Market News

The weekly Baker Hughes rig count data for the week shows total rigs increased 3 to 551. Compared to a year ago, that number is down 25. Lower rig count does not necessarily mean lower oil extraction.

The price of crude oil this week is up 6.10% or $5.77 for the July contract.

Israel is reporting that they carried out a targeted strike in Gaza against the de facto Hamas head.

Earlier today, Israeli said that they would accept a cease-fire in exchange for a genuine commitment from Hezbollah.

Meanwhile, Lebanon's main goal is to declare and solidify complete cessation of hostilities but believes that Israel will not abide by the cease-fire agreement.

Honestly, no one knows what to believe in that region or with peace talks. Also, what is a "genuine commitment". What does that entail?

China Foreign Minister Wang Yi, on ties with the U.S.:

• Teams on both sides are still working on details for outcomes on trade
• Encourages the U.S. and Iran to continue resolving their differences and disputes through talks
• Calls for reopening the Strait of Hormuz
• on Ukraine: Says China and the U.S. are willing to maintain communication
• China and the U.S. agreed to set up boards of trade and investment
• Both sides agreed to address each other's concerns regarding market access for agricultural products
• Agreed to promote the expansion of two-way trade under the framework of reciprocal tariff reductions
• Xi to visit the U.S. in the fall

Comments are somewhat broad in nature.

Recall that Trump explicitly invited him to come on September 24. …

• Industrial production prior month -0.5% revised to -0.3%
• Capacity utilization prior month 75.7
• Manufacturing production last month -0.1% revised to +0.1%

For April:

• Industrial production 0.7% versus 0.3% expected. Year on Year industrial production is up 1.4%
• Capacity utilization 76.1% versus 75.8% estimate. The index a year ago was at 76.1% as well.
• Manufacturing output 0.6% versus 0.2% estimate. Year on Year the manufacturing output is up 1.3%, led by utilities which are up 2.7%

Not surprising, utilities are helping with demand for AI increasing.

The major market groups for industrial production:

• Final Products
  • MoM: +1.1% vs -0.6% last month. Higher
  • YoY: +1.4%
• Consumer Goods
  • MoM: +0.9% versus -0.8% last month. Higher
  • YoY: -0.2%
• Business…

Speaking on a Fox Interview:

• China would not give Iran military equipment
• China agreed to order 200 "Big" Boeing jets
• Xi offered to help on Iran
• Xi said he would like to continue to buy oil from Iran.
• Does not like China support to Iran

Boeing shares have moved lower. There is some ambiguity as to if it is a firm commitment or more of a letter of intent. Also there were earlier reports that the number would be up to 500 jets.

Looking at the hourly chart, the price has moved below its 100 hour moving average at $230.97 after trading as high as $244.07. The 200 hour moving average at $225.95 is the next downside target. The price gapped above the 200 hour moving average back on April 7 and has not been below that will be average since that…

Headlines:

• Risk-off wave starts to sweep across markets ahead of European trading
• Treasury yields jump across the curve, 10-year yields hit near one-year high
• EUR/USD falls to fresh five-week low as dollar firms in final stretch of the week
• Bitcoin and Ethereum analysis shows that 'sell the news' might have triggered
• Iran foreign minister says current negotiations are suffering from lack of trust
• US and China have aligning views on Iran, says Trump
• And so it ends.. Trump boards Air Force One to depart China after his visit
• UAE set to accelerate new oil pipeline project to help bypass Strait of Hormuz

Markets:

• WTI crude (June contract) up 3% to $104.20, Brent crude up 2.4% to $108.30
• 10-year Treasury yields hit one-year high of 4.54%
• S&P 500 futures…

• Prior month 239.7K (revised higher from 235.9K)
• Canada housing starts surged 17% in April to a seasonally adjusted annualized rate of 279,317 units, up from 239,747 in March.
• The sharp monthly increase highlights the volatility in housing starts data and why month-to-month changes should be interpreted cautiously.
• Rural housing starts were estimated at a seasonally adjusted annual rate of 13,694 units.

The 6 month trends showed:

• The trend in Canadian housing starts rose 3.2% in April to 256,777 units.
• The trend measure reflects a 6-month moving average of the monthly seasonally adjusted annual rate (SAAR) of total housing starts across Canada.
• Actual housing starts fell 1% year-over-year in centres with populations over 10,000, with 21,805…

The Empire/NY Fed manufacturing index for May shows:

• Prior month 11.0
• new orders 22.7 versus 19.3 last month. Higher
• shipments 18.9 versus 20.2 last month. Lower
• unfilled orders 4.9 versus 9.1 last month. Lower
• delivery time 20.4 versus 12.1 last month. Higher.
• Inventories 9.7 versus 5.1 last month. Higher.
• Prices paid 62.6 versus 51.1 last month. Higher
• Prices received 31.8 versus 21.8 last month. Higher.
• Employees 8.3 versus 9.8 last month. Lower
• average employee workweek 11.5 versus 13.7 last month. Lower
• supply availability -10.7 versus -10.1 last month. Lower

Looking at the data, although the index is higher, things like prices increasing and employment decreasing is a problem. The good news is new orders and shipments did rise.

Richard Deitz,…

• Prior month 3.6%

• We don't want Iran to have a nuclear weapon, we want the straits open
• Xi clearly stated that Iran cannot possess a nuclear weapon
• It is in China's interest to open the Strait of Hormuz
• We can destroy Iran's power plants in just two days
• China agreed to buy 200 Boeing planes, with potential commitment to purchase up to 750 planes
• "I made no commitment on Taiwan"
• Don't think there's a conflict regarding Taiwan situation, spoke a lot about it with Xi

So far, the only comment that China has made regarding the Iran situation after Trump and Xi sat down to talk was: "This conflict, which should never have happened, has no reason to continue."

The nature of the comments pretty much sums everything up. As mentioned earlier, the contrasting focus also…

• We are trying to keep the ceasefire in order to give diplomacy a chance
• Contradictory messages by the US have made us reluctant about their real intentions on talks
• All vessels can pass through Strait of Hormuz except those at war with us
• Vessels wanting to pass should coordinate with Iran navy
• We are making the necessary arrangements in coordination with Oman
• The situation around the Strait of Hormuz is very complicated and we are trying to help
• Interested in continuing energy business with India
• We understand consequences of sanctions imposed by US

The comments aren't anything new and mainly reaffirm the existing status quo. With US president Trump making his visit to Beijing this week, the war with Iran took a bit of a backseat for two days.…