Rising oil prices and solid employment data, Wall Street mixed the weekend. Both Brent (Sept. 2022) and WTI Crude Oil (August 2022) prices rose more than 2% to USD107.02/Barrel and USD104.79/Barrel, amid the supply shortage. June’s Change in NonFarm Payrolls solid employment data surged 372K (Vs. Surv. 265K), with the June Unemployment Rate holding steady at a low of 3.6%, leaving room for another aggressive FFR hike later this month. This again pushed the pattern of Negative Yield Spread UST2Y 3.10% Vs. UST10Y 3.08%, as an indicator of recession as well as boosting USD safe haven interest, with DXY steady above its high of 107.
The technology sector gains 3%, as inflation in July has the potential to decline. The BI survey for the first week of July 2022 stated that CPI Headline MoM inflation in July 2022 was projected at 0.40% (Vs. Jun. 0.61%), in line with the decline in prices of a number of commodities such as cooking oil deflation -0.04% MoM. This survey is in the midst of speculation that BI will not necessarily increase the BI 7DRRR this July, in line with the CPI Core YoY Jun. 2.63%, still below the median value of BI’s annual target of 2%-4%. The technology sector is sensitive to rising interest rates. For the record, the result of the BI RDG will be posted on July 21, or a week earlier than the FOMC Rate Decision on July 28 which is projected to raise the FFR by 75 bps.
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