FT : China developers face $13bn wall of dollar bond payments in second half

China developers face $13bn wall of dollar bond payments in second half
Foreign investors fear Beijing will favour onshore creditors as Shimao Group becomes latest to default

Chinese property developers face a $13bn wall of foreign currency bond payments in the second half of this year, as a mounting default tally darkens the market outlook.

China’s real estate sector has struggled to come to grips with slowing growth coupled with authorities’ efforts to rein in excess leverage. Waves of defaults have been triggered across the industry, unnerving fixed-income investors who frequently relied on developers’ offshore dollar bonds to deliver outsize returns during the era of ultra-low interest rates.

Real estate company Shimao Group’s default on a $1bn bond last Sunday has heightened concerns among bondholders with exposure to Chinese developers, who have long been a central driver of issuance in Asia’s high-yield dollar debt market. The Shimao bond had traded at just 12 cents on the dollar last week — pointing to high levels of financial distress — ahead of the payment deadline.

“It’s really just one after the other,” said one Asian fixed-income investor with experience trading Chinese developer debt. The investor added that most traders had stopped paying attention to yields and were instead looking at bonds’ dollar pricing — a switch that usually signals deep concerns or fears of imminent default.

“For the developers everybody thinks are still OK, it’s good if they’re in the high 60s or 70s,” the investor said, referring to the bonds’ value in terms of cents on the dollar. “Otherwise, you’re below 40.”

Data from Dealogic show about $13.3bn in dollar bond payments across more than 60 property groups will come due before the end of 2022, equivalent to 13 per cent of the sector’s more than $100bn in outstanding obligations to international bondholders.


The missed payment by Shimao, which has about $5.5bn in outstanding dollar debt, adds to a growing list of embattled developers, including Sunac and China Evergrande, the latter of which faces more than $300bn in total onshore and offshore liabilities.

Foreign creditors are increasingly concerned that onshore investors will be privileged over foreign bondholders and have described debt restructuring at Evergrande and other developers as “opaque” and “ad hoc”.

One Hong Kong-based bond trader, who asked not to be named, said there were few buyers left in Asia’s high-yield market and that investors with exposure were having a “hard time” as developers’ debt obligations mounted.

“Since around June, there’s been a lot of selling from global funds,” the trader said, adding that “it’s a bit late to sell, to be honest”.

Many expect that most of the distressed developers will seek debt extensions, “which lenders tend to agree to”, the trader added. Investors, for example, declined to accelerate other Shimao bond payments when it failed to make good on its recent $1bn bond bill.

Victor Shih, professor of Chinese political economy at the University of California, San Diego, said pressure on Chinese property developers had been further compounded by the US Federal Reserve’s interest rate rises, which have boosted yields provided by ultra-safe US government debt.

“It’s one thing if people were buying Evergrande [bonds] and getting 20 per cent yield, maybe it is worth it to bear the risk,” he said. “Notes that were issued [by developers] offshore a few years ago with a yield of 3 or 4 per cent, you can get that with the US Treasuries now,” he added.

Refinancing dollar debt had also become markedly more difficult for property groups, analysts said, as Covid-19 lockdowns have undermined consumer confidence and sapped demand for new housing in China.

Xiaoxi Zhang, China finance analyst at research group Gavekal, said “most Chinese developers have been shut out of the market and other Chinese high-yield issuers have also seen surging refinancing costs”.

Zhang added that even in China’s onshore bond market, “life is not easy” for private developers seeking to refinance renminbi-denominated debt — although state-owned real estate groups still had more ready access to financing. “As the Chinese economy is facing downward pressure, investors embrace state backing more than ever, making non-[state owned] names hard to refinance at decent cost.”

Despite lagging growth and rising defaults, few investors or analysts expected Beijing to launch a bailout for the cash-strapped property sector. At best, the Asian fixed-income investor said, “a few of these privately owned enterprises may live — and by live, I mean hop along on a crutch”.

FT : US urges Japan to cut cryptocurrency operations in Russia

US urges Japan to cut cryptocurrency operations in Russia
Washington provided Tokyo with information on Russian mining operations with Japanese ties

The US has called on Japan to step up pressure on the country’s cryptocurrency exchanges and miners, urging them to sever ties with Russia in a bid to further financially isolate the country from the outside world.

The request from US diplomats was directed to several of Japan’s 31 officially licensed crypto exchanges that are still running in Russia, according to people close to the situation.

The diplomats asked Tokyo to focus on halting cryptocurrency mining operations based in the Irkutsk region in Siberia, said two people familiar with the matter.

The area is favoured for mining operations because its relatively low temperatures require less cooling and because of the availability of cheap hydroelectric power.

In response, representatives of Japan’s Financial Services Agency renewed demands that the Japanese exchanges they oversee cut any surviving relationships, according to people close to three exchanges.

Asked about the request, the FSA and the US embassy in Tokyo declined to comment. The US state department said Washington and its allies were “united in our determination to hold Russia to account” for the war against Ukraine. “We will continue to evaluate the impacts of our measures and are prepared to take further measures,” a state department spokesperson said.

Since Russia’s invasion of Ukraine, the administration of prime minister Fumio Kishida has been at pains to remain in lockstep with the US and allies on sanctions against Vladimir Putin’s regime and efforts to minimise Japanese business in Russia.

Washington’s decision to supply information on possible Japanese crypto mining operations in Russia was part of an effort to maintain pressure on Putin as the war continues, said people briefed on the matter.

Japan’s FSA, which regulates the country’s licensed cryptocurrency exchanges, responded quickly to Russian’s invasion of Ukraine.

On March 14, the FSA formally asked the exchanges to monitor any accounts or transactions involved the movement of assets of any person or entity under sanctions.

The request followed an emergency change to Japan’s Foreign Exchange and Foreign Trade Act, which brought cryptocurrencies and other digital assets under its umbrella and strengthened the government’s powers to stem their flow in and out of Japan.

The FSA’s notice did not directly ask the exchanges to close any Russia operations but some companies interpreted it that way and several stopped running in the country that month, according to people close to the situation.

Decurret, a cryptocurrency exchange, said that after the invasion and the FSA’s notice it had decided to suspend its operations in Russia.

Many of the exchanges contacted by the FT said that they currently do not have any operations in Russia. A senior executive at one exchange said that they knew of at least one mining company that had cut its relationships with Russia in June after the US request.

However some exchanges and crypto mining businesses have evolved a complex network of subsidiaries to continue working with their Russian operations, an allegation also raised by US diplomats, said people close to the situation.

The former head of one exchange, under condition of anonymity, confirmed that Japanese crypto exchanges had encountered a recent intensification of pressure to relocate any mining or back-office operations out of Russia.

But the person added that they knew of at least one exchange that had decided to maintain its business there, skirting the regulation by setting up a shell company in Singapore and routing payments via that.

FT : Deconstructed watch: Panerai Submersible S Brabus Blue Shadow edition

Deconstructed watch: Panerai Submersible S Brabus Blue Shadow edition
The Italian watchmaker has partnered with German company Brabus for a special edition diving watch

Fans of souped-up Mercedes-Benz cars will be familiar with the name of Brabus, the tuning house established in 1977 by the then 22-year-old Bodo Buschmann who went on to grow it into a multimillion dollar, international business.

Buschmann died in 2018, but not before he had experimented with applying Brabus customising methods to boats having bought an 11.3-metre Axopar a couple of years earlier and having it upgraded by his engineers to boost its performance and enhance its looks.

The project led to a joint venture with Axopar and now Brabus Marine offers a range of regular production and limited edition dayboats with suitably stealthy looks and levels of performance in-line with that of its cars.

Since Buschmann’s death Brabus has been run by his son Constantine who, mindful of the fact that the end of the road is nigh for new, internal combustion-powered road vehicles, is steadily diversifying the firm’s portfolio.

With that in mind, Brabus recently unveiled new 300bhp and 900bhp boats, a €40,000 KTM-based Brabus motorcycle and, through a collaboration with Panerai, what is expected to be an ongoing range of Brabus Marine-inspired watches.

The one shown here is called the Submersible S Brabus Blue Shadow edition and was first shown alongside the new Brabus Marine Blue Shadow boat during the Palma yacht show in April.

Limited to 200 examples and with a £40,600 price tag, it features a 47mm, 3D-printed titanium case and a unidirectional bezel made from Panerai’s carbon-fibre based Carbotech.

Decoration is taken care of by blue and grey dial detailing and a combination of blue SuperLuminova highlights for the minute hand and ‘12’ indicator and green for the remaining hour markers.

The most intriguing aspect of the watch, however, is its patented date display which takes the form of a laser-engraved glass plate topped with a polarised lens that magically avoids either revealing any unwanted parts of the date disc or hiding the workings of the skeletonised workings.

Comprising 341 parts, the in-house, P.4001/S automatic movement features a tungsten winding rotor, twin spring barrels, a GMT function and a power reserve indicator that’s visible through the sapphire case back.

Panerai’s patented crown locking lever (also made from Carbotech) helps to ensure water resistance down to 300 metres, to which end the watch is fitted with a practical leather and rubber hybrid strap.

FT : Jewellers and watchmakers grapple with when to enter the metaverse

Jewellers and watchmakers grapple with when to enter the metaverse
Luxury brands study the possibilities while some warn of danger of being left behind

For Jean-Christophe Babin, chief executive of Bulgari, the question is not whether luxury goods brands should enter the metaverse . . . but how. He worries about his high-end jewellery being “worn by a cubic avatar that looks like three pieces of Lego put together”. But he can imagine a Bulgari “gem discovery game”.

The metaverse is a term coined by Neal Stephenson, in his 1992 science fiction novel Snow Crash, for a “computer-generated universe” in which people communicate via avatars.

Today, its meaning varies. “[It is] partly a dream of the future of the internet and partly a way to encapsulate current trends in online infrastructure, including the growth of real-time 3D worlds,” according to Metaverse and Money: Decrypting the Future, a report published by Citi GPS in March.

Ronit Ghose, global head of banking, fintech and digital assets at Citi Global Insights, says the metaverse is “immersive, it’s persistent and it’s a shared virtual space”.

“If you have a business model that in any way touches the internet, or you think your next generation of consumers will be using the internet to experience, choose, decide, transact, then you have to be interested in the metaverse,” he argues.

“It’s just the next generation of the internet if you take that broad definition.”

Citi’s report estimates that the target market for the metaverse economy could be worth between $8tn and $13tn in 2030, so it is no surprise that watch and jewellery brands have increased investment.

At Bulgari, improving technology to make “more elegant” avatars is one of the tasks facing its innovation business unit, which was launched in 2020 and has a creative laboratory in Rome.

Meanwhile, Tag Heuer, the Swiss watchmaker, advanced its digital strategy last month with the launch of an non-fungible token viewer for its Connected Calibre E4 smartwatch. This feature, available as a free update, allows owners to display NFTs — digital tokens stored on a blockchain, representing unique assets such as art or media, and viewable on wallet apps — on their watchface. The watch connects to the owner’s wallet app in order to verify authenticity.
Frédéric Arnault, chief executive of Tag Heuer, which is owned by LVMH, says it “feels natural” for the company to investigate this world but that it doesn’t “want to jump on it too fast”. “We don’t want it to feel opportunistic,” he says. “We want to come with a real vision that we’ll be able to sustain and that will drive value.”

Arnault, a collector of NFTs, says his brand is going after NFT enthusiasts. “It is very important as a starting point to acknowledge and respect the community, and so we deliver a feature and a product that is useful and exciting for the community,” he says.

In May, Tag Heuer started to accept 12 cryptocurrencies, including bitcoin and ethereum, for purchases on its US website, but it is yet to issue its own NFTs.

Thomas Chauvet, head of luxury goods equity research at Citi, believes that, apart from connected watches, brands are not yet ready to explore the commercial opportunities of the metaverse, in much the same way that they were initially reluctant to embrace ecommerce.

Instead, he says, they will focus on it as a “communication tool” or “authentication opportunity”.


Panerai, the Italian watchmaker, launched its first NFTs last month to “upgrade the customer experience”, according to Jean-Marc Pontroué, chief executive.

Buyers of the Radiomir Eilean Experience Edition watch — it is limited to 50 pieces — were invited to sail along Italy’s Amalfi coast aboard a classic yacht after which the watch was named, and received a digital wallet. This included an NFT artwork, by Skygolpe, which unlocked exclusive content, services, events and offers.

“We wanted to add this NFT to bring added value to customers to say we will connect with you before the experience starts, during the experience, and after the experience.,” says Pontroué. “The NFT is a modern platform to connect people who love our brand.”

Panerai, which is owned by Richemont, plans to give every watch a digital passport next year. This is something Breitling has done since 2020 to allow owners to prove a watch’s authenticity, as well as access the warranty programme.

Both watchmakers have partnered with Arianee, a French company that helps brands to create and distribute NFTs and leverage the tokens. Pierre-Nicolas Hurstel, Arianee chief executive, calls it “a new loyalty tool”.

It transforms the relationship between brands and communities, he says, because the customer keeps control of their data. At the same time, the brand regains control of its digital presence as it no longer has to rely on platforms such as Instagram to reach customers.

“The overarching goal is to build a decentralised database of owners that you can then engage thanks to the mechanisms of NFTs, to whom you can offer a seamless journey across [digital, physical and immersive] channels,” Hurstel says.

In March, Bulgari launched the Octo Finissimo Ultra, the world’s thinnest mechanical watch, which is limited to just 10 pieces. Each watch has a QR code on the barrel’s ratchet wheel which gives the owner access to an NFT artwork. They can also access a virtual 3D tour of the movement and practical data such as the maintenance logbook.

Two necklaces in the latest high jewellery collection, Bulgari Eden, the Gardens of Wonders, have QR codes that link to NFT artworks. The house also revealed the digital-only Beyond Wonder, its “first NFT jewel”, at the same time.

Babin says the challenge in expanding this technology is making the digital assets “really dynamic”. “But I believe that [with] this side of the metaverse we bind clients [to the brand] in a much more intimate, emotional, immersive way,” he says.

His first priority, however, is to create “more touch points” to reach potential clients as the metaverse opens the door to “better visibility” and a “broader audience”. He is conscious that, as a luxury brand, Bulgari has to be selective: its inroads will be “extremely beautiful”.

Last year, the Bulgari Colors exhibition attracted nearly 50,000 people in Seoul, South Korea. More than 10,000 people downloaded an app to experience a virtual-reality version of the show, in which users could style an avatar and explore pieces on display.

Users of Drest, a fashion game, could style a Kate Moss avatar with pieces from the supermodel’s high jewellery collection with Messika. The jeweller joined the app for two weeks this year to build brand awareness and nearly 4mn people saw the content.

“There are more and more younger people who are rich, and they want to know new brands, and this new generation has a new way of living, a new way of consuming [content],” says Valérie Messika, the founder of the French diamond house.

Ghose also points to the “huge amount of wealth generation in the technology industry” that luxury brands may wish to target, people who are “digitally native” and either invested or interested in the metaverse.

He says there is a lot of behind-the-scenes experimentation as companies adapt their digital strategies. “Ignoring [the metaverse] is going to be very dangerous in three years’ time,” he says.

FT : Audemars Piguet expands into luxury hospitality with hotel opening

Audemars Piguet expands into luxury hospitality with hotel opening
Boutique Hôtel des Horlogers sits in the birthplace of Swiss watchmaking


A watch by Audemars Piguet (AP) is rarely designed to be discreet. It is a symbol, intended to be visible — a piece of ostentatious jewellery justified by the craft, workmanship, technical wonder, and invention that it embodies as a functional, rather than a decorative, object.

You might expect then, a hotel designed for AP by a starchitect — Denmark’s Bjarke Ingels — to be a similarly visible and high-tech affair. You would be disappointed.

The new Hôtel des Horlogers in the birthplace and nexus of Swiss watchmaking, the Vallée de Joux, does not even have a sign. Set back from the street behind a grass meadow in the village of Le Brassus, its low-slung, timber and glass facade displays little of the self-conscious luxe of watches that might be made of solid rose gold and retail for hundreds of thousands of pounds.

“The story of how watchmaking started here is fascinating,” Ingels tells me. In 1541, Geneva instituted Protestant reformer John Calvin’s ban on wearing jewellery. “But, because watchmaking was seen as an applied art, it fell outside the regulations and the goldsmiths transferred their skills to clocks.”

That story is supplemented by one just as quirky. The people in the valley, mostly cattle-farmers — many of them Huguenot refugees from France — had little to do in the winter when the valley was snowed in, the roads inaccessible and the schools shuttered. So they took to their attics and began crafting watch parts. Le Brassus’ most prominent buildings are still the AP head office and the Laiterie, with its shiny metal milk churns stacked outside.

The landscape was intimately connected to everyday life, here. When Ingels and his practice, the Bjarke Ingels Group (BIG), came to design the hotel, they made efforts to embed the building in the terrain, even to supplement it by envisaging its eccentric vertical ramps as a landscape within the landscape.

This is a modus operandi for Ingels, whose famous buildings include Amager Bakke, a waste incinerator in Copenhagen with a ski-slope on top, and a pyramidal mountain of a skyscraper, Via 57 West, in West Manhattan. They reflect a desire to create a landscape from, rather than just outside, the architecture, which perhaps stems from the flatness of Denmark. He cannot seem to resist it.

The hotel itself is slick and generous, from the lobby with its stripped tree roots hanging from the ceiling and its unfurled ammonite of a reception desk, to Le Gogant — the restaurant downstairs run by three Michelin star chef Emmanuel Renaut. This is an operation which looks well-engineered and runs, of course, like clockwork.

The interiors, designed by French agency AUM Pierre Minassian, attempt to echo elements of the landscape, from strange truffle-shaped light fittings to mountains inscribed on the walls in silvery op-art discs. It is occasionally a little much — the white elephant-ear light fittings looming over the beds can be a bit oppressive, making the interior at odds with what is, by Ingels’ standards, a relatively understated building.

General manager André Cheminade tells me that this is already becoming “a place of architectural, as well as horological, pilgrimage”. BIG designed the AP Museum next door — another building set deep into the earth and virtually invisible form the main road — so visitors get a two-for-one experience.

Ingels describes the design of the museum to me as “a spiral that takes you to the centre and unwinds again or, if you like, you can jump in time across the space.” He points out that, in watches, “miniaturisation is making things smaller and thinner, and skeletonisation removes plates and reveals the inner workings — the performance of the mechanism becomes the whole story.” So he went and removed everything he could. “The solid elements, the walls and the columns have been eliminated and the spiral mechanism revealed. It’s architecture as clockwork.”

The way he achieved this was to make curved walls of structural glass; the workings of the interior are visible from the valley and the landscape is ever-present inside. Vitrines containing unimaginably precious timepieces spanning the history of watchmaking clam up into black monoliths after closing, watchmakers can be seen in an atelier inside the building working at almost infinitesimally small scales, their labour visible, their actual actions and the microscopic screws and cogs they work with, remaining unseen. The whole thing is wrapped in a delicate bronze mesh, a net to contain the parts.

I could not help asking Ingels, rarely the subtlest and most self-effacing of architects, why these buildings, but particularly the museum, were made almost invisible. “The museum site was between two older buildings,” he says, “and it would have looked like we were a newcomer in between two old friends.”

Le Brassus has become a bit of construction site. These two structures may be complete but a new AP factory is being built along the winding mountain stream. Red tower cranes punctuate the sleepy skyline incongruously, competing only with church spires and the occasional oversized pine.

It is a curious kind of destination, with skiing and forest hiking as attractions besides watches, but it is also an emerging landscape of luxury. Watch and clock maker Jaeger-LeCoultre has its own museum nearby and the independent Espace Horloger in Le Sentier, four kilometres from Le Brassus, gives a fine historic overview of Swiss watchmaking. Blancpain and Breguet, inventors of the shock-absorbers that made watches more durable and practical, are here, too.

Ingels, of course, wears an AP on his wrist. “It’s an exposed escapement, and sometimes, when I’m sitting around, it feels a little like another pulse,” he says. “The clockwork captures energy from my movement and uses it. You take a lot of inanimate gears and springs and then harvest your energy to make an almost lifelike state.”

In a way, it is exactly what he has done with the landscape: harnessing the views, the potential, the movement of the sky and the grass, and using it to animate the interiors of the new hotel. Like the cowbells echoing the chimes of the church clocks, and AP’s incredibly-engineered minute-repeater chiming watches, its architecture is a capturing of the tension between movement, energy and the seemingly inanimate nature of materials.

>>> US After Hours Summary: LEVI +3.6% higher on earnings; WDFC -9.3%, NUS -5% l

After Hours Summary: LEVI +3.6% higher on earnings; WDFC -9.3%, NUS -5% lower on earnings/guidance; GME -5.5% as its CFO steps down

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: MRC +4.9% (raises revenue guidance for Q2 and FY22), LEVI +3.6% (also increases dividend by 20%)

Companies trading higher in after hours in reaction to news: LYV +1.3% (extends CEO's employment contract), OXY +0.7% (Berkshire Hathaway raises stake), VLO +0.6% (authorizes new $2.5 bln share repurchase program), BHR +0.3% (provides Q2 operating data), TRNO +0.2% (provides Q2 operating data), AHT +0.2% (provides Q2 operating data), COST +0.1% (reports June comps), GD +0.1% (awarded $280 mln US Army contract)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: WDFC -9.3%, NUS -5% (guides Q2 revs below consensus)

Companies trading lower in after hours in reaction to news: NRIX -9.2% (announces $55 mln registered direct offering; also reports earnings), GME -5.5% (CFO to step down, names new CFO; also co has laid off employees company-wide, according to Reuters), ALEC -4.4% (ABBV terminates CD33 collaboration program), TWTR -4% (Elon Musk's bid to buy co in jeopardy, according to WaPo; also laying off 30% of its talent acquisition team, according to WSJ), MARA -3.1% (publishes June bitcoin production and miner data), EBS -2.5% (enters into collaboration with Ridgeback to expand availability of Ebanga treatment for Ebola), KALU -1.8% (declares force majeure at Warrick Rolling Mill due to the limited availability of magnesium), MTTR -0.9% (acquires VHT), AUY -0.5% (provides Q2 operating data), RMAX -0.2% (updates strategic initiatives; expects to achieve goal of $100 mln in annual mortgage-related revs by 2028), PM -0.2% (Elliot Mgmt builds stake in Swedish Match AB, plans to oppose deal, according to Bloomberg), BA -0.1% (Qatar Airways indicates that provisional agreement to buy up to 50 737 MAX jets has lapsed, according to Reuters)

>>> US CLose Dow +1.12% S&P +1.50% Nasdaq +2.28% Russell +2.43%

Closing Stock Market Summary: Rebound effort held up ahead of jobs report

The stock market was looking to keep the momentum going from yesterday, and it did just that. The market opened on a high note and built on those gains with each of the three main indices exhibiting a gain of at least 1.0% at the close. With a gain of 1.5%, the S&P 500 closed just above the 3,900 level.

Buyers showed up today to support the rebound effort as evidenced by market breadth. Advancers led decliners by a roughly 3-to-1 margin at both the NYSE and the Nasdaq. 

There were a few factors acting like a positive feedback loop to the buying effort. The bounce coincided with the price action reversal in energy futures and the strength in semiconductors, which hold a leading indicator status.

Energy futures were increasing all day but natural gas futures saw a sharp upturn after the EIA natural gas inventories report this morning. They settled the session up 13.6% to $6.25/mmbtu. WTI crude oil futures settled the session up 4.0% to $102.68/bbl. Unleaded gasoline futures rose 7.0% to $3.68/gal.

Semiconductors had a good showing today with the PHLX Semiconductor Index closing up 4.5%. Every index component closed in the green with the biggest gains seen in ON Semiconductors (ON 51.94, +4.33, +9.1%), KLA Corp (KLAC 314.54, +21.54, +7.4%), and TSMC (TSM 80.75, +5.19, +6.7%).

Copper, another leading indicator commodity, saw big upside moves today, rising 3.5% to $3.55/lb.

Ten of the 11 S&P 500 sectors closed in positive territory with the lone laggard being utilities (-0.1%). Fellow countercyclical sectors, consumer staples (+0.1%) and health care (+0.1%), closed in the green but trailed behind the broader market. 

The top performing sectors were energy (+3.5%), consumer discretionary (+2.5%), information technology (+2.1%), and communication services (+2.0%).

Despite the bounce, the 2s10s spread remains inverted. The 2-yr Treasury note yield rose nine basis points to 3.03% while the 10-yr note yield rose ten basis points to 3.01%.

Reviewing today's economic data:

  • Weekly Initial Claims 235K (Briefing.com consensus 234K); Prior 231K; Weekly Continuing Claims 1.375 mln; Prior was revised to 1.324 mln from 1.328 mln
    • The key takeaway from the report is that claims have spent the past few weeks in a narrow range, suggesting little room left for improvement.
  • May Trade Balance -$85.5 bln (consensus -$84.9 bln); Prior was revised to -$86.7 bln from -$87.1 bln
    • The key takeaway from the report is that the deficit with China decreased by $2.8 bln to $32.2 bln, though this was largely due to reduced manufacturing activity as China implemented coronavirus lockdowns.
  • Crude oil inventories had a build of 8.24 mln barrels
    • Prior week showed a draw of 2.76 mln barrels
  • Gasoline inventories had a draw of 2.50 mln barrels
    • Prior week showed a build of 2.56 mln barrels

Looking ahead to Friday, market participants will receive the following economic data:

  • 8:30 ET: June Nonfarm Payrolls ( consensus 250,000; prior 390,000), Nonfarm Private Payrolls (consensus 275,000; prior 333,000), Unemployment Rate (consensus 3.6%; prior 3.6%), Average Hourly Earnings ( consensus 0.3%; prior 0.3%), and Average Workweek (Briefing.com consensus 34.6; prior 34.6)
  • 10:00 ET: May Wholesale Inventories (prior 2.2%)
  • 15:00 ET: May Consumer Credit (prior $38.00 bln)
  • Dow Jones Industrial Average: -13.6% YTD
  • S&P 400: -18.1% YTD
  • S&P 500: -18.2% YTD
  • Russell 2000: -21.2% YTD
  • Nasdaq Composite: -25.7% YTD