The DXY Index depreciated by 0.2% to 98.9 overnight, staying entrenched in a tight 98.4-99.4 range this month. European currencies also consolidated in the past five sessions, mainly within a 1.1360-1.1460 range for EUR/USD, 1.35-1.36 for GBP/USD, and 0.8160-0.8250 for USD/CHF. The Swiss National Bank is widely expected to lower rates to 0% on June 19 despite Switzerland’s entry into the US Treasury Department’s currency monitoring list. SNB has warned of negative rates and forex interventions to address the CHF’s haven appeal amid the USD’s negative appeal driven by Trump’s aggressive tariff and fiscal policies.
The US Treasury 30Y yield eased by 2.8 bps to 4.94%. The New York Fed reported that tariffs did not prevent inflation expectations from falling across all horizons. Median expectations for 1Y inflation expectations fell to a three-month low of 3.2% YoY in May from 3.63% in April, while 5Y expectations eased a third month to 2.61% from 2.74%. On June 11, consensus expects CPI inflation in April to be unchanged at the same 0.2% MoM pace as in March, and slightly higher at 0.3% MoM in April vs. 0.2% in March. The US-China tariff truce on May 12 likely played an important role in keeping tariff-led inflation fears at bay. Trump will likely step up pressure for the Fed to lower rates at next week’s FOMC meeting.
The S&P 500 closed above 6000 for a second session but met stiff resistance at 6020. Investors were disappointed that the first day of US-China trade talks in London wrapped up with no meaningful breakthroughs. Trade talks will enter a second day with the US seen relaxing US tech export restrictions in exchange for China resuming rare-earth mineral shipments. China’s trade data reinforced why US President Donald Trump described the talks as tough. Although China’s exports to the US plunged 35% YoY in May, they increased strongly by 14.8% to Southeast Asia and 12% to the European Union. Nonetheless, commodity-led currencies – AUD, NZD, and CAD – appeared to have gained some traction after the Trump-Xi call on June 5 that paved the way for trade talks. AUD/USD held a higher 0.6480-0.6540 range vs. its 0.6405 low at the end of May, and NZD/USD has been above 0.60 since the start of June.
Quote of the Day
“Well done is better than well said.”
Benjamin Franklin
June 10 in history
Benjamin Franklin tested the lightning conductor with his kite-flying experiment in 1752.
Topic
GENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates)
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
[#for Distribution in Singapore] This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.