May 27. US labor market: what's the news?

According to the US Department of Labor, the number of Americans who filed new applications for unemployment benefits fell more-than-expected last week to 406 thousand. Economists predicted 425 thousand applications. Last week, the number of requests was fixed at the level of 478 thousand.

The decline came mainly on the back of fewer layoffs, as companies are in dire need of workers to meet the growing demand driven by the rapidly recovering economy. What's more, the pandemic-related business restrictions have been lifted as more than half of the US adult population is fully vaccinated against the coronavirus.

And while the number of applications still far exceeds the 200,000 to 250,000 range considered compatible with healthy labor market conditions, they fell from a record 6.149 million in early April 2020.

23 states, including Florida and Texas, have announced the end of federal government-funded unemployment programs next month. These programs include a $300 weekly subsidy that businesses say discourages unemployed people from finding work.

Analysts: It's too early to wait for Bitcoin to recover

J.P. Bank experts Morgan predicts that it is too early to wait for a recovery in Bitcoin, which is currently experiencing a fall from the $60K area to $ 35-36K.

Previously, analysts had already expected that Bitcoin's failure to overcome the $60,000 threshold would lead to bearish signals and further curtailing positions in this cryptocurrency. Perhaps this was a significant factor in the correction last week.

However, there are no signals of a long-term decline yet. According to experts, the price must fall to the level of $26 thousand before the cryptocurrency can reverse the main trend.

Over the long weekend in the US, Bitcoin plummeted due to the Memorial Day holiday: it traded at around $36,311 on Saturday and then dropped to $33,633. By Monday night, the currency recovered slightly to $36,833. Today's trading remained volatile.

Recall that in May, many factors influenced the bitcoin rate. Among them are negative tweets from Tesla CEO Elon Musk, as well as concerns about impending government regulation from the United States and China.

June 03. Beige Book: US economic growth accelerates

The US Federal Reserve Beige Book was published last night – a document containing summaries and comments from the Fed on the economic situation in the country.

According to the report, the US economic recovery accelerated between April and May, despite supply bottlenecks, hiring new hires, and rising prices in many parts of the country.

In addition, the widespread use of Covid vaccinations and the weakening of quarantine measures had a strong impact on consumer spending: their growth is primarily associated with an increase in public spending on travel and restaurants. At the same time, the level of sales of passenger cars remained stable, and this is due to a slowdown in production due to a shortage of semiconductors.

In general, production in the country continues to grow, but many manufacturers report widespread material and labor shortages. The number of employees in the United States is growing relatively steadily, with the largest gains in employment shown in the catering and retail sectors. The growth in wages was also moderate, but it is noted that more and more employers have raised wages and offered bonuses.

The Beige Book is usually published about two weeks before the next Fed meeting. The next meeting of the FRS leadership will take place on June 15-16.

June 07. The European Parliament named the countries to be admitted to the European Union

The head of the European Parliament David Sassoli in his interview called for the admission of the Western Balkan countries to the European Union. At the same time, the politician noted that such an enlargement of the EU would become «a positive project for peace and prosperity.»

These are countries such as Albania, North Macedonia and Serbia. The expansion of the EU's territory can have enormous benefits both for the Western Balkan region itself and for Europe as a whole, as it will help «ensure a stable, prosperous and peaceful continent.»

According to Sassoli, the countries of the Balkan Peninsula will be able to join the European Union as soon as they meet all the necessary criteria. And at the moment, all countries have yet to complete some reforms.

June 09. IRS wants to receive data on transactions in cryptocurrencies

US Internal Revenue Service (IRS) Commissioner Charles Rettig said Congress needs to give the tax authorities legislative authority to collect information on cryptocurrency transfers in excess of $10,000.

Currently, more than 8600 crypto-exchanges have been created in the world, and the capitalization of the cryptocurrency market exceeds $ 2 trillion. At the same time, most virtual cryptocurrencies are created in such a way as to remain out of sight of the authorities. Moreover, there are more and more cases of illegal use of digital currencies by cybercriminals and hackers.

In addition, the huge revenues generated by the growth of crypto assets are eluding the IRS, creating a tax hole of about $1 trillion a year (the difference between legally owed and collected taxes).

Rettig suggests informing the IRS about cryptocurrency transfers in the same way banks do about money transfers, and brokers who report to the IRS about securities transactions. However, this initiative can be implemented no earlier than 2023.

11.06. ECB raised its forecast for GDP growth in the euro area

According to the latest forecast of the ECB, the growth of GDP in the eurozone this year will amount to 4.6%, which is significantly higher than the March forecasts. This became known during the speech of the head of the regulator Christine Lagarde at a press conference following yesterday's meeting of the Board of Governors.

Lagarde also noted that this assessment of the economy is presented in the baseline scenario of macroeconomic forecasts by the Central Bank for June 2021. According to these forecasts, GDP growth in 2022 will grow by 4.7%, and in 2023 by 2.1%.

Compared to previous ECB estimates, which were made in March, GDP growth forecasts for 2021 and 2022 have been revised upward (4% and 4.1%, respectively). The forecast for 2023 remains unchanged.

According to inflation forecasts, consumer prices are expected to rise 1.9% in 2021, 1.5% in 2022, and 1.4% in 2023. According to the March forecast, inflation was expected to be 1.5% this year, 1.2% next year and 1.4% in 2023. The correction of estimates is associated with the dynamics of energy prices.

June 15. China again threatens all world trade

The partial closure of the Yantian terminal at the Chinese port of Shenzhen is putting the entire global container trade at risk. Experts note that the consequences of such a failure could be much more serious than the blocking of the Suez Canal by the ship Ever Given in March this year.

Recall that the blockage of the Suez Canal affected 55 thousand TEU (a unit of measurement for the capacity of freight vehicles) per day and lasted six days. Problems in Yantian can affect 25.5 thousand TEU per day, and they have been going on for more than two weeks.

The reason for the closure of the terminal was the outbreak of coronavirus in the Chinese province of Guangdong, where the port is located. In addition to Yantian, problems arose in the nearest terminals Shekou (Shenzhen city) and Nansha (Guangzhou). It is worth noting that these are the third and fifth largest ports in the world.

A large amount of cargo has already accumulated outside the port, some of which is being redirected to the ports of Nanshu, Shekou and Hong Kong, but their capacity is no longer enough. Complicating the situation is the fact that customs requirements differ in Chinese ports, which also limits the possibility of redirecting cargo flows.

June 17. Investors prepare for volatility amid expectations of stimulus collapse

The Federal Reserve is starting to talk about curtailing super-soft monetary policy, which may cause high volatility in the near future.

The first increase in the Fed's interest rate is possible in 2023, and not in 2024, as previously predicted. Moreover, the regulator has begun debates about when and how it would be appropriate to start scrapping the massive $120 billion a month bond buying program.

Previously, it was planned that the program will continue until significant progress is made in the recovery of the labor market and in bringing inflation closer to the target level of 2%. And according to forecasts, inflation will well exceed the regulator's target, accelerating to 3.5% this year.

The question of when exactly the Fed will roll back stimulus has had a huge impact on financial markets: stocks have declined, the dollar has jumped to two-month highs, and the yield on 10-year Treasury bonds has surged.

Experts note that the current situation is reminiscent of 2013, when the Fed unexpectedly for everyone put forward the idea of gradually winding up the quantitative easing program. Bond yields rose sharply then, and the underlying 10-year yield jumped from an approximate 2% in May to 3% in early September.

June 21. Crypto traders lost $1 billion due to Chinese bans

The central bank of China has called on financial institutions to fight harder against cryptocurrency trading. The People's Bank of China urged banks to immediately close payment gateways for clients trading in cryptocurrencies. In addition to this, the country's third largest bank has also imposed restrictions on clients whose activity is related to cryptocurrencies.

The digital currency market immediately reacted to this news with a strong fall, by more than 6%, and the capitalization of the entire crypto market dropped to $1.46 trillion. The bitcoin rate fell to $31,828. In the daily interval, traders lost about $1 billion.

The largest liquidation was recorded in the bitcoin market, and traders spent ~$618 million.The Ether (ETH) market records liquidations for ~$267 million, and XRP – for $43 million.

Moreover, the hashrate of the Bitcoin network also showed a drop. For example, today the cryptocurrency hash rate has dropped to 91 Exaches/sec. The last time the network recorded such values back in November 2020. However, experts note that the reduction in the hash rate may be due to the relocation of miners from China: in mid-May, China announced a fight against cryptocurrency miners under the pretext of protecting the financial system and reducing carbon emissions.

June 23. Moody’s: the US expects the market to fall

The representative of the international agency Moody’s, which monitors the state of economies in different countries, said that investors should wait for the fall in the value of major market assets by 10-20%.

Last year, the US cut the rate to almost zero to revive the economy and consumer demand. However, demand and inflation in the US are now outstripping forecasts, which could force the Fed to raise loan rates and reduce bond redemptions in the market to contain the rise in prices. And after that the quotes will inevitably collapse by 10-20%.

The chief economist of Moody’s Analytics noted in his interview that the list of risky assets today includes both stocks and bonds, as well as commodities and cryptocurrencies. At the same time, experts do not expect a quick recovery of quotations on the stock market, because the value of shares is already at its maximums. It is estimated that it may take a year to cover losses after a market crash.

The Dow Jones posted its largest weekly drop since October 2020, shedding 3.5%. The S&P 500 experienced its worst week since the end of February, falling more than 2%. The Nasdaq hi-tech index also dipped, but it remains just 1.3% below its all-time high.

July 07. UAE will not support the extension of the OPEC + deal

The UAE intends to abandon the plan to extend the oil production limitation agreement beyond April 2022, unless the country's reference base to reduce production is increased. The UAE is demanding an increase in the reference base for a reduction in production from 3.168 to 3.8 million b/d.

The Emirates agree to increase OPEC + oil production by 400 thousand barrels per day from August, but believe that the plan for extending the 2020 agreement should be discussed separately.

Earlier, the UAE Energy Minister Suheil al-Mazroui said that the country is ready to increase oil production when the market demands it. However, at the moment there is no need to make a decision to extend the term of the OPEC + agreement until the end of 2022. «The deal is valid for another nine months, and we have plenty of time to discuss it later,» the minister said.

In response, Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman called on the UAE for compromise and rationality to reach an OPEC + agreement on Monday.

July 7. The EC raised its forecast for growth and inflation in the eurozone

The European Commission has revised upward its estimates of economic growth in the eurozone in 2021 and 2022, while warning about the risks associated with new strains of coronavirus. The EC also expects higher than previously predicted inflation this year for all 19 EU countries, but assumes that consumer price growth will slow down in 2022.

This year, the European Commission expects the euro area to grow at 4.8% this year, much higher than the 4.3% forecast in May. Such a serious revision is mainly associated with the removal of lockdowns and the opening of the economies of the EU countries in the second quarter.

The European region is expected to grow 4.5% next year, higher than the 4.4% growth forecast published in May.

Inflation, according to forecasts of the European Commission, this year will reach 1.9%, compared with 1.7% in the May forecast. In 2022, inflation is expected to slow down to 1.4%. Recall that the target inflation threshold of the European Central Bank is just below 2%.

At the same time, representatives of the regulator note that inflation may turn out to be higher than predicted if problems with supply chains are more stable, and price pressure will have a stronger effect on consumer prices.