Global Market News

Global equities see losses

Global equities were down this week amid a sharp rise in global bond yields. The S&P 500 and Dow Jones closed down 1.15% and 1.93%, respectively, while the Nasdaq lost 0.90%. The US 10-year Treasury jumped several basis points to 4.06% while the price of a barrel of West Texas Intermediate crude oil increased a couple of dollars, closing Friday at $73.67. Volatility, as measured by the CBOE Volatility Index, increased over the week to 14.83.

US payrolls fall short

June nonfarm payrolls in the US came in below expectations for the first time in nearly a year. While economists expected a rise of 230,000 jobs, only 209,000 were actually added to the economy last month. The data demonstrates some cooling in the US labor market which has been anticipated by the Federal Reserve. Fed Chairman Jerome Powell made it clear last month that softening in the labor market was required for inflation to come down. While the jobs data is seen as an improvement, it is likely not enough to stave off a rate hike at the Fed’s July meeting.

International Developments

Israel withdraws following largest military operation in West Bank in years

Israel has withdrawn its military from the West Bank city of Jenin after its largest military operation in the city in 20 years. Israeli officials have stated that the operation was designed to eliminate the presence of armed militants responsible for attacks against Israelis. The operation began on Monday with drone strikes, followed by the insertion of Israeli forces into the area. At least 12 Palestinians have been killed in the violence, with eight confirmed militants, more than one hundred injured, with thousands having fled the city. Israeli Prime Minister Benjamin Netanyahu has increased the government’s pressure on the West Bank this year, putting 2023 on track to be the deadliest year in the West Bank since 2005.

Sweden’s NATO bid faces headway from Turkey

US President Joe Biden hosted Swedish Prime Minister Ulf Kristersson on Wednesday to strengthen Sweden’s NATO bid, as Turkey continues to block Swedish entrance into NATO in the runup to the NATO summit in Vilnius. Turkish opposition stems from an accusation that Sweden is harboring Kurds affiliated with the Kurdistan Workers’ Party (PKK), which is considered a terrorist group within Turkey, and that Turkey will not budge from its position until specified individuals are either extradited or expelled. While Sweden has extradited a small number of individuals to Turkey, this has proven insufficient. Furthering complicating the negotiations are recent Quran burnings outside a Stockholm mosque, which sparked outrage not just in Turkey, but in the Muslim world broadly. 

US Social & Political Developments

Yellen visits Beijing

US Treasury Secretary Janet Yellen has flown to Beijing in a bid to halt the slide in US-China relations. Economic turbulence has been growing between the US and China for some time, with China recently announcing an export ban against the US on gallium and germanium, citing national security concerns. The move appears to be a tit-for-tat retaliation to the advanced semiconductor exportation ban levied against China during the fall of last year by the US government. Yellen is set to stress that it is in both countries’ interests to compete economically so as to benefit both sides, without further estranging the two economies from each other.

Supreme Court shoots down student loan forgiveness

The US Supreme Court has struck down President Biden’s plan to erase $400 billion in student loan debt in a 6-3 ruling. Writing in the majority, Chief Justice John Roberts argues that the president lacks statutory authority to make this move under powers given to the executive by the Congress. Shifting gears, the president announced a second bid to eliminate some student loan debt using the Higher Education Act, which grants the US Department of Education authority to “compromise, waive, or release loans.” More details on the move will be forthcoming as rules are established over the coming months, with the move potentially ending up right back in the Supreme Court.

Corporate/Sector News

Twitter vs. Meta: Is Threads a Twitter-Killer?

Meta has launched Threads, a rival social media app to Twitter, and has quickly received notice of potential legal action from Twitter’s legal team. Twitter alleges that Meta hired former Twitter employees who made a “copycat” app using Twitter’s intellectual property. Meta denies this charge. Over 70 million people have signed up for Threads, a number which took Twitter four years to reach after launch, and Meta expects the userbase to continue growing. 

Beijing imposes export controls in retaliation to US, EU

Beijing has imposed new restrictions on exporting gallium and germanium, two metals critical to semiconductor, telecommunications, and electric-vehicle industries in what appears to be retaliation to technology export restrictions targeting China from the US and Europe. The heightening trade bans between China and the West stem from fierce competition in quantum computing, artificial intelligence, chip manufacturing, and beyond. Analysts believe Beijing may just be posturing, and only expect the tech industry to feel the crunch if the restrictions last for over a year.

Biden administration approves largest-ever wind project

The Biden administration approved the largest offshore wind energy project ever, located off the coast of New Jersey. Up to 98 turbines have been approved to operate as well as three offshore substations to transmit the energy to shore. The project is expected to generate around 1,100 megawatts, enough to power over 380,000 homes, upon completion. The administration called the project a milestone for the United States, as it lags far behind Europe and China in wind-generated energy.

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Source: WSJ