The EUR is the strongest and the JPY is the weakest as the North American session begins. Changes are relatively modest today. The USD is mostly higher but only marginally. This week has seen big declines in the greenback helped by lower CPI and PPI inflation data. The dollar is down

• -2.4% vs the EUR,
• -2.5% vs the JPY,
• -2.18% vs the GBP,
• -3.37% vs the CHF,
• -1.15% vs the CAD,
• -2.67% vs AUD, and
• -2.8% vs the NZD.

Today marks the beginning of second-quarter results from the largest U.S. lenders (and traditionally the start of the earnings season for the other companies), with JPMorgan Chase, Wells Fargo, and Citigroup leading the pack. And the results so far are off to a good start.

JPMorgan ChaseQ2 earnings, show significant increases in various aspects of its performance. The company reported a 34% increase in revenue to $41.31 billion, surpassing analysts’ expectations of $38.66 billion. Net income soared to $14.47 billion or $4.75 per share, outpacing the anticipated $3.97 per share. The bank’s acquisition of the failed First Republic in May was noted to have contributed a $2.7 billion gain while incurring $1.2 billion in credit costs. Without First Republic’s contribution, JPMorgan’s revenue would have risen by 21%, and profit would have increased by 40%.

Net interest income saw a record 44% increase for the third straight time, reaching $21.78 billion. Meanwhile, non-interest income, comprising fees collected across all business segments, rose by 25% to $19.53 billion.

Wells Fargo also beat. The bank earned $4.94 billion, up 57% from the same period the previous year, translating to $1.25 per share and beating analysts’ expectations of $1.16 per share. Revenue saw a 20% increase to $20.53 billion, surpassing the anticipated $20.11 billion.

One major expense was the $949 million set aside to cover bad loans, primarily in the troubled commercial real estate sector. However, the bank reported more loans and higher interest rates, which led to a 29% rise in net interest income to $13.16 billion. As a result, Wells Fargo increased its full-year guidance, forecasting a 14% rise in net interest income in 2023.

Citigroup reported earnings per share of $1.33 versus $1.30 expected on revenues of $19.4 billion versus $19.27 billion expected.

J.P. Morgan is trading up $4.41 or 2.96% at $153.28. Wells Fargo is trading up $1.66 or 3.75% $45.38. Citigroup is trading up $0.47 or 0.99% $48.15.

In other stock news, the merger between Microsoft and Activision Blizzard continues to face legal challenges. The Federal Trade Commission (FTC) is making renewed attempts to halt the merger, arguing it would break antitrust law. This move follows unsuccessful efforts earlier this week when a federal judge rejected the FTC’s request. Microsoft aims to finalize the merger before their standing agreement with Activision Blizzard expires on July 18. Meanwhile, UBS has upgraded Microsoft (MSFT) from Neutral to Buy, and increased its price target (PT) to $400 from the previous $345. MSFT shares are up 1.81% at $348.87 (up from $342.66 close)

Nick Timiraos, known for his strong connections with the Federal Reserve, underscored the comment made by Federal Reserve Board Governor Christopher Waller about a potential rate hike in the September Federal Open Market Committee (FOMC) meeting. Waller clarified that the decision to skip the rate hike in June was not due to delays but was based on evaluating bank-credit conditions. He suggested that there is no alternating meeting plan for rate decisions, and that each FOMC meeting, including September, is a potential opportunity for a rate adjustment. However, Waller added a caveat that if the next two Consumer Price Index (CPI) readings resemble the last two, the data might suggest that a pause in rate hikes could be warranted.

Approximately two weeks after the Supreme Court rejected a student loan forgiveness program that could have provided a significant headwind to spending in the US when restarted in September (impacting 16M borrowers), the Biden administration announced a similar measure designed to automatically forgive $39 billion in student debt for about 804,000 borrowers. This debt relief, however, is part of a solution to the education loan system’s repayment plans. Under these terms, borrowers will have any remaining debt canceled by the government after they have made payments for 20 or 25 years, with the exact duration depending on factors such as their borrowed amount and loan type.

In entertainment, Hollywood is seeing significant unrest as actors join screenwriters in a strike for better pay, working conditions, and protections from the use of artificial intelligence-created digital replicas. Represented by SAG-AFTRA, the actors’ decision to strike could heavily impact the film and TV industry. What am I going to watch on TV going forward? Well have Mission Impossible this weekend. My wife will drag me to Barbie next weekend.

Finally, in commodities, oil prices are on track to post gains for the third consecutive week but for today, prices are near unchanged. For the week, the price is up 4.10% which comes after a 4.56% rise last week and a 2.14% rise in the week prior. Despite a marginal dip, supply disruptions in Libya and Nigeria, combined with hopes for robust U.S. demand, are supporting prices. Recent inflation readings have also fueled expectations that the Federal Reserve may step back from interest rate rises, potentially bolstering demand in the world’s top oil consumer. China data this week was not supported. Technically, the price continues to push against 200-day MA at $77.33. The high today reached $77.30. That level will be a key barometer going forward.

On the economic calendar today

At 8:30am:

• CAD Manufacturing Sales m/m: The estimate is an increase of 0.8%, up from the prior increase of 0.3%.
• USD Import Prices m/m: The estimate is a decrease of 0.1%, less than the prior decrease of 0.6%.

At 10:00am:

• USD Prelim UoM Consumer Sentiment: The estimate is at 65.5, slightly higher than the prior reading of 64.4.
• USD Prelim UoM Inflation Expectations: The prior reading was 3.3%; the current estimate hasn’t been specified.

In other markets:

• Crude oil is trading down $0.10 or -0.14% at $76.78
• Spot gold is trading down $0.90 or -0.05% $1959.06
• Silver is trading up $0.03 or 0.14% at $24.81
• Bitcoin is trading at $31,221. Yesterday at around 5 PM the price was trading at $31,165

In the premarket for US stocks, the major indices are trading higher. The Dow Industrial Average is leading the way to the upside thanks to the earnings data. UnitedHealth, a Dow 30 stock, is up $30.35 or 2.98% of $461.10 after reporting better-than-expected earnings per share of $6.14 versus $6.01 on revenues of $92.9 billion versus $91 billion expected. They also raised guidance for the fiscal year. The S&P and NASDAQ indexes are trading modestly higher

• Dow Industrial Average is trading up 160 points after yesterday’s 47.71-point rise
• S&P index is trading up 5.5 points after yesterday’s 37.90-point rise.
• NASDAQ index is trading up 5 points after rising 219.61 points yesterday.

The major indices are on pace for solid gains this week:

• Dow Industrial Average is up 1.96%
• S&P index is up 2.53%
• NASDAQ index is up 3.5%

In the European equity markets, the major indices are mixed

• German DAX, -0.16%
• France’s CAC, +0.33%
• UK’s FTSE 100, +0.24%
• Spain’s Ibex, +0.08%
• Italy’s FTSE MIB, +0.05% (delayed).

In the Asian Pacific market today, markets closed higher:

• Japan’s Nikkei 225, -0.09%

• China’s Shanghai Composite, +0.04%

• Hong Kong’s Hang Seng, +0.33%

• Australia’s S&P/ASX 200, +1.56%

In the US debt market, yields are lower in early US trading

• 2-year yield 4.657% +4.7 basis points
• 5-year yield 3.962% +2.8 basis points
• 10-year yield 3.771% +1.2 basis points
• 30-year yield 3.899% +0.4 basis points

In the European debt market, benchmark 10-year yields are down

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• Source: https://www.forexlive.com/technical-analysis/the-eur-is-the-strongest-and-the-jpy-is-the-weakest-as-the-north-american-session-begins-20230714/