💡Quote of the week
“In theory, considering the events of 2011 when gold experienced a significant rally of $300 within two weeks … leading up to the debt ceiling deadline and subsequent credit rating downgrade of the US, a "debt impasse" is super gold positive.” Nicky Shiels, Head of Metals Strategy at MKS PAMP
Investment news
🇩🇪 German recession. The German economy slipped into a technical recession in the first quarter of this year, as households tightened spending. (CNBC)
On Thursday, data released by the German statistics office revealed a revision to the country's GDP, which was downgraded from zero to -0.3% for the initial three months of this year.
This follows a 0.5% contraction observed in Germany during the final quarter of 2022. Meeting the criteria of two consecutive quarters with negative growth indicates a technical recession.
🇬🇧 📉 Sharp drop. U.K. inflation falls below 10% for the first time since August as energy prices retreated and Russia's invasion of Ukraine faded from the annual consumer price comparison. (CNBC)
The Office for National Statistics reported Wednesday that headline CPI inflation came in at 8.7%, down from 10.1% in March, but above Reuters' consensus estimate of 8.2%.
🇺🇸 U.S. debt ceiling crisis. As time runs out to avoid a catastrophic U.S. default, Republican and White House negotiators are close to an agreement to raise the debt limit and cap federal spending for two years. (Bloomberg)
Under the terms of the emerging agreement, defense spending would be allowed to rise 3% next year in line with President Joe Biden’s budget request.
⭐ Gold bounces. Gold prices moved up from two-month lows on Friday, helped by a drop in the U.S. dollar as traders assessed the progress of U.S. debt ceiling talks and the Fed’s rate hike path ahead.
“Today’s moderating U.S. dollar has carved out some breathing space for bullion,” said Han Tan, chief market analyst at Exinity.
🏦 Stocks, U.S. bonds steady. In anticipation of further news on whether US lawmakers would reach a debt agreement, equity markets were steady and Treasury yields held near two-month highs. (Bloomberg)
“The market remains very much focused on the US debt ceiling talks, even though we have been in this situation a number of times in the recent past,” said Stuart Cole, head macro economist at brokerage at Equiti Capital UK Ltd.
📉 European gas tumbles in the longest run. As the economy shows few signs of a meaningful recovery, European natural gas prices are headed for their longest run of weekly declines since 2007. (Bloomberg)
Futures fell as much as 4.7% on Friday before paring losses, extending this year's decline to over 66% and putting them on track for an eighth straight week of declines.
💵 Record fine. The European privacy regulators fined Meta 1.2 billion euros ($1.3 billion) over the transfer of EU user data to the U.S. (CNBC)
Despite the 2020 European court ruling, Meta continued to send personal data of European citizens to the U.S. according to the Irish Data Protection Commission that oversees the company's operations in the EU.
📸 Image of the week
Opinion
🤔 Recession might be a good thing. Founder and CEO of Destination Wealth Management Michael Yoshikami believes that a U.S. recession might prevent a steep market decline in 2023. (CNBC)
“If the economy avoids [recession] and keeps on its frothy path, then I think we’re going to have some problems in the market in the second part of the year,” Yoshikami said.
⚔️ With China and the U.S. redefining geopolitics, Europe faces a win-win scenario. “Viewed from China, the EU is the most important high-income market that it still has largely unfettered access to.” (CNBC)
“The U.S.′ hawkish policy stance towards China means that China needs to improve relations with Europe to mitigate the impact of export controls. Therefore, China has an incentive to work hard on improving EU relations,” Anna Rosenberg, head of geopolitics at Amundi Institute, told CNBC.
What else is happening
🇺🇦 Ukraine war. Russia carried out an intense missile and drone strike overnight to Friday; Russia’s Medvedev said the conflict could last decades. (CNBC, Reuters)
“This conflict will last for a very long time. For decades, probably. This is a new reality,” Russian Security Council Deputy Chairman Dmitry Medvedev said, according to reports from Russian news agencies cited by Reuters.
🇺🇸 🇨🇳 U.S.-China trade spat. U.S. Secretary of Commerce Gina Raimondo met with her Chinese counterpart Wang Wentao in Washington D.C. on Thursday to discuss bilateral trade concerns. (CNBC)
According to a readout by the Commerce Department, “The two had candid and substantive discussions on issues relating to the U.S.-China commercial relationship, including the overall environment in both countries for trade and investment and areas for potential cooperation.”
And finally…
🧬Genome data sheds light on how Homo sapiens emerged in Africa. Several ancestral groups from different parts of Africa contributed to the emergence of Homo sapiens in patchwork fashion, migrating from one region to another and mixing with one another over the centuries. (Reuters)
Homo sapiens did not evolve from a single region in Africa or from a mixture with an unidentified closely related species in the human evolutionary lineage within Africa, as longstanding hypotheses have suggested.
See you next week!
