Dollar Retreats, Gold Rebounds Amid Easing Inflation Expectations

Market Overview

The launch of the U.S.-China talks in London has boosted market sentiment, sparking a rally in chip stocks and lifting both the S&P 500 and Nasdaq for a second straight day. The semiconductor index closed up nearly 2%. Meanwhile, U.S. Treasury yields pulled back after surging, following a broad decline in May inflation expectations. The 10-year yield rose initially but ended lower. The U.S. dollar weakened, giving gold a lift—Comex gold futures reversed an intraday 1% loss to close higher. Silver surged more than 2%, marking a new three-year high. Oil prices rose for a third straight session, with WTI crude gaining over 1% to hit a two-month high.

Hot Topics to Watch

● May Consumer Inflation Expectations Drop Sharply

According to the New York Fed's latest survey, U.S. consumer inflation expectations declined across all horizons in May—for the first time in 2024. One-year inflation expectations saw the largest drop, falling from 3.6% in April to 3.2%. Three- and five-year outlooks also edged lower. Analysts note that while expectations remain above the Feds 2% target, the downtrend is clear. Improved consumer confidence is largely attributed to a temporary easing of U.S.-China trade tensions. The survey also showed marginal improvements in Americans' views on employment, personal finances, and stock market outlook.

● Hedge Funds Enter “Panic Buying” Mode on U.S. Stocks

Hedge funds have entered a "panic buying" phase, logging a fifth consecutive week of net long positions in U.S. equities. Long positions outpaced shorts by a 3:1 ratio. In this wave of capital reallocation, industrials emerged as the biggest winners, with the sector seeing the highest net inflows in over seven months. At the same time, hedge funds added to U.S. healthcare stocks for the sixth straight week.

Key Events to Watch (GMT+8)

• 16:30 EU – Eurozone June Sentix Investor Confidence Index

• 18:00 US – May NFIB Small Business Optimism Index

• 00:00 US – EIA Short-Term Energy Outlook Report (Monthly)