Weekly Market Recap – May 26, 2023

As the clock kept ticking, the debt ceiling talks showed progress. At our press time, there is an agreement to raise the limit for two years while cutting and capping some government spending. Congressional passage is not assured, especially in the House of Representatives where Republicans hold a slim majority. Governor Ron DeSantis (R-FL) and Senator Tim Scott (R-SC) both announced bids for their party’s presidential nomination. Russia claimed victory in the deadliest battle in its war on Ukraine. A months-long struggle for the city of Bakhmut, now abandoned and devastated, has killed thousands of troops on each side. Estimates are that 20-30 thousand Russian soldiers died, while the Ukrainian toll is believed to be about one-fifth as many casualties.

Monthly economic statistics reported during the week compared with prior levels were: new home sales 683,000 vs. 656,000, PCE index +0.4% vs. +0.1%, Core PCE +0.4% vs. +0.3%, PCE (year-over-year) +4.4% vs. +4.2%, Core PCE (year-over-year) +4.7% vs. +4.6%, durable goods orders +1.1% vs. +3.3%, durable goods orders minus transportation -0.2% vs. -0.3%, personal spending (nominal) +0.8% vs. 0.0%, personal income (nominal) +0.4% vs. +0 .3%, and consumer sentiment index rose to 59.2 from 57.7. Weekly labor department reports showed that initial jobless claims rose to 229,000 from 225,000. The quarterly GDP (second reading) rose 1.3% in Q1 vs. +1.1% in Q4.

Given the uncertainty about the debt ceiling issue, stock market volatility has been ratcheting up. The CBOE VIX, aka “the fear index” rose 6.8% to 17.95 on Friday. For the week, the stock indices we track ended mixed, with the DJIA closing at 33,093.34 (-1.0%), the S&P 500 rose 0.3%, settling at 4,205.45, and the NASDAQ Composite went out at 12,975.69 (+2.5%). In currency trading, USD Index futures increased to 104.136 (+1.0%). The commodity sector rose slightly, as reflected in S&P’s GSCI; the portfolio of futures closed at 546.85 (+0.6%) on Friday.

All six metals futures we monitor moved to the downside. Settlement prices and weekly percentage decreases were: gold at $1,944.30 (-1.9%), silver at $23.360 (-2.9%), platinum at $1,028.10 (-4.4%), palladium at $1,423.50 (-6.6%), copper at $3.6820 (-1.3%) and aluminum at $2,237.50 (-2.0%).

Divergence was evident as energy commodity subcategories moved in opposite directions; the petroleum sector rose and the methane sector fell. Closing prices and their respective movements were as follows: WTI crude at $71.99 per barrel (+0.6%), Brent crude at $76.95 (+1.8%), heating oil at $2.3693 per gallon (+0.3%), and RBOB gasoline at $2.7034 (+4.9%), NYMEX natural gas at $2.181 per MMBtu (-15.6%) and ICE TTF Dutch gas at €24.520 per MWh (-18.7%). Looking back at the charts, the last time global natural gas prices saw such lows was in September 2021.

In the Ag futures, weekly movements for the nine product markets we report on were 4 higher and 5 lower. The gainers were: soybeans at $13.37¼ (+2.3%), corn at $6.04 (+8.9%), wheat at $6.16 (+1.8%), and live cattle at 167.350 (+1.0%). The contracts that fell into the red were: sugar at 25.37¢ (-1.6%), cocoa at $2,991 (-2.5%), coffee at $1.8160 (-5.4%), cotton at 83.35¢ (-3.9%), and lean hogs at 76.075 (-8.4%).

Futures Referenced in Market Recap

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