to the impact of rebalancing funds, tech stocks have fallen nearly 9% compared to the SPX’s 3% rise, and technical indicators suggest that the stock market may further weaken in the short term.
In the fixed income sector, as the market suddenly shifts its attention to the possibility of Trump’s second presidential term, the US bond yield curve has steepened significantly in the past two weeks (from -48 to -38). Although both candidates may implement loose monetary policies and fiscal expansion plans, bond traders are more concerned about bond supply and inflation under Trump’s administration.
Furthermore, despite Trump facing lawsuits and possible imprisonment for falsifying business records, a recent ABC/Ipsos poll in the US showed that even if he is convicted, only 4% of his supporters would withdraw their support, while 80% have pledged to continue supporting him. This aligns with a previous poll that showed 94% of Trump’s 2020 voters intend to vote for him again in November, indicating an extremely loyal support base. Regardless of the final outcome, this election is destined to be controversial. The Manhattan court is scheduled to announce its verdict on July 11, and Trump may appeal any ruling. There is no confirmed timetable for other trials before the November 5 election day.
In the cryptocurrency field, there isn’t much noteworthy content. This week, ETH performed about 0.8% better than BTC, with stable but unremarkable capital inflows to ETH. The approval date for ETH S-1 is still unknown, with the market “consensus” speculating it could be as early as July. Meanwhile, native users have started to shift towards large memecoins such as Shiba/Dogecoin and Pepe. These coins have seen gains of 10-20% in the recent dull market conditions.
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