WTI and Brent prices.  If this trend continues, oil prices may fall significantly in the back half of the year, as inventories fail to decline fast enough from a lower rig count.

  • Copper prices remained relatively flat this week despite weak data from China’s Fixed Asset Investment report.  However, if the current trend continues copper prices may weaken over the summer before experiencing seasonal strength later in the year.
  • Emerging Markets


    • Chinese equities outperformed on the back of speculation that the government will continue to foster economic growth through monetary easing. Furthermore, new yuan loans increased to 900.8 billion in May, while the M2 money supply growth rate increased to 10.8 percent. The Shanghai Stock Exchange Composite Index rose 2.85 percent this week.
    • The Russian ruble bounced back from its sharp downside move last week as the central bank ceased purchasing dollars in order to stem the currency’s rapid appreciation. The ruble rose 2.78 percent against the dollar this week.
    • The U.S. dollar retreated for the second straight week, adding further support to the technical notion that the currency is rolling over. The DXY Index fell 1.38 percent this week.


    • Turkish equities along with the lira declined this week after the ruling AKP Party failed to secure the necessary amount of seats to retain power. The new uncertainty surrounding the inability of the various parties to form a coalition helps to explain the underperformance. The Borsa Istanbul 100 Index fell 1.72 percent this week and the Turkish lira fell 1.52 percent.
    • Hungarian equities retreated this week on the back of little material information to explain the move. The Budapest Stock Exchange Index fell 2.01 percent this week.
    • Greek equities were considerably volatile this week. The market reacted negatively on the decision to “kick the can down the road” in terms of the country’s debt repayment timeline. On a positive note, the rhetoric regarding the negotiations appears to becoming more positive on both sides. The Athens Stock Exchange fell 1.48 percent this week.


    • Consumer prices in Hungary grew at the fastest rate this year, on a year-over-year basis, highlighting the effect of the central bank’s significant string of rate cuts. Inflationary pressures are certainly a welcome sign in the Hungarian economy.

    Rate Hike

    • Polish consumer price index (CPI) data will be released next week. As investors remain uncertain on the necessity of further easing, the CPI number will be an important one to monitor. Analysts are expecting the month-over-month growth rate in consumer prices to contract by 0.7 percent, an improvement from the prior month’s contraction of 1.1 percent.
    • Tenacious deflationary pressure along with anemic domestic demand in China, as revealed in the May economic data, should raise expectations from investors of further government policy easing (monetary, fiscal or administrative).  This backdrop could benefit interest- rate sensitive and attractively-valued sectors the most such as banks and property developers. This would reinforce the ongoing visible recovery of property sales thanks to lower financing costs and rising wealth effects from the momentous equity bull market.

    Rate Hike


    • Clearly the outcome of the Turkish elections creates a severe amount of uncertainty surrounding the country’s political future. If a coalition government is not formed then a snap election will be called, which could further intensify the uncertainty. Furthermore, the country’s macro situation remains considerably gloomy, with year-over-year GDP growth falling to a timid 2.3 percent.

    Rate Hike

    • Despite the positive change in the rhetoric surrounding the debt negotiations, there still remains considerable risk that Greece could default and be removed from the eurozone.
    • The Indonesian rupiah remains susceptible to further weakness against a tightening scare in the U.S. Similarly, the macro thesis of owning Indonesian stocks is being challenged as President Jokowi’s 30-percent tax revenue growth assumption appears increasingly illusive in a slowing economy, therefor diminishing the likelihood of realizing a fresh infrastructure investment cycle promised earlier. It may not be a stretch to argue that, in U.S. dollar terms, the bear market in Indonesian equities has resumed.

    Leaders and Laggards

    Weekly Performance
    S&P 5002,094.11+1.28+0.06%
    S&P Energy560.60-5.28-0.93%
    S&P Basic Materials313.97+1.15+0.37%
    Russell 20001,265.02+4.01+0.32%
    Hang Seng Composite Index3,805.32-26.53-0.69%
    Korean KOSPI Index2,052.17-15.93-0.77%
    S&P/TSX Canadian Gold Index154.30-5.14-3.22%
    Gold Futures1,180.60+12.50+1.07%
    Oil Futures60.01+0.88+1.49%
    Natural Gas Futures2.76+0.17+6.41%
    10-Yr Treasury Bond2.39-0.02-0.71%


    Monthly Performance
    S&P 5002,094.11-4.37-0.21%
    S&P Energy560.60-25.72-4.39%
    S&P Basic Materials313.97-3.68-1.16%
    Russell 20001,265.02+32.75+2.66%
    Hang Seng Composite Index3,805.32-54.58-1.41%
    Korean KOSPI Index2,052.17-61.99-2.93%
    S&P/TSX Canadian Gold Index154.30-15.92-9.35%
    Gold Futures1,180.60-38.60-3.17%
    Oil Futures60.01-0.49-0.81%
    Natural Gas Futures2.76-0.18-6.10%
    10-Yr Treasury Bond2.39+0.10+4.23%


    Quarterly Performance
    S&P 5002,094.11+40.71+1.98%
    S&P Energy560.60+15.73+2.89%
    S&P Basic Materials313.97+1.96+0.63%
    Russell 20001,265.02+32.88+2.67%
    Hang Seng Composite Index3,805.32+528.09+16.11%
    Korean KOSPI Index2,052.17+66.38+3.34%
    S&P/TSX Canadian Gold Index154.30-3.60-2.28%
    Gold Futures1,180.60+26.50+2.30%
    Oil Futures60.01+15.17+33.83%
    Natural Gas Futures2.76+0.03+1.06%
    10-Yr Treasury Bond2.39+0.28+13.05%

    Please consider carefully a fund’s investment objectives, risks, charges and expenses.   For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637).   Read it carefully before investing.  Distributed by U.S. Global Brokerage, Inc.

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