Fed Signal for Rate Pause Takes Pressure Off Hot Jobs Report (5 min read)
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Fed officials are signaling they plan to keep interest rates steady in June while retaining the option to hike further in coming months. Governor Philip Jefferson said skipping an increase would give policymakers time to assess data but not preclude future tightening. This view undercuts the importance of the monthly jobs report that is coming out on Friday. After Jefferson spoke, investor bets for a hike in June plunged to about 35% from nearly 60%.

Euro zone inflation falls more than expected to 6.1% as core pressures ease (2 min read)

The euro zone’s annual headline inflation rate fell to 6.1% in May from 7% in April, below the predicted 6.3%. Core inflation eased to 5.3% from 5.6%. Investors still see the European Central Bank (ECB) carrying out two more interest rate hikes in its upcoming meetings. Inflation eased in Spain and Italy, while price rises in Germany and France are now at 12-month lows. The ECB meets on June 15 to make its latest monetary policy decision.

AI Stock Rally Stalls as Nvidia Drops Back Below $1 Trillion (3 min read)
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The rally in tech stocks linked to AI has stalled following a disappointing sales outlook from C3.ai, leading to a selloff in AI stocks. C3.ai's shares fell over 18% and Nvidia declined 5.7%, impacting the broader enthusiasm for tech shares. Lofty valuations and concerns about the monetization of AI technologies have raised caution in the industry. However, analysts expect long-term growth as AI spending increases and the semiconductor cycle improves. Nvidia still remains a key player in this space and is seen as the prime beneficiary of the growing demand.

Macy’s and Costco sound a warning about the economy (3 min read)
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Major retailers like Macy's and Costco are experiencing a slowdown in customer demand which may indicate a potential concern for the US economy. Macy said that consumers have reduced spending at their stores, reallocating their money towards essential items. Costco also notes a similar shift in customer preferences towards cheaper meats due to changing budgets. The new spending patterns are impacting retailers catering to middle and higher-income shoppers, but retailers focused on essential goods, such as Walmart, are faring better.

SOXX Pulls In Over $500M (ETF flows)
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The US ETF flows last week show that the iShares Semiconductor ETF (SOXX) ranked 4th in inflows and had one of the highest AUM percentage growth amid the surging interest in chip stocks. Some of the largest outflows were ETFs that shorts the QQQ or US treasury and the energy sector. This list from etf.com also provides the top flows by asset classes in the past week and year-to-date.

State Street Aims to Tokenize ETFs, Private Assets (3 min read)
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Matteo Andreetto, head of SPDR EMEA at State Street Global Advisors, believes the tokenization of ETFs and private assets will be game-changing. Although State Street is not planning on launching crypto ETPs, they are exploring the potential of tokenizing its product offerings. Matteo said their clients would be interested in SPDR digital assets or SPDR tokenized ETFs if they were available. Other asset managers, including DWS and Franklin Templeton, have also recently expressed interest in tokenization.

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Thanks,
Thomas

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