T3 Monthly Insights - Jun 2024

In June, US indices extended their upward momentum, with the S&P 500 and Nasdaq reaching record highs and posting monthly gains of +3.47% and +5.96%, respectively. This rally was supported by robust jobs reports and lower-than-expected inflation data for May. Non-farm payrolls surged by 272K, surpassing the consensus forecast of 182K, while CPI dipped to 3.3% y/y. Federal Reserve officials indicated a likelihood of a single interest rate cut this year, maintaining borrowing costs at a 23-year high. The Dollar Index rose +1.14% m/m to 105.866.

The Euro softened by 1.24% in June to 1.0713, following the ECB's first rate cut since 2019. President Christine Lagarde remained cautious about future cuts, citing uncertainties in inflation and emphasizing data-dependent decisions. Meanwhile, the UK's Labour Party won a decisive victory in the general election, ending 14 years of Conservative rule. The Bank of England held rates steady at 5.25%, given ongoing electoral campaigns and core inflation rates above 3%. Sterling declined by 0.76% m/m to 1.2645.

The Swiss National Bank reduced rates by 25 basis points to 1.25% for the second time this year, positioning itself as a leader in global policy easing, with another cut expected by year-end. The Swiss Franc closed the month at 0.8988 (-0.39% m/m).

Japanese stock markets hit new highs in June, partly due to the weakening Yen. USDJPY surged by +2.27% to 160.88, prompting speculation of potential intervention. Japan's core inflation rose to 2.5% in May, the highest in three months, driven primarily by increased electricity costs.

In Australia, Q1 GDP growth was sluggish, gaining only 0.1% q/q, the slowest pace since December 2020. The Reserve Bank of Australia kept rates unchanged at a 12-year high of 4.35% in its June meeting, underscoring vigilance on inflation, which remains elevated at 3.6%. Aussie rose +0.26% m/m to 0.667.

Elsewhere, Gold initially declined in early June following strong non-farm payroll data but rebounded to close the month flat at 2326.75