Daily Market Outlook, June 21, 2024

Munnelly’s Macro Minute…

“Summer Solstice Sees Markets Spooked Ahead Of Today's Options Witching Event”

Asian stocks declined after technology equities dragged the S&P 500 lower overnight. The yen was the focus of attention after a six-day decline that increased the likelihood of intervention. The Hang Seng Index dropped as much as 2%. Mainland indexes also declined amidst Beijing's hesitancy to increase stimulus. The government's decision to raise levies related to renewable energy resulted in an acceleration of inflation in Japan, supporting the BoJ's argument to consider hiking interest rates in the upcoming months. At their meeting a week ago, policymakers kept interest rates unaltered and refused to provide specifics on reducing bond purchases.

Following a weather-related decline in April, UK retail sales volume surged in May, with both the headline and ex-fuel measures increasing by 2.9% month-on-month. Additionally, April's figures were revised to be less negative than initially reported, with the headline measure adjusted from -2.3% to -1.8% month-on-month. The 10% increase in the National Living Wage, which took effect in April, appears to have boosted spending power in May. Given these factors, the month-to-month fluctuations are not surprising.

Stateside Goldman Sachs ‘estimate this options expiration will be the largest ever with over $5.1 trillion of notional options exposure expiring, driven by a record $870 billion notional in single

stock options. This exceeds the notional value of options that expired in December

2023 ($4.9T), which was the prior record high’

Overnight Newswire Updates of Note

New EU Debt Rules Can Only Work With Political Support, IMF Says
Yellen Says Trump’s Proposed Tariffs Will Raise Consumer Costs
Putin Says Russia May Send North Korea High-Precision Arms
Sheinbaum Names Ex-Foreign Minister Ebrard As Economy Chief
Dollar Firms On Recovering Risk Sentiment, Prospects Of Easier Overseas Rates
Kroger’s Stock Pops After Better-Than-Expected Earnings
Engine Fire On Boeing 737 Forces Emergency Landing In India
Boeing Is Shifting Engineers Away From X-66A Development
Nikola Plans 1-For-30 Reverse Stock Split To Comply With Nasdaq Listing Rules

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)

FX Options Expiries For 10am New York Cut

(1BLN+ represent larger expiries, more magnetic when trading within daily ATR)

EUR/USD: 1.0600-10 (2.03BLN), 1.0650-60 (4.2BLN)
1.0680-90 (1.17BLN), 1.0695-1.0705 (2.59BLN)
1.0720-30 (1.4BLN), 1.0735 (478M), 1.0750 (509M)
1.0775 (926M), 1.0790 (347M), 1.0795-05 (1.0BLN)
USD/CHF: 0.8900-05 (1.6BLN), 0.8950 (463M), 0.8980 (500M)
EUR/CHF: 0.9500 (511M), 0.9545-50 (321M), 0.9625 (1.03BLN)
0.9675 (400M), 0.9700 (355M), 0.9750 (416M), 0.9800 (430M)
GBP/USD: 1.2665 (462M), 1.2740 (2.0BLN), 1.2760 (246M)
1.2780 (1.15BLN)
EUR/GBP: 0.8400 (631M), 0.8440 (460M), 0.8450-55 (371M)
0.8475 (1.0BLN)
AUD/USD: 0.6600-05 (421M), 0.6640-50 (323M), 0.6675 (225M)
0.6710 (386M). NZD/USD: 0.6125 (330M)
USD/CAD: 1.3630 (205M), 1.3645-50 (717M), 1.3655-65 (1.4BLN)
1.3675-80 (1.04BLN), 1.3700-20 (2.1BLN), 1.3740-55 (1.24BLN)
1.3800 (1.5BLN)
USD/JPY: 156.75 (801M), 157.00-10 (1.68BLN), 157.20-25 (934M)
157.50 (1.48BLN), 158.00 (772M), 158.25 (738M), 158.40-50 (532M)
159.00 (1.05BLN), 159.15-25 (547M), 159.50 (300M), 160.00 (430M)

CFTC Data As Of 14/06/24

Equity fund speculators increase S&P 500 CME net short position by 20,612 contracts to 352,937
Equity fund managers raise S&P 500 CME net long position by 13,149 contracts to 967,970
Euro net long position is 43,644 contracts
Japanese yen net short position is 138,579 contracts
British pound net long position is 52,121 contracts
Swiss franc posts net short position of -42,863
Bitcoin net short position is -1,138 contracts