The Treasury Department just disclosed new borrowing forecasts for the next half of the remaining year. In Q3, they expect to take on a whopping $1.007 trillion in privately held debt, assuming $650 billion in cash on hand at the end of September. This lofty estimate tops May's projection by $274 billion, thanks to dwindling opening balances, bulging ending balances, and gloomy revenue and spending outlooks. For Q4, they foresee borrowing $852 billion, given an anticipated $750 billion coffer in December. Actual Q2 borrowing landed at $657 billion, below May's outlook, as cash reserves and income shrank while costs expanded.
The major U.S. stock indexes closed higher on Monday, with energy stocks leading the gains, with Chevron rising over 3% after an analyst upgrade. Johnson & Johnson dragged down healthcare stocks after a judge rejected the company's bankruptcy plan for its talc liabilities. Big tech stocks like Apple and Amazon remain in focus with upcoming earnings reports. Meme stock Tupperware continued its rally, closing 366% higher since its short interest stood at its all time high of 27% in mid-July.
Gold prices edged lower as traders anticipate an end to Fed rate hikes by year's end, which would boost gold inflows. However, strong U.S. jobs data expected on Friday could pressure gold by signalling more rate hikes from the Fed. Longer-term, slowing economic growth in H2 2023 is expected to increase safe haven demand for gold.
Oil prices rise steadily and may continue to rise ahead of the OPEC+ meeting on August 5th as factors like China's policy moves and a weaker dollar support prices, despite facing some downward pressure after recent gains. Saudi Arabia's voluntary supply cuts have tightened supply, while signs of economic recovery in the US and China point to higher oil demand, though China's manufacturing contracted again in July.
The dollar index strengthened on Monday as a survey showed U.S. banks tightening lending standards amid rising interest rates. However, the dollar posted monthly losses against the yen, euro, and pound due to signs of slowing U.S. inflation. Currencies like the Australian dollar and Chinese yuan rose based on positive economic news from China, while the yen extended losses as the Bank of Japan announced an unscheduled JPY200 billion worth of Japanese government bonds (JGBs).