1. A Quiet Day Before a Busy Week
There isn’t much market-moving economic data today.
Tomorrow, we get Canada’s monthly GDP report. Keep in mind that Canada is currently in a technical recession, and the CUSMA deadline is July 1, adding another layer of uncertainty.
We’ll also receive fresh insights into the U.S. housing market, along with the JOLTS Job Openings Report.
Looking ahead: Thursday: U.S. jobs report.
The second half of the week could be much more eventful.
2. Leverage Is Rising Again
Margin debt is soaring.
Leveraged ETFs continue to attract significant inflows.
There’s a growing sense that “nothing can go wrong.”
Meanwhile, the S&P 500 closed below its 50-day moving average on Friday. This moving average has been an important technical level for quite some time.
If the index can hold above it, buyers could step back into the market. If not, selling may follow.
But don’t lose sight of the bigger picture. We could be in one of those periods where stop losses become essential. Very rarely you see massive move downs in summer months, but we are also living in wild times. Also never forget that trend is your friend. You do a lot better being with the trend than betting against it.
3. Is Gold About to Flash a Death Cross?
If you’ve been watching gold charts, particularly the 50-day and 200-day moving averages, you’ve probably noticed something important. A death cross is likely going to happen. That’s when the 50-day moving average falls below the 200-day moving average.
It’s worth watching closely because it’s often viewed as a bearish technical signal.
The last death cross on gold occurred in 2023, but the decline that followed was relatively modest. However, if you look back over the past 10 to 15 years, there have been several death crosses that were followed by significant selling.
As for silver, the technical picture has weakened a bit. There’s a breakdown at play. If the breakdown continues, it wouldn’t be surprising to see silver trade in the $50-$45 range in the near term. Time will tell more as silver has been very reactive lately.
4. Japan May Be the Market’s Biggest Blind Spot
Have you looked at the Japanese yen lately? It’s trading near all-time lows against the U.S. dollar.
Remember: Japan imports much of its energy and is also the largest holder of U.S. government debt. The Bank of Japan has intervened several times when USD/JPY approached 160.
At the time of writing, USD/JPY is around 161.9. Is another intervention coming?
At the same time, Bank of Japan interest rates have increased, while bond yields remain elevated. That also raises questions about the sustainability of the yen carry trade.
Japan may be one of the most overlooked stories in global markets right now. Between the currency, yields, and the broader economy, there’s a lot happening beneath the surface.
5. Bitcoin Stalls While AI Heads to Space
The $60,000 level is becoming a major battleground for Bitcoin. It continues to struggle to break meaningfully above that level.
If sellers regain control, there’s a possibility Bitcoin falls toward the $53,000-$55,000 range before finding stronger support.
Meanwhile, Canadian five-year bond yields have cooled slightly. For homeowners renewing mortgages, this could translate into relief of a few basis points.
Also worth watching: the BIS report on AI and its broader implications…interesting read.
And one final thought: is “space consolidation” becoming the hottest new theme? Rocket Lab and Iridium merging, how many more will follow?