Home › Market News › Silver, the U.S. Dollar, and the Budget Deficit Spending Spree
The Economic Calendar:
MONDAY: Wholesale Inventories (9:00a CT), Consumer Inflation Expectations (10:30a CT)
TUESDAY: NFIB Business Optimism Index (5:00a CT), Redbook (7:55a CT), 3-Year Note Auction (12:00p CT)
WEDNESDAY: MBA Mortgage Applications (6:00a CT), CPI (7:30a CT), Inflation Rate (7:30a CT), EIA Petroleum Status Report (9:30a CT), 10-Year Note Auction (12:00p CT), Monthly Budget Statement (1:00p CT)
THURSDAY: Jobless Claims (7:30a CT), PPI (7:30a CT), EIA Natural Gas Report (9:30a CT), WASDE Report (11:00a CT), 30-Year Bond Auction (12:00p CT), Fed Balance Sheet (3:30p CT)
FRIDAY: University of Michigan Consumer Sentiment (9:00a CT), Baker Hughes Rig Count (12:00p CT)
Key Events:
Analysts anticipate a rise in headline and core CPI for May, paying close attention to whether April’s tariffs impact consumer prices. While some Fed officials believe tariff-induced price increases will be transitory, others are more cautious, and firms are expected to pass rising costs onto consumers, which the Fed will consider in its policy decisions.
President Trump is intensely “jawboning” the Federal Reserve, demanding aggressive interest rate cuts, especially in light of the European Central Bank’s recent actions.
The ECB just lowered its key rate by 25 basis points to 2%, marking its first cut in a year, as euro-area inflation eased to 1.9% in May, prompting policymakers to support growth amidst global trade tensions.
Trump has repeatedly cited Europe’s proactive rate cuts, stating, “Europe has had 10 rate cuts, we have had none,” and is now pushing for the Fed to slash rates by a full percentage point, despite a stronger-than-predicted U.S. jobs report for May.
This aggressive push from Trump contrasts with the Fed’s recent history, having last made a single cut of this magnitude at the onset of the COVID-19 pandemic, and only a full point in total during President Biden’s last year in office.
Last week, the S&P 500 was higher by 1.54% and the Nasdaq 100 was up by 1.92%.
Despite persistent tariff-related headwinds and some mixed economic signals, the May jobs data demonstrated unexpected resilience, mitigating concerns of a sharp economic slowdown. The labor market continues to exhibit a theme of low hiring and low firing, while wage growth sustains its pace ahead of inflation.
This 20% increase from the April lows is primarily attributed to solid fundamentals, easing trade tensions, and robust corporate earnings. While valuations have undoubtedly contributed to these gains and may suggest some complacency, strong earnings, particularly within mega-cap technology, have been crucial in underpinning the rally from the bottom.
May’s Nonfarm Payrolls (NFP) report, at 139K, significantly exceeded consensus expectations, which had anticipated figures below 100K.
Sentiment this past week was significantly buoyed by positive developments on the trade front. Following a heightened U.S.-China tensions stemming from accusations of trade truce violations, a phone call between President Trump and Xi Jinping on Thursday was described as “very good.”
President Trump subsequently confirmed an invitation to visit China and reciprocated, announcing an upcoming round of trade talks between U.S. and Chinese officials in London in June.
Success in trading isn’t about perfect entries, but about perfect risk management.
The adage “Give a man a money printer and he will print money” appears increasingly relevant given recent events.
Elon Musk, the prominent figure behind DOGE, publicly broke his long-standing support for President Trump and his administration, tweeting strong condemnation of a “massive, outrageous, pork-filled Congressional spending bill.”
This outspoken disapproval, a clear departure from his prior public alignment, highlights a fundamental divergence between the two influential personalities concerning the critical issue of the U.S. national debt’s significance.
Get ready, precious metal traders, because silver is on a tear!
The white metal is not just making new highs; it’s doing so across all fractal samples, signaling a significant shift in market dynamics. The rally for July Comex silver futures (SIN25) has been undeniable, with prices hitting a remarkable 13-year high above $36.00 an ounce.
This wasn’t an overnight phenomenon. The groundwork for silver’s ascent was laid earlier in the week. On Monday, we witnessed a powerful bullish “breakout” from a choppy and sideways trading range on the daily chart. While prices paused briefly on Tuesday and Wednesday, the momentum quickly returned, culminating in Thursday’s impressive run to multi-year highs.
Furthermore, the sheer volume tells a compelling story. In just the first four trading sessions of June, volume is already 38% higher than the entire last week of May! This kind of activity points to a serious conviction behind the buying.
A “Squeeze Play”? Now, here’s where it gets really interesting for those watching the market mechanics. The contract high for July Comex silver futures in daily data stands at $36.10. Should silver break past this point and establish a new contract high, it would put the entire short side of open interest in a precarious debit position at the clearing house.
What does that mean? If the CME (Chicago Mercantile Exchange) decides to raise margins in response to this volatility, it places immense pressure on those who are shorting silver. They would need to meet higher margin requirements to maintain their positions, potentially forcing them to cover their shorts, which would further fuel the rally.
All signs point to continued upside for the silver market in the near term.
The narrative and momentum in crypto are still very positive.
Stablecoin issuer Circle Internet Financial, known for its USD 61 billion market cap stablecoin USDC, saw its stock soar by 168% on its first trading day.
The company’s long-anticipated IPO successfully raised approximately $1.1 billion by selling 34 million shares at $31 each. Circle’s shares surged to a high of $123 before closing the week around $107.70.
This “white-hot debut” followed continuous upsizing of the IPO, with earlier SEC filings indicating an increase to 32 million shares priced between $27 and $28, targeting a valuation of up to $7.2 billion, and reports suggesting BlackRock planned to acquire about 10% of the IPO shares.
Circle’s strong public market performance underscores a broader resurgence of interest in crypto within public markets. This renewed enthusiasm extends beyond Bitcoin accumulation programs, with public companies now engaging in diverse digital asset strategies, including staking and other ecosystem participation.
Forget the headlines about inflation or interest rates for a moment. The real story is being told by the U.S. dollar, which has been quietly weakening, shedding over 6.4% year-to-date by early June – its worst performance in over 30 years.
This isn’t just a blip; it’s a “structural crack” in the dollar’s strength, reminiscent of significant shifts in 1999 and 2003.
What does a weaker dollar mean? It’s a pressure release for emerging markets, a boost for global commodities, and a clear signal that capital is seeking value elsewhere. We’re seeing this play out with strong rallies in currencies like the Brazilian Real and Indian Rupee, alongside surging resource-heavy stock exchanges in Canada and Australia.
Even gold, the timeless safe haven, is having its best start since 2020. History shows that when the dollar drops this significantly, emerging markets tend to outperform the S&P 500 in the latter half of the year.
The message is clear: 2025 isn’t just another year, it’s a script-rewriting year for global finance.
Trade uncertainty is a major market concern due to the Trump administration’s tariff actions.
Despite a passed deadline for “best offers” to avoid new tariffs, no significant progress was made. President Trump subsequently escalated steel and aluminum tariffs to 50%, citing national security, a move that has further strained global trade relations.
The tangible impact of these tariffs is evident, as highlighted by recent corporate retailers’ profit warnings.
Concurrently, U.S.-China relations remain tense, with Trump describing President Xi as “extremely hard” to negotiate with.
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