Weekly Market Recap – June 17, 2022

Aiming to stem inflation, the Federal Reserve raised interest rates by three-quarters of a percentage point on Wednesday; 1994 was the last time the central bank made a move of that magnitude. The Bank of England raised rates one-quarter point, pursuing a policy more cautious than the Fed. The average rate for a 30-year mortgage rose to 5.78%, its biggest one-week increase since 1987; it was 3.02% last June.

60 million Americans were under extreme heat warnings during the week, with high temperatures breaking daily records in multiple cities. Yellowstone National Park was closed to the public, due to historic rainfall that washed away roads and bridges. This was the first time in the park’s 150-year history that flooding forced it to close. In 2020 the pandemic caused a two-month closure, and in 1988, wildfires resulted in a five-month shutdown.

Monthly economic statistics released during the week, compared with the prior month were as follows: retail sales -0.3% vs. +0.7%, business inventories +1.2% vs. +2.4%, building permits 1.70 million vs. 1.82 million, housing starts 1.55 million vs. 1.81 million, industrial production +0.2% vs. +1.4%, capacity utilization 79.0% vs. 78.9%, and leading economic indicators unchanged at -0.4%. Weekly statistics for initial jobless claims were 229,000 vs. 232,000, and continuing claims were unchanged at 1.31 million.

Stocks tumbled further on recession concerns, except for an upward blip on Wednesday in reaction to the rate hike. For the three indices we track, Friday’s final levels were: DJIA at 29,888.78 (-4.8%), S&P 500 at 3,674.84 (-5.8%), and the NASDAQ Composite at 10,798.35 (-4.8%). Volatility soared in equities, reflected in the CBOE VIX jumping to 31.13 (+12.2%). In currencies, USD Index futures went out at 104.488 (+0.5%). The commodities sector plummeted 6.4% according to the S&P GSCI’s 753.61 close. Bitcoin sank further towards $20,000 for the first time since December 2020, with the cryptocurrency ending the week 72% below its nearly $69,000 November high.

Weakness prevailed on the metals futures charts for both the precious and industrial categories. Settlement prices and weekly percentage losses were as follows: gold at $1,840.60 (-1.9%), silver at $21.587 (-1.6%), platinum at $930.20 (-4.2%), palladium at $1,798.70 (-5.7%), copper at $4.0135 (-6.5%) and aluminum at $2,498.00 (-6.8%).

The wild intercontinental discrepancy in the natural gas sector of the energy futures market was one for the record books. ICE TTF Dutch gas skyrocketed 42.8% for the week in direct response to Russia’s action of halting exports to western European customers. On Tuesday, Gazprom’s chief executive said: “our product, our rules” after Russia\\\’s gas supply to Germany was cut in half. July TTF futures ended the week up at €117.738 per MWHr. Stateside, however, the NYMEX nat gas contract for July plummeted 21.5% for the week, beginning with the reaction to Tuesday’s announcement that the aftermath of the June 8 fire at the Freeport liquid natural gas terminal in Texas would completely halt LNG exports to Europe until September. This was a major bearish supply-side signal for traders, sending the July contract down to $6.944 per MMBtu. The petroleum sector of the energy markets was less turbulent. There was a steady decline across the board, partially attributed to growing recession woes and higher interest rates. Settlements and net weekly percentage losses were as follows: WTI crude at $109.56 per barrel (-9.2%), Brent crude at $113.12 (-7.3%), heating oil at $4.3398 per gallon (-0.6%), and RBOB gasoline at $3.7930 (-9.1%).

The contracts on our list of nine agricultural products ended the week with a score of four up and five down. Those in the red were: soybeans at $17.02 (-2.5%), wheat at $10.34¼ (-3.4%), coffee at $2.2765 (-0.5%), sugar at 18.60¢ (-1.4%), and cotton at 143.45¢ (-1.1%). The gainers were: corn at $7.84½ (+1.5%), cocoa at $2,387 (+0.1%), live cattle at 136.575 (+0.3%) and lean hogs at 107.875 (+4.0%).

Futures Referenced in Market Recap

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