SCOTUS Upholds Obamacare; Greece Not Fixed

Economic data

- (ZA) South Africa May PPI M/M: 0.8% v 0.5%e; Y/Y: 3.6% v 3.3%e
- (UK) Jun CBI Industrial Reported Sales: 29 v 35e
- (CZ) Czech Central Bank left both Repurchase Rate and EUR/CZK cross unchanged, as expected
- (BR) Brazil May Unemployment Rate: 6.7% v 6.6%e
- (US) May Personal Income: 0.5% v 0.5%e; Personal Spending: 0.9% v 0.7%e; Real Personal Spending: 0.6% v 0.5%e
- (US) May PCE Deflator M/M: 0.3% v 0.3%e; Y/Y: 0.2% v 0.2%e
- (US) May PCE Core M/M: 0.1% v 0.1%e; Y/Y: 1.2% v 1.2%e
- (US) Initial Jobless Claims: 271K v 273Ke; Continuing Claims: 2.247M v 2.22Me
- (US) Jun Preliminary Markit Services PMI: 54.8 v 56.5e; Composite PMI: 54.6 v 56.0 prior
- (US) Weekly EIA Natural Gas Inventories: +75 bcf vs. +77 to +81 bcf expected

US equities are making modest gains this morning after a mixed PCE report and Obamacare's victory before the Supreme Court. As of writing, the DJIA is up 0.20%, the S&P500 is up 0.29% and the Nasdaq is up 0.28%.

The May PCE report - the Fed's preferred measure of inflation - was largely in line with expectations. Core PCE of +1.2% did not budge from the April reading and met expectations, leaving the measure well below the Fed's 2.0% target. The personal consumption expenditures component was unexpectedly strong and registered the biggest gain since August 2009. Separately, the Atlanta Fed raised its GDPNow forecast for real GDP growth in Q1 to 2.1% from 2.0% prior.

Obamacare survived a major challenge before the US Supreme Court, as the justices ruled 6-3 to uphold disputed subsidies language in the King v. Burwell case. Chief Justice John Roberts authored the majority opinion, writing "A fair reading of legislation demands a fair understanding of the legislative plan." The majority decision stated that the broader "context and structure" of the act intended to allow tax credits under any exchange created by the law, whether state or federal. Note also that in today's PCE report, personal healthcare expenditures gained 0.61% y/y, for the lowest increase since the early 1960s. Major healthcare and hospital stocks are all up 2-3% on the session.

Eurozone finance ministers held their fourth meeting in a week in another attempt to iron out a package of Greek economic reforms. Once again they were unsuccessful. After the meeting, German Chancellor Merkel that this weekend was the final chance for Greece, with a deal required before the market opened next Monday. The IMF reiterated that June 30th was Greece's hard deadline and the nation would be considered in arrears if it missed its payments at that time. There was a brief dip in EUR/USD to 1.1150 earlier today, but other than that the pair has held steady around 1.1200 for the last 24 hours.

IAC/InterActiveCorp said it was planning an IPO of its Match.com unit, which also includes popular dating service tinder. The new group will sell less than 20% of the company in the transaction, which is expected to complete in the fourth quarter. IAC also named Joey Levin, the former head of its search and applications business, as its new CEO. Shares of IACI are up 4.6% but off their highs.

Looking Ahead

- 13:00 (US) Treasury to sell $29B in 7-Year Notes
- 15:00 (AR) Argentina May Industrial Production M/M: No est v 0.4% prior; Y/Y: No est v -1.5% prior
- 18:45 (NZ) New Zealand May Trade Balance (NZD): -0.1B v +0.1B prior;
Exports: 4.3Be v 4.2B prior; Imports: 4.3Be v 4.0B prior
- 19:30 (JP) Japan May Jobless Rate: 3.3%e v 3.3% prior; Job-To-Applicant Ratio: 1.17e v 1.17 prior; Overall Household Spending Y/Y: +3.6%e v -1.3% prior
- 19:30 (JP) Japan May National CPI Y/Y: 0.4%e v 0.6% prior; CPI Ex Fresh Food Y/Y: 0.0%e v 0.3% prior; CPI Ex Food, Energy Y/Y: 0.4%e v 0.4% prior
- 19:30 (JP) Japan Jun Tokyo CPI Y/Y: 0.5%e v 0.5% prior; CPI Ex Fresh Food Y/Y: 0.1%e v 0.2% prior; CPI Ex Food, Energy Y/Y: 0.1%e v 0.1% prior