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[Markets] Dow Jones Rallies, Tech Stocks Fall As AMC Stock Surges 22%; Baidu, Nio Advance, While Zoom Video Earnings On Tap The Dow Jones Industrial Average rallied 300 points Tuesday, as AMC stock surged 22% in morning trade. Zoom Video earnings are due after the close. Published:6/1/2021 10:32:17 AM
[Markets] Dow rallies nearly 300 points higher Tuesday morning as coronavirus cases fall to lowest in over year U.S. stock benchmarks rose Tuesday morning as Wall Street returned from a three-day holiday weekend to start a new month on a positive note with the economy reopening as coronavirus cases decline to the lowest in over a year though inflation is rising. The Dow Jones Industrial Avearge [ : DJIA] rose 288 points, or 0.8%, at 34,818, the S&P 500 gained 0.6% to 4,231, and the Nasdaq Composite Index climbed 0.5% to 13,817. Shares of hares of Cloudera Inc. were in focus after the data management and analytics software company disclosed a deal to be acquired for $16 a share in cash by funds advised by Clayton, Dubilier & Rice LLC and Kohlberg Kravis Roberts & Co. L.P. . Published:6/1/2021 9:12:38 AM
[Markets] Dow rallies nearly 300 points higher Tuesday Dow rallies nearly 300 points higher Tuesday Published:6/1/2021 9:12:38 AM
[Markets] Boeing stock rallies to pace the Dow's early gainers, after Cowen turns bullish Shaers of Boeing Co. rallied 2.0%, enough to pace the Dow Jones Industrial Average's premarket gainers, after Cowen analyst Cai von Rumohr turned bullish on the aerospace and defense giant, citing improving air traffic and a brighter outlook regarding regulatory oversight. Von Rumohr raised his rating on Boeing to outperform, after being at market perform since January 2020, while boosting her price target to $290 from $240. Von Rumohr said "fast improving air traffic" is bolstering demand for Boeing aircraft, and while lingering oversight from the Federal Aviation Administration and the timing of approval of Boeing's MAX planes in China will limit the upside to 2021 financial results, he believes the outlook for the next three years is brighter. He said Boeing's second-quarter results could "miss" expectations, given the China approval delay, but he doesn't believe it's in the U.S. or China's interest to hold trade hostage, so he doesn't see the situation as a long-term overhang. The stock's implied price gain would add about 32 points to the Dow's price, while Dow futures gained 251 points, or 0.7%. Published:6/1/2021 8:29:41 AM
[Markets] World Stocks Hit Record As US Futures Jump, Oil Spikes Above $70 World Stocks Hit Record As US Futures Jump, Oil Spikes Above $70

It turns out that Monday's dip in futures was a low-volume headfake, and on Tuesday global markets hit a new record high as U.S. equity futures jumped, with spoos also approaching all time highs after markets shrugged off concerns about rising inflation and looked ahead to U.S. employment data later in the week. Brent rose above $70 to the highest since October 2018 as OPEC+ forecast a tightening global market before members meet to discuss production output today. At 715am, Emini futs were 4,226 up 24 points ot 0.58%; Dow futs were up 212 to 0.61% while Nasdaq futs rose 52 pts, up 0.38%.

MSCI’s broadest gauge of global stock markets rose 0.3% to a record high, led by broad gains across Europe’s leading indexes with the US looking at a solid green open. Here are some of the biggest U.S. movers today:

  • AMC Entertainment Holdings climbs 6.3% in premarket trading. The company issued 8.5m shares to Mudrick Capital Management for $230.5m to pursue acquisitions. The shares gained 116% last week amid the continuation of a retail-trading frenzy that has boosted the stock this year.
  • Cloudera rises 23% in premarket trading. Affiliates of KKR and Clayton Dubilier & Rice agreed to take Cloudera private in an all-cash transation that valued the company about about $5.3b.
  • Vertex Energy jumps about 30% in premarket trading, building on a rally after agreeing to buy an Alabama refinery from Shell for $75 million.

“Although global stocks are now around 20% above pre-pandemic highs, a combination of strong earnings growth and reasonable valuations relative to still-low bond yields points to further upside for stocks,” said Mark Haefele, chief investment officer, UBS Global Wealth Management.

Global stocks started the new month near record highs, underpinned by the recovery from the health crisis and ample liquidity. Still, the jump in commodities prices is stoking concerns that rising price pressures could prompt central banks to withdraw support earlier than anticipated. Traders are awaiting key American jobs data later in the week to help assess the path of the rebound.

“The inflation outlook is a risk because it is so unknown at the moment, and it will take a number of months to really get a true idea of whether we will see that inflation be persistently higher or not,” Kerry Craig, JPMorgan Asset Management global market strategist, said on Bloomberg TV.

In Europe, the Stoxx 600 Index gained 1.1%, rising to a new record high, led higher by cyclical shares, as data showed that euro-area factories are struggling to keep up with surging demand and joblessness in Germany fell. Italy’s FTSE MIB Index jumped to the highest level since 2008, while France’s benchmark CAC 40 Index climbs to highest level in more than 20 years, lifted by gains in companies including Total and ArcelorMittal.  The Stoxx 600 Basic Resources index rose as much as 3.6%, with miners buoyed by continued gains in metal prices. Gains were led by London-listed Rio Tinto, Anglo American, BHP and Glencore. Copper miners Antofagasta, KGHM and Boliden also higher and steel makers Evraz and Voestalpline gaining. Here are some of the biggest European movers today:

  • Hansa Biopharma shares climb as much as 15%, the most since July, after RBC raises its price target on the stock to SEK323 from SEK287 following new pricing information for kidney transplant drug Idefirix in Europe.
  • M&A Saatchi shares gain as much as 13%, the most since Feb. 26, after the ad agency says it sees earnings ahead of consensus, with Peel Hunt saying the firm’s trading update is “reassuring.”
  • Norwegian Air shares gain as much as 11% after SEB upgrades to buy from sell following recent share price drop, seeing a “newly born” company after the airline’s “harsh” restructuring process.
  • Biffa shares climb as much as 9.7% to a record following full-year earnings that beat analysts’ estimates. Investec concurs with the message coming from the earnings release about opportunities in a circular economy and a likely regulatory tailwind.
  • EssilorLuxottica shares rise as much as 1% as the company is pushing ahead with the sale of some optical retail businesses in Italy, the Netherlands and Belgium to meet antitrust requirements for its purchase of GrandVision, according to people familiar with the situation.
  • Nel shares slump as much as 8% after SpareBank 1 Markets downgrades to sell from buy with PT NOK8.5 vs NOK20.
  • Aryzta shares retreat as much as 7.4%, the most intraday since Dec. 21, on inflation worries after the Swiss baker said it will have to lift prices due to the higher cost of dairy ingredients, flour and packaging in the pandemic aftermath.
  • Sixt shares fall as much as 5.4%, the most since March 9. The vehicle-rental company’s shares are now trading at a significant valuation premium reflecting expectations of a “seamless” recovery in earnings, Berenberg says in a note, downgrading the stock to hold from buy.

Against a backdrop of a patchy recovery from covid, May eurozone inflation came in higher than expected at 2%, driven by rising energy costs, above the European Central Bank’s target of below but close to 2% - and with even higher levels expected later in the year. 

Euro zone manufacturing activity expanded at a record pace in May, according to the Tuesday PMI surveys which suggested growth would have been even faster without supply bottlenecks that have led to an unprecedented rise in input costs. IHS Markit's final Manufacturing Purchasing Managers' Index (PMI) rose to 63.1 in May from April's 62.9, above an initial 62.8 "flash" estimate and the highest reading since the survey began in June 1997. In the UK, the manufacturing PMI was revised down by 0.5pt in the final release but remained almost 4.5pt above the previous all-time high from 1994. The Italian and Spanish manufacturing PMIs both improved slightly ahead of expectations in May and reached post-1998 highs. The final set of manufacturing PMIs for May confirms the continued cyclical strength of manufacturing activity across Europe, with elevated future output expectations suggesting scope for continued growth in coming months. An index measuring output, which feeds into a composite PMI due on Thursday and is seen as a good guide to economic health, eased from April's 63.2 to 62.2. Anything above 50 indicates growth.

Earlier in the session, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6% in a volatile trading day, with gains in consumer-discretionary and energy shares offsetting falls in the health-care and consumer-staple sectors; the index hit the highest in a month and taking total gains so far this year past 7% . South Korean stocks rose 0.6% after a jump in May exports, and Chinese stocks climbed 0.2% after data showing factory activity expanded at the fastest pace this year in May. China's CSI 300 Index ended the day up 0.2% after falling as much as 1.2% as concern among foreign investors eased about Beijing’s move to slow the yuan’s rally. A gauge that tracks Chinese technology stocks in Hong Kong advance to the highest in a month, led by Kuaishou Technology and Meituan. The latter jumped for a second day in Hong Kong, and was one of the biggest boosts to the Asianstock benchmark, following Monday’s surge after it had better-than-expected earnings results. Thailand’s SET index was the biggest gainer in Asia, rising 1.6%, as the country approved stimulus measures worth 140 billion baht ($4.5 billion) to counter the impact from the nation’s biggest coronavirus outbreak yet. Korean stocks also rose after the trade ministry said exports surged the most since 1988 in May. The Asian gauge in May posted its first monthly outperformance against the S&P 500 Index since January. The broader MSCI Emerging Markets Index has also been on a tear, and is poised to close at its highest since Feb. 23. Indonesia was closed for a holiday

Chinese stocks ended Tuesday slightly higher, as foreign investors returned in afternoon trading with concerns easing over the impact of the central bank’s action to slow the yuan’s rally. The benchmark CSI 300 Index added 0.2% at the close, marking the fifth straight day with a move smaller than 1% after a jump of 3.2% a week ago. A subgauge of materials shares rebounded to lead the gains after losing 1.8% in the morning, with Hengli Petrochemical, Wanhua Chemical, Rongsheng Petrochemical and Hengyi Petrochemical among the best performers in the main index. Overseas investors resumed net buying onshore equities after selling in the morning session, picking up 1.1 billion yuan worth of stocks for the day. The inflows came after the People’s Bank of China announced on Monday that financial institutions would be required to hold more foreign currencies in reserve from June 15, in the first such hike since 2007. The central bank’s move will reduce the supply of dollars and other currencies onshore -- putting pressure on the yuan to weaken. “The central bank’s policy could slow the pace of the yuan’s rally, but not the trend of its appreciation,” said Pei Xiaoyan, chairman of Shenzhen Qianhai Tonglu Capital Ltd. “The inflow will continue for sure,” he added, predicting the Shanghai Composite Index to climb to 4,000 points this year. The Shanghai Composite rose 0.3% to 3624.714 points, while the ChiNext slid 0.3%, the first drop in four sessions.

In Australia, the S&P/ASX 200 index closed 0.3% lower at 7,142.60, falling for a second day. Weakness in health and bank stocks nudged the gauge lower. Earlier, the Reserve Bank of Australia kept its key interest rate and three-year bond target unchanged. The best performer was Whitehaven, jumping to its highest since April 14. The biggest laggard was Blackmores, falling the most since April 23. In New Zealand, the S&P/NZX 50 index rose 1.2% to 12,462.47

In FX, the dollar was mixed against most of its Group-of-10 peers with Scandinavian currencies leading the advance and the euro swinging between gains and losses. Bunds were little changed after paring earlier losses even as inflation in the euro area climbed to the highest level in more than two years; Eurozone PMI manufacturing index rose to 63.1 in May, from 62.9 in April. The pound was the worst G-10 performer and retreated after hitting its strongest level in three years as concern over a new coronavirus strain outweighed bets on the U.K. economic recovery. Australia’s dollar was higher even as it trimmed gains after the Reserve Bank left rates unchanged and reiterated that inflation and wage gains are unlikely to be at the point where an interest-rate hike is needed until 2024.

In rates, Treasuries were re under pressure as Friday’s month-end bid fades from the market and S&P 500 futures exceed last week’s high. Treasury yields cheaper by nearly 2.5bp at ~1.62% in 10-year sector, cheapening 5s10s30s fly by 1.7bp and steepening 2s10s by ~2bp; bunds outperform by 2bp vs Treasuries, gilts by less than 1bp. During Asia session 10-year sector lagged on the curve on good volume, suggesting fresh selling pressures. There’s no Treasury coupon supply this week, and USD IG issuance is expected to be moderate during holiday-shortened week capped by May jobs report Friday. Germany’s 10-year Bund yield, meanwhile, was steady at around -0.18% with bond markets taking news of the surge in euro zone inflation in their stride. In Japan, the benchmark 10-year bond did not trade on Tuesday, the first time since June 2020 that such an occurrence took place. Trading activity in Japanese government bonds has waned of late, mirroring moves in global markets where yields have been confined to narrow ranges amid a lack of direction. The 10-year JGB yield traded at 0.08% on Monday.

In commodities, Brent crude futures climbed to the highest in more than two and a half years after the OPEC+ alliance forecast a tightening global market ahead of a production policy meeting. The glut built up during the pandemic has almost gone and stockpiles will slide rapidly in the second half, according to the OPEC+ assessment. The IEA wants it to boost output to put a lid on rising prices and said current policy will widen the supply-demand gap.

West Texas Intermediate rose as much as 3.2% from Friday’s close to $68.42 a barrel, while global benchmark Brent topped $70, a level it has failed to hold for a sustained period since 2019.

Commodities from iron ore to copper also pushed higher. Concerns about global inflation have driven gold up 8% this month to comfortably above $1,900, although the yellow metal gave up early session gains to last trade down 0.2% on the day

This week’s main event is Friday’s U.S. payrolls data, with markets looking for a signal from the Federal Reserve on when it will start tapering its bond-buying program. Median forecasts are that 650,000 jobs were added in May, but the outcome is uncertain following April’s unexpectedly weak 266,000 gain. Though U.S. inflation data last week was above estimates, another big miss on the jobs front would delay prospects for any wind-down of stimulus, analysts say. SocGen strategist Sebastien Galy said he expected the jobs data to come in below or in line with consensus, but, given low levels of equity volatility, markets were primed for a jump on higher-than-expected numbers. “We remain constructive on risk as we expect a disappointment on NFP (non-farm payrolls) but the equity volatility market is likely to reprice higher from its rather extreme lows,” he said in a note to clients. Also on deck - fresh manufacturing data for May will provide further clues on the state of the recovery. 

HP Enterprise and Zoom Video are among the companies due to report earnings today

Market Snapshot

  • S&P 500 futures up 0.33% to 4,216.25
  • STOXX Europe 600 +0.88% to 450.71
  • MXAP up 0.3% to 209.74
  • MXAPJ up 0.5% to 708.43
  • Nikkei down 0.2% to 28,814.34
  • Topix up 0.2% to 1,926.18
  • Hang Seng Index up 1.1% to 29,468.00
  • Shanghai Composite up 0.3% to 3,624.71
  • Sensex little changed at 51,903.80
  • Australia S&P/ASX 200 down 0.3% to 7,142.57
  • Kospi up 0.6% to 3,221.87
  • German 10Y yield rose 0.3 bps to 0.184%
  • Euro little changed at $1.2229
  • Brent Futures up 1.55% to $70.87/bbl
  • Gold spot up 0.26% to $1,911.91
  • U.S. Dollar Index little changed at 89.837

Top Overnight News from Bloomberg

  • China forced banks to hold more foreign currencies in reserve for the first time in more than a decade, its most substantial move yet to rein the surging yuan
  • U.K. house prices recorded double-digit growth for the first time since 2014 last month, as the nation’s booming market showed no signs of cooling
  • A Group of Seven meeting this week is unlikely to settle on a rate for a global minimum corporate tax, Japan’s Finance Minister Taro Aso said, sounding a note of caution before he and his counterparts gather in London
  • Asia’s manufacturing activity continued to advance in May, though at a slightly slower pace, despite flare-ups of Covid-19 around the region that could force some plants to close and weigh on sentiment
  • Euro-area factories are struggling to keep up with the economic recovery as orders rise faster than production, setting the bloc up for a summer spike in inflation
  • There is “no major obstacle” standing in the way of negotiations being held in Vienna to revive the 2015 nuclear agreement between Iran and world powers to lift sanctions, Government Spokesman Ali Rabiei says in press conference

Quick look at global markets courtesy of Newsquawk

Asian equity markets traded mixed after lacking firm direction in the absence of a lead from the US owing to the Memorial Day holiday and amid tentativeness ahead of this week’s key events culminating with Friday’s US jobs numbers. ASX 200 (-0.3%) was lower as losses in healthcare and the top-weighted financial industry led the declines seen across most sectors and with risk appetite also subdued by prospects of an extension to the Victoria state lockdown. Furthermore, a slew of data releases failed to inspire as Building Approvals, Net Exports Contribution to GDP and Company Q1 Profits were all in contraction territory, despite mostly beating expectations. Nikkei 225 (-0.2%) failed to hold on to opening gains and retreated below the 29k level alongside currency-related pressure, although the KOSPI outperformed after trade data remained solid including a 45.6% jump in Exports. Hang Seng (+1.1%) and Shanghai Comp. (+0.3%) conformed to the mixed picture with the Hong Kong benchmark kept afloat by strength in tech as e-commerce platforms began the 618 Mid-Year shopping extravaganza with early record sales. However, the mainland continued to suffer from a firmer currency despite the PBoC’s attempt to curb the one-way bets on the CNY through an increase in the FX reserve requirement ratio, while marginally better than expected Chinese Caixin Manufacturing PMI data and the recent announcement to allow couples to have three children did little to help the broader market although provided some tailwinds for baby-related stocks. Finally, 10yr JGBs were flat with price action subdued after the BoJ maintained the amount and pace of its intended JGB purchases for June and with the central bank only in the market today for treasury bills.

Top Asian News

  • Malaysia Lockdown to Impact Growth, Deficit Targets, FM Says
  • Japan’s Much-Maligned Vaccine Campaign Quietly Gathers Speed
  • Hong Kong Calls on Banks to Push Staff to Get Vaccinated

Equities in Europe kicked off the session modestly in the green and thereafter extended gains (Euro Stoxx 50 +0.9%), with the Stoxx 600 notching another record high whilst the FTSE MIB revisits levels last seen in 2008. Overall, sentiment has been more constructive since APAC hours as UK and US players re-join trade following their respective domestic holidays, and with volumes looking less anaemic. US equity futures have also extended on modest broad-based gains, but upside is less pronounced vs peers across the pond as participants look ahead to a raft of Tier 1 data points this week kicking off with the ISM Manufacturing PMI later today – Note the Markit PMIs have widely been flagging inflationary pressures arising from supply chain complications and the rise in raw materials. The FTSE 100 (+1.2%) shrugged off yesterday’s lacklustre European performance as the rebound in base metals propels the miner-heavy index; meanwhile, the IBEX (-0.4%) lags amid losses in heavy-weight constituents. Sectors portray a more risk-on picture and pro-cyclical bias with the defensive peers towards the bottom of the pile. The Basic Resources sector outpaces its peers, closely followed by Autos and Oil & Gas. The Auto sector is buoyed by a string of constructive updates. Daimler (+2.7%) welcomes the settling of litigation with Nokia (+0.5%), whilst Volkswagen (+2.5%) cheers a potential battery unit IPO, and Stellantis (+1.6%) is bolstered by speculation that it may announce an entry into the EV battery market at an event on July 8th.

Top European News

  • AB Science Halted After Suspending Drug Trials on Heart Risk
  • Aryzta Shares Decline Amid Worries Over Raw-Material Prices
  • VW Nears Diesel-Damages Agreement With Former CEO, BI Says
  • Haldane: Half of U.K. Charities Are at Risk of Failing

In FX, the Aussie was elevated amidst a rise in iron ore prices and better than anticipated data, including building approvals, current account, net exports and gross company profits going into the RBA policy meeting, and only suffered a temporary setback on initial less hawkish than expected perceptions as all settings and guidance were left unchanged. However, its relatively rapid recovery owes more to the failings of the Buck as Aud/Usd rebounds firmly through 0.7750, but the Aud/Nzd cross remains anchored around 1.0650 in wake of last week’s recalibration to price in an earlier OCR hike by the RBNZ. Indeed, the Kiwi has also regained momentum vs its US peer to retest resistance and offers ahead of 0.7300 in advance of NZ Q1 terms of trade, while next up for the Aussie Q1 GDP. Elsewhere, the Pound also derived strength at the expense of its US counterpart, albeit with extra impetus from strong oil prices, Nationwide hpi and hawkish rhetoric via BoE’s Ramsden in the Guardian, though Cable came up against a barrier around 1.4250 and lost grip of the 1.4200 handle even before a downgrade to the final manufacturing PMI.

  • CAD/USD/NOK - Not a normal major grouping, but the Loonie and Norwegian Krona have the prop of crude in common, as WTI approaches Usd 68.50/brl and Brent touches Usd 71 awaiting JMMC/OPEC+ meetings from midday London time. Usd/Cad is straddling 1.2050 and Eur/Nok has retreated sharply from recent highs to probe 10.1000, but the Crown also taking advantage of the Euro’s fade more broadly. Meanwhile, Buck has bounced on the back of a corrective rebound in US Treasury yields ahead of the return of cash markets from Monday’s Memorial Day holiday, with the DXY just shy of a recovery high close to 90.000 within a 89.915-717 range and now looking towards the final Markit manufacturing PMI, ISM, Dallas Fed and Beige Book for some independent direction along with speeches from Fed’s Quarles and Brainard.
  • EUR/JPY/CHF - All off best levels vs the Dollar, as the Euro loses some traction from firm EGB yields irrespective of decent Eurozone manufacturing PMIs and data such as German jobs, Italian GDP, Eurozone inflation, and unemployment. Eur/Usd waned circa 1.2241 and hefty option interest at the 1.2275 strike (1.7 bn), while the Yen is pivoting 109.50 and Franc is hovering above 0.9000 in wake of an acceleration in Swiss retail sales, mixed GDP and a slight dip in the manufacturing PMI following latest comments from the SNB reiterating the need to keep monetary policy loose given the still highly valued Chf, albeit weaker recently.

In commodities, WTI and Brent front month futures have been extending on APAC gains throughout the European morning, with the former printing north of USD 68/bbl (vs low 66.41/bbl) and the latter grinding higher to earlier test USD 71/bbl to the upside (vs low 69.29/bbl). The energy market is eyeing a few moving parts alongside the overall risk profile across the market. Firstly, JCPOA talks are taking longer than anticipated, with some officials noting a potential spill-over into a sixth round of negotiations. However, Iran has reassured that the deal is not dead and could be inked by mid-to-late June. Secondly, OPEC+ producers are poised to meet at 13:30BST after the JMMC at 12:00BST. Members are expected to maintain current quotas, but Iranian supply will reportedly be high on the agenda. Analysts and some energy officials have suggested that Iranian and OPEC+ supply can be absorbed by the market heading into a less COVID-restricted summer period, with the US driving season also looming – Click here for a full primer. Elsewhere, spot gold and silver have been moving at the whim of the Buck but retain USD 1,900/oz and USD 28/oz statuses respectively, ahead of a risk-packed week. Turning to base metals, LME copper kicked off the week on the front-foot amid the subdued Buck, the risk appetite across markets and supply woes emanating from mine strikes at BHP’s most extensive Chilean operations. Finally, Dalian iron ore futures rose over 4% overnight as China’s top steelmaking city of Tangshan announced the easing of restrictions – although this comes against the backdrop of China cracking down on rising commodity prices.

US Event Calendar

  • 9:45am: May Markit US Manufacturing PMI, est. 61.5, prior 61.5
  • 10am: May ISM Employment, prior 55.1
    • May ISM Prices Paid, est. 89.0, prior 89.6
    • May ISM New Orders, prior 64.3
    • May ISM Manufacturing, est. 60.8, prior 60.7
  • 10am: April Construction Spending MoM, est. 0.5%, prior 0.2%
  • 10:30am: May Dallas Fed Manf. Activity, est. 36.2, prior 37.3

DB's Jim Reid concludes the overnight wrap

Welcome back after the long weekend to readers in the UK and the US, and hope you had a restful break. For us in the UK it seemingly marked the arrival of summer after some very wet weeks in May, though much of my weekend was spent wandering through various furniture outlets as we look to fit out our next place. It was also the first time since the pandemic began that I ventured onto the tube and actually felt squashed, which shows that life does seem to be returning to some semblance of normality. Don’t just take my word for it though, as the data shows that the Saturday before last was the first time in over a year that tube usage was running at more than half of its pre-Covid levels. With stats like these you can tell I’m the life and soul of the party.

Given it’s the start of the month, we’ll shortly be releasing our performance review running through how various financial assets have fared in May and YTD. For the month overall, most of the key assets in our sample made gains in spite of increased concern regarding inflation risks, and commodities were one of the best-performing asset classes as they extended their YTD gains. However, it was a very different story for crypto-assets, with Bitcoin seeing a massive -35.4% slump in May as it came under the spotlight of the authorities. Full details in the report out shortly.

We’ll have to wait and see as to what June will bring, but markets in Asia have started the month on a mixed footing with the Nikkei (-0.35%) and Shanghai Comp (-0.11%) moving lower whilst the Hang Seng (+0.45%) and Kospi (+0.53%) have both risen. Over the long weekend, an important story from Asia was that the People’s Bank of China increased the reserve ratio for foreign exchange holdings at financial institutions to 7% from June 15, which is 2 percentage points higher than its current level. This follows a noticeable strengthening for the yuan over recent months that’s sent it to a 3-year high against the US dollar.

Otherwise overnight, the main news is that Brent crude oil prices have surpassed $70/bbl again after the OPEC+ group forecasted a tightening market with declining inventories, with the glut built up thanks to the pandemic nearly gone. Meanwhile US equity futures are pointing modestly higher, with those on the S&P 500 up +0.02%, and 10-year Treasury yields have also risen +2.0bps this morning to 1.615%.

Back to China, and another important headline from yesterday was the confirmation by the official Xinhua News Agency that all couples would be allowed to have three children, which marks an easing of the current two-child restriction. This comes against the backdrop of a noticeable decline in the birth rate in recent years, and the latest census release in May showed that population growth over the last decade was the slowest since data collection began in 1953. Furthermore, the UN’s population forecasts show that by the end of the decade, China is expected to have fallen behind India as the world’s most populous country.

Over in Europe, equities slipped back amidst thin trading volumes as they awaited the coming week’s data releases. The STOXX 600 ended the session down -0.49%, ending a run of 7 successive gains, though the index’s performance was cushioned by the fact UK markets were closed, and France’s CAC 40 (-0.57%) and Germany’s DAX (-0.64%) saw larger declines. For sovereign bond markets it was a pretty uniform story across the continent, with yields on 10yr bunds (-0.5bps), OATs (-0.5bps) and BTPs (-0.4bps) all moving slightly lower.

Turning to the week ahead now, the calendar will begin to pick up again following a quieter couple of weeks just gone, and this will mark the start of an eventful period as we get an array of important data releases (including the US CPI release in 9 days’ time) along with the next big round of central bank meetings. In terms of this shortened week ahead, the main highlight will be the US jobs report for May on Friday, which will give us a fresh perspective on the state of the recovery there, but on top of that we’ve also got the release of the May PMIs from around the world (starting today), along with the Euro Area’s flash CPI reading for May (also today), which will be an important one as investors stay focused on signs of building price pressures throughout the global economy.

Starting with the US jobs report, last month we saw nonfarm payrolls significantly underwhelm expectations with just a +266k increase, contrary to the consensus expectation for a +1m gain, while the previous month also saw downward revisions. This raised fears among investors that the US could be experiencing labour shortages and supply-chain constraints, but positive data since then like the weekly initial jobless claims have raised hopes that this was just a blip rather than a trend, and that we might start to see the “string” of positive releases that Chair Powell alluded to that would show progress towards the Fed’s goals. However our economists are expecting a bounceback in May, with a rise in nonfarm payrolls of +800k, which in turn would see the unemployment rate decline to a post-pandemic low of 5.9%. They note that it’s also worth bearing in mind some of the distributional variables that the Federal Reserve are tracking, in addition to the main numbers, as they seek to achieve their maximum employment objective.

Ahead of that, today will offer some more clues on how global economic momentum is faring into Q2 as we get the release of the manufacturing PMIs from around the world, before the services and composite numbers come out on Thursday. Overnight we’ve already had some of the numbers out of Asia, with China’s May Caixin manufacturing PMI printing in line with consensus at 52 while Japan’s final manufacturing PMI also printed 0.5pts stronger than the flash reading at 53.0 . Similarly, Australia’s final manufacturing PMI also pointed towards manufacturing strength and printed up +0.5pts from the flash at 60.4. Later on we’ll also get the numbers from Europe and the US, though the flash PMIs we’ve already got were generally strong, with the Euro Area composite PMI at a 3-year high of 56.9, while the US composite PMI was at a record high of 68.1 since the series started in 2009.

Finally on the data front, we’ll get the Euro Area flash CPI release for May later today, which will be in focus given the upside surprise in the US reading. We’ve actually already got the readings for the biggest countries, with Germany reporting a rise in their harmonised index of consumer prices yesterday to +2.4% in May (vs. +2.3% expected), which is the fastest rate of inflation since October 2018. For the Euro Area as a whole, our economists are looking for a +1.8% year-on-year print, which would be the fastest since November 2018.

Another event that could potentially be of interest this week is the meeting of G7 finance ministers in London on Friday into Saturday. They already had a virtual meeting with central bank governors last Friday, and speculation has been increasing that they could be close to reaching an agreement on the corporate taxation of multinationals that would see a global minimum corporate tax imposed. Indeed, Reuters reported that “sources close to Friday’s talks” were saying that a deal on the tax issue could be reached as soon as this week. This could in turn pave the way for it to be signed off by G7 leaders when they gather for their own summit the following week.

Of course, the pandemic will continue to remain in the spotlight over the week ahead as the world continues to grapple with renewed outbreaks. Starting with the good news, the picture at the global level does appear to be brightening of late, with data from John Hopkins University showing that cases rose by +3.66m in the week ending May 28, which is the 4th consecutive weekly decline and down by more than a third compared to 4 weeks ago. Within that a number of countries are seeing major progress, with US cases rising at their slowest level in nearly a year and the numbers in India continuing to fall, albeit from still elevated levels. Nevertheless there remain a number of signs of concern. Here in the UK the number of cases has started to rise again, which comes amidst the spread of the Indian variant, and has led to rising questions as to whether the easing of restrictions on June 21 will be able to go ahead. Separately over the weekend, health officials in Vietnam reported a new variant that combines characteristics of the variants initially discovered in India and the UK, and the country’s health minister said it was more transmissible than previous versions. Meanwhile the surge in cases in Argentina has seen the Copa America football tournament moved to Brazil instead.

Given the UK and the US were both out yesterday, we’ll finish with our usual recap of the week just gone, which saw an incredibly positive performance for markets across all the major asset classes. Risk appetite was strong, supported by further signs of improvement regarding Covid-19, as well as the fact that investors remained relaxed for now about inflation risks. And in turn, this helped equities advance to fresh highs, with the STOXX 600 up +1.02% to a new record (though it’s since come down yesterday), while the S&P 500 was up +1.16% to close less than 1% away from its all-time high in early May. Cyclical sectors led the moves higher along with small-cap stocks, and the Russell 2000 saw an even bigger +2.42% rise over the week.

Otherwise sovereign bonds made gains as well, with yields on 10yr Treasuries down -2.7bps to 1.594%, as part of a decline that was entirely driven by lower real rates (-2.8bps) rather than inflation expectations (+0.1bps). And European sovereign debt had an even more positive performance, with yields on 10-year bunds seeing a -5.3bps decline as part of their largest weekly decline so far this year. Finally we saw another rise in commodity prices after two weeks of decline, with Brent Crude (+4.80%), WTI (+4.31%) and copper prices (+4.04%) all moving higher.

Tyler Durden Tue, 06/01/2021 - 07:54
Published:6/1/2021 7:01:05 AM
[Markets] These money and investing tips can help you stay belted in when stocks get on a roller coaster MUTUAL FUNDS WEEKLY Don’t miss these top money and investing features: Dow 37,000? It’s possible if U.S. stocks stage an ‘average’ summer rally Small-cap stocks will go nowhere over the next year, ... Published:5/30/2021 7:46:59 AM
[Markets] Dow Jones Gains; Biden Touts Economy Despite Inflation; AMC Stock Trades Wildly The Dow Jones closed higher after President Joe Biden touted the economy. led the blue chips, while AMC stock fell after a wild session. Published:5/28/2021 3:32:27 PM
[Markets] Bullion Best In May As Tech Wrecks; Bitcoin's Biggest Bust In A Decade Bullion Best In May As Tech Wrecks; Bitcoin's Biggest Bust In A Decade

Well that was a different month - bonds were bid, big-tech dumped (as Meme stocks soared), crypto puked along with the dollar but bullion was best bid.

Is it time to cut the dollar's rope?

Nasdaq dropped in May - its biggest monthly drop since October (even after its big comeback from mid-month). Trannies outperformed (up for the 4th straight month)...

Source: Bloomberg

Small Caps led this week, just outperforming Nasdaq; as the Dow lagged.NOTE the action very much concentrated around the open every day...

FANG Stocks closed lower in May, biggest monthly drop since September...

Source: Bloomberg

Meme stocks soared in May - the biggest jump since January's chaos...

Source: Bloomberg

Bonds were bid on the month with the belly outperforming (7Y -5bps)...

Source: Bloomberg

Amid a chaotic month (the payrolls plunge), 10Y yields ended the month back below 1.60%...

Source: Bloomberg

And while real yields pushed lower (more negative) again in May, gold is signaling they have further to fall...

Source: Bloomberg

The Dollar was down for the second straight month, ending May with its lowest monthly close since 2014...

Source: Bloomberg

Bitcoin crashed 37% in May - its worst month since 2011. Ethereum was the least bad horse in the crypto glue factory, falling less than 10% on the month..

Source: Bloomberg

Despite lots of vol, ETH dramatically outperformed BTC for the second straight month...

Source: Bloomberg

Bitcoin was unable to reclaim $40k and closed below the 200DMA once again...

Source: Bloomberg

Commodities were broadly speaking higher in May, up for the 11th month of the last 13...

Source: Bloomberg

Silver's best month since Dec, Gold's best month since July, Crude and Copper also up over 4% on the month...

Source: Bloomberg

Spot Gold closed back above $1900 extending gains off the $1700 double-bottom...

Source: Bloomberg

Finally, have a great Memorial Day... with the most expensive gas in 7 years...

Source: Bloomberg

And as inflation soars, production disappoints... Can anyone say "Stagflation"?

Source: Bloomberg

And this just made us laugh... while sobbing...


Tyler Durden Fri, 05/28/2021 - 16:00
Published:5/28/2021 3:02:20 PM
[Markets] US STOCKS-Wall Street shrugs off inflation jump to move higher U.S. stocks climbed on Friday as investors brushed off a stronger-than-expected inflation reading, putting both the Dow and S&P indexes on track to post their first weekly gain in the past three weeks. Consumer prices as measured by the personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, rose 0.7% in April, topping analysts' 0.6% estimate and after a 0.4% increase in March. PCE is the Federal Reserve's preferred measure of inflation. Published:5/28/2021 2:32:10 PM
[Markets] Dow Jones Up 370 Points This Week Ahead Of Biden Budget Plan; These Stocks Soar The Dow Jones Industrial Average headed for a third straight gain Friday, on track for a 370-point jump for the week and a 2% gain for May. Published:5/28/2021 11:35:46 AM
[Markets] Dow Jones Rallies As Inflation Picks Up; Apple Downgraded, AMC Stock Rockets 38% The Dow Jones Industrial Average rallied 150 points Friday, as a key inflation gauge beat estimates. Apple was downgraded, while AMC stock rocketed 38%. Published:5/28/2021 9:32:21 AM
[Markets] Futures Jump, Meme Stocks Soar Ahead Of Key Inflation Print Futures Jump, Meme Stocks Soar Ahead Of Key Inflation Print

S&P futures rose on Friday after solid economic data and Joe Biden’s leaked $6 trillion federal budget plans spurred a Wall Street rally in cyclical shares ahead of a closely watched inflation report offsetting recent worries about a spike in prices put the S&P 500 on course for its smallest monthly gain since February. At 7:15 a.m. ET, Dow e-minis were up 177 points, or 0.5%, S&P 500 e-minis were up 16 points, or 0.38%, and Nasdaq 100 e-minis were up 48 points, or 0.35%. Treasuries were steady and the dollar strengthened. Markets will be shut on Monday for Memorial Day holiday

In a continuation of yesterday's retail buying frenzy, meme stocks GameStop and AMC Entertainment were set for a fifth day of gains, soaring 4.1% and 21.8% respectively, extending gains on the back of a social media-led rally that helped double the value of AMC’s stock this week. Here are some of the other biggest U.S. movers today:

  • HP shares (HPQ) drop 5% in U.S. premarket trading after beating Wall Street estimates but warning that the ongoing computer chip shortage could impact its ability to meet demand for laptops this year. This prompted concerns strong PC sales have peaked. Morgan Stanley sees the pullback as a buying opportunity, calling the supply chain risks “manageable.”
  • (CRM) rose 4.9% after raising its full-year forecast for revenue and profit, helped by increased demand for its cloud-based software during the pandemic.
  • Iterum Therapeutics (ITRM) jumps 27% in premarket trading after saying the FDA doesn’t deem an advisory committee meeting as necessary as it reviews the co.’s new drug application for sulopenem etzadroxil/probenecid.
  • Stocks exposed to cryptocurrencies such as Marathon Digital (MARA) and Riot Blockchain (RIOT) decline as Bitcoin falls as much as 5.2% against the dollar.
  • Boeing Co fell 1% after reports said it halted deliveries of its 787 Dreamliners, adding fresh delays for customers following a recent five-month delivery suspension due to production problems.
  • Inc added 4.9% premarket after raising its full-year forecast for revenue and profit, helped by increased demand for its cloud-based software during the pandemic.

The Fed's favorite inflation metric - the core PCE index - will be released at 8:30 a.m. ET, and is expected to have risen 0.6% in April after a 0.4% increase in March. A big beat could give credence to fears of an overheating economy and prompt the central bank to reconsider its accommodative monetary policy.

Biden is reportedly set to unveil a budget that would take federal spending to $6 trillion in the coming fiscal year. Investors will watch data on personal spending and the Federal Reserve’s preferred inflation measure later Thursday for further clues on the outlook for prices.

Global stocks are set to climb for a fourth month, supported by the frenzied economic rebound from Covid-19, while comments from Federal Reserve and global central bank officials have helped temper fears that inflation could spark a faster-than-expected reduction in stimulus. Treasury Secretary Janet Yellen said she sees the burst in prices as temporary, though likely to last through the end of 2021.

"Between now and year end, we see a little more room for stocks to move up from where they are today and the highs they already achieved earlier this year," Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets LLC, wrote in a note. “But we don’t think that the path to get there will be smooth and think a short-term pullback before the year is up remains likely.”

European stocks reached a fresh record high, boosted by expectations that the European Central Bank won’t hit the brake on stimulus measures next month. The Euro Stoxx 50 rose 0.6% to best levels of the week. DAX outperformed slightly, with Insurance, financial services and industrial names the leading sectors, while miners and autos are slightly in the red. Here are some of the biggest European movers today:

  • Marimekko shares jump as much as 14% to a record after the Finnish design company announced a debut collection with Adidas, “marking the first-ever sports apparel collaboration from Marimekko.”
  • Cattolica gains as much as 12% and is the day’s second-best performer on the FTSE Italia All-Share Index after reporting 1Q results that Equita called “solid.”
  • Solutions 30 advances as much as 30%, a third session of gains after the stock crashed 71% on Monday when the company said Ernst & Young couldn’t give an opinion on its 2020 financial statements.
  • Banco Sabadell drops as much as 4.3% after unveiling its new strategic plan that includes cost savings that “may require additional convincing,” according to Jefferies.
  • Corbion falls as much as 6.3% after Barclays downgrades to equal-weight from overweight, citing cost headwinds in raw materials.

Earlier in the session, the MSCI Asia Pacific Index added 0.8% while Japan’s Topix index closed 1.9% higher. Chinese stocks fell for the first time in five days, as foreign investors ended their buying spree after the nation’s central bank signaled the yuan’s recent gains have been too fast. The CSI 300 Index shed 0.3%, driven by declines in healthcare and technology firms. Still, the benchmark recorded its best week in more than three months with a 3.6% advance, mainly fueled by Tuesday’s jump that was the most since July last year. The People’s Bank of China set a weaker-than-expected daily reference rate for the yuan Friday, following its statement the previous day warning against one-way bets. The Chinese currency hit a five-year high against a basket of trading partners this week, prompting overseas investors to pile into local assets including stocks.

Foreigners became net sellers of mainland shares for the first time this week, reflecting jitters caused by the PBOC’s latest moves on the currency. They trimmed 526 million yuan worth of holdings Friday, paring net purchases this week to 46.8 billion yuan.

In Australia, the S&P/ASX 200 index rose 1.2% to 7,179.50, surpassing its previous record from May 10. The benchmark was supported by gains among miners and energy stocks. The gauge climbed 2.1% for the week, its best since April 9. Inghams was the best performing stock on Friday after saying its forecast earnings may exceed current consensus for the FY21 period. Nuix was the biggest laggard after ending a consultancy pact. In New Zealand, the S&P/NZX 50 index fell 0.5% to 12,182.25. The benchmark dipped back into technical correction territory after dropping over 10% from its Jan. 8 record.

In rates, the 10-year U.S. Treasury yield hovered above 1.60% amid growth optimism and concerns of more debt supply to fund spending. Yield curves bear steepen, long end gilts underperform, trading ~1bps cheaper to bunds. Following a slate of U.S. economic data including April personal income and spending, focus is likely to shift to month-end rebalancing, at 2pm ET for Bloomberg Barclays Treasury Index, conforming to Sifma’s early close recommendation ahead of U.S. holiday weekend. In Europe, semi-core and peripheral spreads are mixed, BTPs are steady despite softer auction metrics. Cash USTs hold a narrow range ahead of a round of economic data and an early close at 2pm New York ahead of Monday’s Memorial Day holiday.

In FX, Bloomberg Dollar index was little changed, trading near the best levels of the week. The yen fell as Japan recommended extending a state of emergency that includes Tokyo to curb infections. The euro was steady around $1.22 after earlier dipping to a one- week low. The pound inched lower, retreating from Thursday’s rally, with concerns growing that the U.K. won’t be able to fully re-open its economy later in June; traders were also reconsidering a speech from Bank of England policy maker Gertjan Vlieghe on Thursday, which pushed up the pound and gilt yields. Sweden’s krona fell, paring some of yesterday’s gain, but stayed within its recent range versus the greenback. The Australian dollar rose over its New Zealand peer on short- covering from funds ahead of Tuesday’s RBA policy meeting. China signaled the yuan’s recent appreciation is too rapid, with a weaker-than-expected reference rate. NZD and SEK were the worst G-10 performers. TRY weakens to a record low against USD.

In commodities, crude futures drift off the lows, WTI regains a $67-handle, Brent holds above $69.50. Spot gold holds a narrow range, finding support around Thursday’s lows near $1,890/oz. Most base metals are in the green with LME tin rallying sharply on production concerns.

Bitcoin slipped toward the $35,000 level, wiping out most of this week’s advance as Bank of Japan Governor Haruhiko Kuroda warned about token’s volatility and speculative trading. The digital currency lost 7% to trade around $35,700, recalling levels seen in last week’s crypto meltdown. Bitcoin is now flat for the week after a run that’s seen prices swing between $33,000 and $39,000.

Looking at the day ahead now, additional data highlights from the US include April’s data on personal income and personal spending, the MNI Chicago PMI for May, and the preliminary wholesale inventories for April. From central banks, the ECB’s Villeroy will be speaking, while there’s also a virtual meeting of G7 finance ministers and central bank governors.

Market Snapshot

  • S&P 500 futures up 0.3% to 4,212.25
  • STOXX Europe 600 up 0.43% to 448.36
  • MXAP up 0.9% to 208.34
  • MXAPJ up 0.5% to 698.91
  • Nikkei up 2.1% to 29,149.41
  • Topix up 1.9% to 1,947.44
  • Hang Seng Index little changed at 29,124.41
  • Shanghai Composite down 0.2% to 3,600.78
  • Sensex up 0.7% to 51,497.16
  • Australia S&P/ASX 200 up 1.2% to 7,179.51
  • Kospi up 0.7% to 3,188.73
  • Brent Futures little changed at $69.49/bbl
  • Gold spot down 0.2% to $1,892.44
  • U.S. Dollar Index little changed at 90.02
  • German 10Y yield rose 0.2 bps to -0.170%
  • Euro little changed at $1.2197

Top Overnight News from Bloomberg

  • ECB Executive Board member Isabel Schnabel played down concerns over rising borrowing costs as policy makers prepare for their next meeting, saying that higher bond yields reflect an improving economy
  • The latest repricing in currency volatility skews shows how investors are placing their bets on which central bank moves first away from extraordinary stimulus. Leveraged and institutional names alike have added positions lately that use the likes of the euro, the yen and the Swiss franc as funding currencies in carry trades versus emerging market and cyclical ones, a Europe-based trader says
  • The Bank of Japan will consider climate change in its monetary policy discussions, Governor Haruhiko Kuroda said in his clearest signal yet that the central bank is looking to support the battle against global warming
  • France’s statistics agency cut its estimate of economic output at the start of the year, showing the euro area’s second largest economy slipped into a recession for the second time in the Covid pandemic
  • China has dialed up its rhetoric about surging commodity prices and a strong currency with almost daily commentary by officials and in state media in the past two weeks, a sign authorities are becoming more uncomfortable with recent gains
  • China is signaling that the yuan’s recent appreciation is too rapid, with steps that are likely to slow -- but not reverse -- its gains after the currency soared tomulti-year highs against that of trading partners
  • U.K. firms are more upbeat about the economy than at any time since 2016, buoyed by a further easing of coronavirus restrictions in May, the Lloyds Bank Business Barometer shows
  • Gold stored at the Bank of England has been selling for unusually high premiums recently, signaling that central banks may be back in the market buying
  • The Japanese government recommended extending a state of emergency that includes Tokyo and other major cities, in a last-ditch effort to rein in Covid infections ahead of the capital hosting the Olympics in less than two months

Quick look at global market news courtesy of Newsquawk

Asian equity markets traded mostly higher as the region improved upon the slight positive tilt seen on Wall St. and US equity futures also marginally extended on the prior day’s late ramp-up on what was otherwise a choppy session following mixed data releases and heading into month-end. ASX 200 (+1.2%) was underpinned by continued outperformance in the mining-related sectors amid strength in underlying commodity prices and with risk appetite also spurred by potential M&A reports including BetMakers Technology's proposal to acquire Tabcorp’s wagering and media business for AUD 4.0bln, while KKR and Domain Holdings partnered on a surprise AUD 3bln bid for PEXA that boosted shares in Link Administration which the largest shareholder in PEXA with a 44% stake. Nikkei 225 (+2.1%) outperformed as exporters cheered the recent currency weakness and with the BoJ said to consider a 6-month extension to the September deadline for the pandemic-relief program as soon as the next policy meeting on June 17th/18th. Hang Seng (+0.1%) and Shanghai Comp. (-0.2%) were mixed with focus in Hong Kong on JD Logistics which jumped over 10% on its debut and which was the 2nd largest IPO for the city so far this year, although the mainland lagged following the recent strengthening of the CNY to a 5-year high against a basket of currencies and amid lingering tensions with the US after the bipartisan bill to counter China received enough support to advance in the US Senate. Finally, 10yr JGBs tracked the recent declines in T-notes with demand hampered by the outperformance of Japanese stocks which pressured prices in the 10yr benchmark beneath 151.50, while the central bank’s presence in the market for over JPY 1.1tln of JGBs heavily concentrated in 3yr-10yr maturities did little to spur a rebound.

Top Asian News

  • Traders Grapple With Grief While India’s Markets Keep Rising
  • Survivors Tell a Harrowing Tale of Lapses in India Sea Disaster
  • Vaccine Progress, Weak Yen a Reprieve for Japan’s Lagging Stocks
  • Japan Widens Vaccine Center Access as Thousands of Slots Remain;
  • Kuroda Says BOJ Will Mull Climate in Monetary Policy Discussions

Equities in Europe hold onto the modest gains seen at the cash open and some more (Euro Stoxx 50 +0.5%), following on from mixed trade seen across APAC and on Wall Street, with the tone somewhat tentative ahead of US PCE and looming month-end. As a reminder, US and UK markets will be closed on Monday due to public holidays. US equity futures meanwhile have been grinding higher since the start of European trade despite a distinct lack of news flow as markets approach the summer period, whilst global central bank officials continue to stress the need for current levels of support and hold the view that inflationary pressures are transitory and not secular. Back to Europe, sectors are mostly positive with the earlier cyclical bias fading to a more broad-based/themeless picture with some idiosyncratic outliers. Banks top the chart amid the favourable yield environment, whilst Autos and Basic resources lag, with the latter seeing renewed pressure as China continues to jawbone commodity prices. Individual movers are relatively scarce, but SAP (+0.3%) has ultimately failed to glean much tailwind from its US peer Salesforce rising +4% post-earnings. Airbus (+2.4%) meanwhile remains firm following yesterday’s production upgrade alongside a positive broker move by JPM today.

Top European News

  • Europe’s Top Stock in 2015 Stakes Revival on Payment Cards
  • U.K. Considers Carbon Border Tax to Protect Domestic Industry
  • Germany Plans to Expand Coronavirus Vaccinations to Children
  • Danske Bank Veteran Chief Analyst Leaves for Banking Circle

In FX, far from all change or hero to zero, as the Kiwi remains firmly on track to record healthy gains vs the Greenback and Aussie on diverging Central Bank policy outlooks following the hawkish RBNZ shift to signal a September 2022 OCR lift-off on Wednesday. However, Nzd/Usd has retreated through 0.7250 from around 0.7317 at best and Aud/Nzd has bounced just over 50 pips from a whisker above 1.0600 amidst what appears to be profit taking and a technical correction more than anything fundamental given that Aud/Usd remains heavy after failing to retain hold of the 0.7800 handle and subsequently not sustaining momentum beyond the half round number below. Meanwhile, the Buck is also struggling to build on recovery gains even though month end factors are mildly supportive/constructive, especially against the Yen and US Treasury yields are off recent lows ahead of potentially key data and surveys, like PCE inflation, advanced trade and Chicago PMI, on top of President Biden’s Budget presentation. Indeed, the DXY has not extended much further having regained 90.000+ status before waning again within a 90.163-89.987 band and falling fractionally short of the w-t-d high posted yesterday.

  • EUR/GBP/JPY- The Euro got a somewhat unexpected boost from ECB’s Schnabel delivering a more upbeat assessment of the Eurozone economic recovery, and crucially no concern whatsoever about the recent leg-up in yields as in her view this reflects the improving outlook and is desirable. She also believes that financing conditions remain favourable, in contrast with distinctly dovish midweek commentary from Panetta and others of late. Hence, Eur/Usd is still keeping 1.2200 in sight and averting attempts to test/trigger stops that are anticipated to be sitting circa 1.2160 (double bottom from last week), though may find it hard to revisit 1.2250+ peaks as heavy option expiry interest resides between 1.2200-10 (1.6 bn), 1.2215-25 (1 bn) and 1.2265-75 (1 bn). Similarly, Sterling has continued its revival from worst levels in wake of hawkish BoE vibes from Vlieghe on Thursday, albeit with less impetus via Haldane who is also due to leave the MPC shortly and already dissented this month in favour of a Gbp 50 bn APF Gilt reduction – see 10.00BST and 9.27BST posts on the Headline Feed for more. Nevertheless, Cable has peered over 1.4200 again and Eur/Gbp remains sub-0.8600. Elsewhere, the Yen may actually rescued from a worse fate by option expiries at the 110.00 strike (2 bn) as its strives to contain losses and arrest a slide into month end, and with some market observers also flagging the prospect that Japanese exporters could be buyers at the level for hedge purposes to offset the tide of rebalancing flows.
  • CHF/CAD - Both on the backfoot against their US counterpart, with the Franc not drawing much encouragement from a significantly stronger than expected Swiss KOF indicator as it hovers near 0.9000, while the Loonie seems equally unimpressed with a firm revival in crude prices, but may be cushioned by unusually large option expiries running off at the 1.2100 strike later (1.5 bn for the NY cut).

In commodities, WTI Jul and Brent Aug trade relatively flat with an upside bias, in line with the cautiously positive risk tone, with the former on either side of USD 67/bbl (vs 66.74-67.45 range) and the latter just north of USD 69/bbl (vs 69.01-64 range). News flow for the complex has remained light after the gains seen yesterday as Biden’s USD 6tln 2022 budget proposal energised the bulls, with eyes still on the Iranian nuclear deal discussions – with the noise surrounding this much quieter this week vs the last. “However, if and when there is a breakthrough, we would expect it to lead to some immediate downward pressure on the market. We expect any weakness to be short-lived, however, given that the medium-term fundamentals are still supportive.” ING suggests, whilst also citing the upcoming summer driving season. Elsewhere, spot gold and silver have been uneventful and mildly pressured by the firmer Buck and yields. Spot gold has dipped back below USD 1,900/oz with the level acting as overnight resistance. Turning to base metals, Dalian iron ore continued to recover overnight from its recent losses, but the focus remains on Beijing’s commodities crackdown with China’s Securities Journal re-running similar reports to last week regarding the crackdown of speculatively driven price fluctuations. Further, sources note that several Chinese commodity firms pared back their bullish futures bets at the request of the government. LME copper has been subdued but holds onto its USD 10,000/t. Goldman Sachs said the fundamental path for key commodities including oil, copper and soybeans remains oriented towards incremental tightness in H2 with scant evidence that supply response is enough to derail the bull market, while it added that the bullish thesis in commodities is not about Chinese speculators nor is it growth in Chinese demand, but is about scarcity and a DM-led recovery.

US Event Calendar

  • 8:30am: April Personal Spending, est. 0.5%, prior 4.2%
  • 8:30am: April Personal Income, est. -14.2%, prior 21.1%
  • 8:30am: April PCE Deflator MoM, est. 0.6%, prior 0.5%; PCE Deflator YoY, est. 3.5%, prior 2.3%
    • 8:30am: April PCE Core Deflator MoM, est. 0.6%, prior 0.4%; PCE Core Deflator YoY, est. 2.9%, prior 1.8%
  • 8:30am: April Retail Inventories MoM, est. -2.0%, prior -1.4%
    • 8:30am: April Wholesale Inventories MoM, est. 0.7%, prior 1.3%
  • 8:30am: April Advance Goods Trade Balance, est. -$92b, prior -$90.6b
  • 9:45am: May MNI Chicago PMI, est. 68.0, prior 72.1
  • 10am: May U. of Mich. Current Conditions, prior 90.8
  • 10am: May U. of Mich. Sentiment, est. 83.0, prior 82.8; 1 Yr Inflation, prior 4.6%; 5-10 Yr Inflation, prior 3.1%

DB's Jim Reid concludes the overnight wrap

Yesterday was the first day in about 6 weeks that I ventured outside in just a short sleeve shirt. Summer is arriving at last and now looks pretty set fair for the next couple of weeks. Famous last words. I’m celebrating tomorrow by playing a 36 hole golf tournament, then an 18 hole one on Sunday, Legoland on Bank Holiday Monday and then I’m taking a day’s holiday on Tuesday to play another 36 hole golf tournament. Any guesses as to which one of those days I’m looking forward to least? My aim is to go on as few (preferably zero) stomach churning rollercoasters as possible.

With the sun out at least in this little corner of the world, global cyclical equities posted a decent performance yesterday after generally positive data releases and further good news on the pandemic helped to support risk appetite. Next week’s ISM numbers and US jobs report will be more important to sentiment but for now optimism has edged the S&P 500 (+0.12%) back to within 0.8% of its all-time high. Meanwhile Europe’s STOXX 600 (+0.27%) advanced for a 6th successive session to a new record.

US capital goods (+1.86%) and banks (+1.45%) led the moves higher for the S&P, while small-cap stocks also performed strongly as the Russell 2000 index advanced +1.06%. Pandemic outperformers lagged once again with tech hardware (-0.93%) and software (-0.68%) among the poorest performing industries. In Europe it was much the same story of cyclicals leading the charge, which included the STOXX Banks index rising +2.18% to another post-pandemic high.

In term of the catalysts, the weekly initial jobless claims from the US proved to be better than expected for the week through May 22, coming in at a post-pandemic low of 406k (vs. 425k expected). In turn, this raised hopes further that next week’s jobs report will prove that the underwhelming April release of just a +266k increase in nonfarm payrolls was a blip rather than a trend. Our own economists are expecting a decent bounce back with an +800k increase in nonfarm payrolls, which would be the best number since last August given the revisions to the previous data. Other numbers also proved stronger than expected, with core capital goods orders rising by +2.3% in April (vs. +1.0% expected), even if the broader headline durable goods orders unexpectedly fell -1.3% (vs. +0.8% expected).

One additional notable data highlight was US Q1 core PCE, which was revised up two tenths to 2.5%, which in turn lifted the YoY estimates for Q1 to 1.61% from 1.55%. That is the second highest quarterly uptick in core PCE since 2012, with only Q3 of last year (the initial reopening) being higher. This will have inflation-watchers even more focused on today’s April core PCE deflator print and the final reading on the University of Michigan May consumer sentiment. Our economists expect an large increase (+0.77% forecast vs. +0.36% previously), given the outsized strength in the April CPI and PPI data. If their expectations bear out, it would bring the YoY growth rate up from 1.8% to 3.1%, with half of that due to base effects rolling off of the calculation. For the University of Michigan's consumer sentiment index (83.0 final vs. 82.8 preliminary), the attention will be on revisions to the median 5 - 10 year inflation expectations series. The preliminary release showed a 40bp surge to 3.1% – the highest since August 2008. This number can be heavily revised so definitely one to watch as we think expectations are going to be key to whether inflation takes a foothold.

Another reflationary headline was regarding President Biden’s budget for fiscal year 2022, which is set to be unveiled today. The New York Times reported that it would include a call for $6tn of federal spending in the 2022 fiscal year. Furthermore, over the decade it would take federal spending to its highest sustained levels since WWII according to the report, with the government spending more each year as a percentage of GDP than at any time since WWII, with the exception of 2020 and 2021 during the coronavirus recession and response.

Though US budgets are more aspirational documents that still have to be worked out in Congress, Treasury yields moved higher, with the 10yr yield up +3.1bps to 1.606%. The increase was as a result of a mix of higher real yields (+1.7) and inflation expectations (+1.2bps), with the latter only rising twice in the last eight sessions now. The 7yr auction seemed to go ok which took yields off their highs (1.623%) for the day. Remember it was a bad 7yr auction at the end of February that led to one of the biggest intra-day moves higher in yields we have seen for some time.

European yields also moved higher, with those on bunds (+3.4bps), OATs (+3.1bps) and BTPs (+1.5bps) all rising. Meanwhile the spread of 10yr Greek debt over bunds fell yet again to 104.8bps, its tightest level since 2008.

One of the more outsized moves came from gilts yesterday, with 10yr yields up +5.8bps following comments from Gertjan Vlieghe of the BoE’s Monetary Policy Committee. He said that his “central scenario” was that the economy evolved similarly to the MPC’s May projections, but with “somewhat more slack”. Under this scenario, his view was that “the first rise in Bank Rate is likely to become appropriate only well into next year”. Nevertheless, a 2022 hike was more aggressive than markets were previously pricing, and he also said that under an upside scenario, then it would be in Q1 2022 that there’s “a clear view of the post-furlough unemployment and wage dynamics, so a rise in Bank Rate could be appropriate soon after”, so an even quicker pace potentially. The comments also helped sterling to be the top-performing G10 currency yesterday, strengthening +0.59% against the US Dollar.

Asian markets have largely taken Wall Street’s cyclical lead this morning with the Nikkei (+2.23%), Hang Seng (+0.63%), and Kospi (+0.88%) all up with Japanese equities boosted by a weaker Yen. Chinese bourses are trading without any direction though with the Shanghai Comp flat, the CSI (-0.09%) down and the Shenzhen Comp (+0.22%) up. In Fx, the Chinese yuan is up +0.23% to 6.3688, to the strongest level since May 2018 and is now up +2.89% since March 31st. Elsewhere, Australia’s 10y yields are up +6.5bps to 1.688% as markets begin to price in a more hawkish RBA outlook following the RBNZ meeting on Wednesday. Outside of Asia, futures on the S&P 500 are up +0.34% while metal prices have also gained with DCE iron ore up +3.33% and SHF steel rebar up +3.42%.

On the pandemic, the improving picture at the global level has seen the rate of new weekly case growth come down by more than a third since its peak a month ago, according to data from John Hopkins University, though we’re still some way above the recent trough in mid-February. Nonetheless, the Covid-19 related concerns remain with the Japanese government indicating overnight that the state of emergency would be extended in Tokyo and other regions to June 20, a little more than a month before the Tokyo Olympics start. PM Suga is expected to announce the formal decision later today and the decision to extend the state of emergency will affect almost half of Japan’s population. In the UK, there were continued concerns over the spread of the Indian variant, as cases rose to a fresh 6-week high of 3,542 yesterday, and Health secretary Hancock said to MPs that the lifting of restrictions on June Y21 would only take place “if it’s safe.” The hope is that the relatively advanced vaccination programme in the UK will help to blunt the link between cases to hospitalisations and deaths, with more than 73% of the adult population now having received a first vaccine dose, and more than 45% having had a second one. The German government announced that the country will start vaccinating children 12 and older starting June 7 on a voluntary basis. Lastly there was good news in the US, where a Quinnipiac poll showed 72% of Americans have either gotten a vaccine shot or are planning on getting one, this up from a mid-April iteration of the survey which measured it at 68%. Those who said they would not get vaccinated dropped 4pp to 23%. This comes as vaccination rates have slowed in recent weeks as over 50% of the adult population is now fully vaccinated according to the White House. On the topic of returning to normality, 73% of those polled said their Memorial Day Weekend plans (this weekend for our non-US readers) are similar to those pre-pandemic.

Looking at yesterday’s other data, the second estimate of Q1 GDP for the US maintained the annualised rate of growth at +6.4%, contrary to expectations for a +6.5% reading. Meanwhile pending home sales for April unexpectedly fell -4.4% (vs. +0.4% expected), and the Kansas City Fed’s manufacturing activity index for May also underperformed with a 26 reading (vs. 30 expected). In Europe, the German GfK consumer confidence for June underwhelmed at -7.0 (vs. -5.2 expected), though Italy’s consumer confidence index from Istat increased to a post-pandemic high of 110.6 in May (vs. 104.0 expected).

To the day ahead now, and additional data highlights from the US include April’s data on personal income and personal spending, the MNI Chicago PMI for May, and the preliminary wholesale inventories for April. Over in Europe, there’s also the preliminary French CPI reading for May, as well as the Euro Area’s final consumer confidence for May. From central banks, the ECB’s Villeroy will be speaking, while there’s also a virtual meeting of G7 finance ministers and central bank governors.

Tyler Durden Fri, 05/28/2021 - 07:56
Published:5/28/2021 7:00:19 AM
[Markets] Dow Jones Holds Gain As Nasdaq Turns Negative After Jobless Claims Improve The Dow Jones traded slightly higher in today's market after paring earlier gains. Over the past hour, the S&P 500 also sold off from its highs. Published:5/27/2021 3:55:49 PM
[Markets] Dow industrials finish up over 100 points; small caps gain over 1% Dow industrials finish up over 100 points; small caps gain over 1% Published:5/27/2021 3:25:23 PM
[Markets] Small Caps Jump, Big-Tech Dumps, As Biden's Booming Budget Busts Bonds Small Caps Jump, Big-Tech Dumps, As Biden's Booming Budget Busts Bonds

Biden's booming budget sent yields higher on the day - and the retroactive capital gains tax embedded in that budget spooked stocks broadly speaking. But Small Caps refused to lay down as the short-squeeze continued. Nasdaq ended lower on the day...

The Dow and S&P haven't been this uncorrelated since the dotcom crash in 2000...

Source: Bloomberg

Small Caps are ripping back relative to Nasdaq as the spiky trading continues...

The last two days have been the biggest short-squeeze since the panic-spike in "most shorted" stocks amid the last WSB Reddit Raiders attack in January... And hedgies suffer...

Source: Bloomberg

WSB stocks are soaring again...

Source: Bloomberg

...with AMC (and its massive short position) getting its face gamma-squeeze-ripped off...

AMC was the most-traded stock in the world today!!

VIX crashed to a 16 handle once again...

Bond yields broke higher on the heels of Biden $6 trillion budget bonanza - now that's a lot of supply to soak up if The Fed is gonna taper. Yields were up around 3bps on the day, but remain lower on the week...

Source: Bloomberg

10Y yields pushed back above 1.60% again...

Source: Bloomberg

Bitcoin oscillated again between $40k and $38k...

Source: Bloomberg

Ethereum is also coiling up for a move...

Source: Bloomberg

The dollar went nowhere on the day, testing higher and lower intraday to end back at unch on the week again...

Source: Bloomberg

Spot Gold fell back below $1900 today, but staged a decent recovery after Europe closed...

Source: Bloomberg

Oil finally broke out of its recent range (top the upside)...

Source: Bloomberg

Finally, the economy is screaming 'Stagflation'...

Source: Bloomberg

And stocks are loving stagflation? It's a mad world alright!

Tyler Durden Thu, 05/27/2021 - 16:00
Published:5/27/2021 3:05:51 PM
[Markets] Dow Jones Leads Stock Market But Pares Gains As Biden, GOP Work On Infrastructure Plan The Dow Jones Industrial Average sharply pared its gains midday Thursday, after rising nearly 300 points in early trade. Published:5/27/2021 11:25:30 AM
[Markets] Dow Jones Pares Gain As Nasdaq Leads Market Upside; This Automaker Scores Breakout The Dow Jones traded near breakeven in today's market after paring earlier gains. Over the past hour, the Dow and S&P 500 sold off from their highs. Published:5/26/2021 3:48:35 PM
[Economy] The Dow-Jones Industrial Average turns 125
Here's to 125 more.
View Post
Published:5/26/2021 3:21:25 PM
[Markets] Dow Jones Flat As Small Caps Surge; Amazon Up As Jeff Bezos Announces Departure Date The Dow Jones was flat as small cap outperformed. Amazon stock was up as CEO Jeff Bezos announced his official departure date. Published:5/26/2021 2:48:14 PM
[Markets] The Dow Jones Industrial Average Turned 125 Today. It’s Not Time to Retire It Just Yet. Yes, recent performance hasn’t been all that good. The Dow has underperformed the in recent years, with the blue-chip benchmark 10.7% annual return over the past decade lagging behind the S&P 500’s 12.1%, according to FactSet data. Details on how the Dow has done since its founding are sketchy. Published:5/26/2021 2:20:10 PM
[Markets] Dow Up Despite Pressure From This Key Stock; Look Who Just Joined IBD Leaderboard The Dow Jones Industrial Average held a 60-point gain Wednesday afternoon, as the major indexes sought to recover the prior session's losses. Published:5/26/2021 12:49:05 PM
[Markets] Here's Where The Original Dow Stocks Are Now, 125 Years Later The Dow Jones Industrial Average just turned 125 today. But it's amazing how few of the original members survived. Published:5/26/2021 11:47:54 AM
[Markets] Dow Jones Rallies As Bitcoin Jumps Above $40,000; Nvidia Earnings Due Late The Dow Jones Industrial Average reversed from early gains Wednesday, as Bitcoin briefly jumped back above $40,000. Nvidia earnings are due late. Published:5/26/2021 10:47:55 AM
[Markets] Dow Jones Reverses As Bitcoin Jumps Above $40,000; Nvidia Earnings Due Late The Dow Jones Industrial Average reversed from early gains Wednesday, as Bitcoin briefly jumped back above $40,000. Nvidia earnings are due late. Published:5/26/2021 9:28:31 AM
[Markets] 3 Dividend Stocks to Celebrate the 125-Year Anniversary of the Dow Jones Industrial Average Distilling & Cattle Feeding Co, The American Sugar Refining Company, and the United States Rubber Company are just three of the 12 businesses Charles Dow selected to reflect the American economy on May 26, 1896. Fast forward to 2021, and the index consists of 30 companies, only six of which are materials, industrials, or energy stocks. A rotation out of growth toward income and value has helped the Dow Jones Industrial Average (DJIA) outperform the S&P 500 and the Nasdaq Composite so far this year. Published:5/26/2021 8:16:16 AM
[Markets] Dow snaps 3-day win streak as stocks end slightly lower Dow snaps 3-day win streak as stocks end slightly lower Published:5/25/2021 3:11:55 PM
[Markets] Dow Jones Flat; Amazon Stock Slips Amid Antitrust Lawsuit; Top Stock Offers New Buy Point The Dow Jones lost ground as the stock market struggled. Boeing and Walt Disney were blue chip stock standouts. Amazon stock fell amid an antitrust lawsuit. Published:5/25/2021 1:14:14 PM
[Markets] Dow Jones Nearly Flat As Stock Market Mulls Consumer Confidence Dip Stocks briefly reversed lower midday Tuesday with the Dow Jones Industrial Average erasing a 117-point gain as consumer confidence fell more than expected. Published:5/25/2021 11:40:33 AM
[Markets] Dow Jones Reverses Lower As Nvidia, Tesla Turn Red; Hot IPO Stocks Roblox, UiPath In Focus After Breakouts The Dow Jones Industrial Average reversed lower Tuesday, as tech giants Nvidia and Tesla stock turned red. Hot IPO stocks Roblox and UiPath were in focus. Published:5/25/2021 11:15:51 AM
[Markets] Dow Jones Erases Gains As Nvidia, Tesla Turn Lower; Hot IPO Stocks Roblox, UiPath In Focus After Breakouts The Dow Jones Industrial Average reversed lower Tuesday, as tech giants Nvidia and Tesla stock turned red. Hot IPO stocks Roblox and UiPath were in focus. Published:5/25/2021 10:13:36 AM
[Markets] Dow Jones Today Heads For 4 As Stocks Climb; ASML Holding, Intel Pace Chip Rally America's Car-Mart and ASML Holding climbed as chips rallied and the Dow aimed to extend its three-day advance. Published:5/25/2021 9:11:15 AM
[Markets] S&P 500 trades above 4,200 early Tuesday, and Dow sees modest rise as tech and consumer discretionary shares climb U.S. stock benchmarks opened modestly higher Tuesday, with gains coming after Federal Reserve officials were seen easing concerns that rising inflation pressures would prompt policy makers to suddenly tighten monetary policy, while Treasury yields eased for a fourth session. The Dow Jones Industrial Average was up 0.2% at 34,459, the S&P 500 index climbed 0.3% to 4,210, while the Nasdaq Composite Index advanced 0.6% to around 13,737. In corporate news, shares of Lordstown Motors Corp. were down 17% after the electric-vehicle startup late Monday reported a wider quarterly loss and said it is seeking "additional capital" to fund itself. Published:5/25/2021 8:39:24 AM
[Markets] US Home Prices Explode At Fastest Pace Since 2013 US Home Prices Explode At Fastest Pace Since 2013

"In real terms, home prices have never been so high. My data goes back over 100 years, so this is something," Nobel prize-winning economist Robert Shiller told CNBC's "Trading Nation" earlier this week and according to Case-Shiller's latest data (for March) released today, home prices in America (the 20-City Composite) are surging at a stunning 13.27% YoY (up 1.6% MoM)...

Source: Bloomberg

Phoenix, San Diego, Seattle reported highest year-over-year gains among 20 cities surveyed.

"These data are consistent with the hypothesis that COVID has encouraged potential buyers to move from urban apartments to suburban homes," Craig Lazzara, global head of index investment strategy at S&P Dow Jones Indices, said in statement.

"This demand may represent buyers who accelerated purchases that would have happened anyway over the next several years. Alternatively, there may have been a secular change in preferences, leading to a permanent shift in the demand curve for housing."

As Shiller noted, that is the highest price ever and over 19% higher than the home price index was at the peak in 2006...

Finally, we revert back to the man behind the index. Shiller believes the current housing market environment is similar to 2003, five years before the housing market crash in 2008. 

"If you go out three or five years, I could imagine they'd [prices] be substantially lower than they are now, and maybe that's a good thing," he added.

"Not from the standpoint of a homeowner, but it's from the standpoint of a prospective homeowner. It's a good thing. If we have more houses, we're better off."

Tyler Durden Tue, 05/25/2021 - 09:05
Published:5/25/2021 8:11:08 AM
[Markets] Dow Jones Today Shoots For 4 As Futures Rise; ASML Holding, Intel Pace Chip Rally America's Car-Mart and ASML Holding climbed as chips rallied and the Dow aimed to extend its three-day advance. Published:5/25/2021 7:39:59 AM
[Markets] Dow Jones Futures Rally As Bitcoin Surges; 2 Hot IPO Stocks Break Out Dow Jones futures were higher early Tuesday, The tech-heavy Nasdaq reclaimed a key level in today's stock market rally, as Bitcoin surged. Published:5/25/2021 6:09:00 AM
[Markets] Mark Hulbert: Dow 37,000? It’s possible if U.S. stocks stage an ‘average’ summer rally Dow Jones Industrial Average has gained 7% on average between the beginning of June and the end of August.
Published:5/25/2021 6:09:00 AM
[Markets] Dow Jones Futures Rally: Nasdaq, Tesla Retake Key Levels As Bitcoin Surges; 2 Hot IPO Stocks Break Out Dow Jones futures were little changed late Monday. The tech-heavy Nasdaq reclaimed a key level in today's stock market rally, as Bitcoin surged. Published:5/24/2021 7:06:39 PM
[Markets] Dow Jones Futures Rally: Tech Stocks, Tesla Retake Key Levels As Bitcoin Surges; 2 Hot IPO Stocks Break Out Dow Jones futures were little changed late Monday. The tech-heavy Nasdaq reclaimed a key level in today's stock market rally, as Bitcoin surged. Published:5/24/2021 6:07:26 PM
[Markets] Dow Jones Futures: Tech Stocks, Tesla Retake Key Levels As Bitcoin Surges Dow Jones futures were little changed late Monday. The tech-heavy Nasdaq reclaimed a key level in today's stock market rally, as Bitcoin surged. Published:5/24/2021 4:35:00 PM
[Markets] Bitcoin, Bullion, & Big-Tech Soar As Dollar Drop Resumes Bitcoin, Bullion, & Big-Tech Soar As Dollar Drop Resumes

As the inflation narrative fades amid a now-negative China credit impulse, all of the old favorite trades are back and today was the panic-buying of big-tech reignited once again. Nasdaq roared higher, Small Caps lagged along with the Dow, S&P ended up 1%..

Small Caps are coiling in a tight range between 50- and 100-DMAs...

And Nasdaq bounced after closing below its 100DMA, back above its 50DMA...

Growth outperformed Value...

Source: Bloomberg

VIX tumbled back below 19...

Another short-squeeze (filled the gap from last Wednesday's tumble) provided some more ammo for the rip today...

Source: Bloomberg

Cryptos all rallied hard today, surging back into the green after another illiquid bloodbath over the weekend...

Source: Bloomberg

...with Bitcoin back above $38,000 after falling beloe $32k over the weekend...

Source: Bloomberg

Ether outperformed dramatically, ripping back from below $2000 to over $2500...

Source: Bloomberg

And gold held its gains...

As the dollar reversed its gains from late Friday...

Source: Bloomberg

Bonds were bid today - even as stocks rallied - with the majority of the curve down around 1-1.5bps...

Source: Bloomberg

10Y Yields found support at 1.60% again...

Source: Bloomberg

Real yields dipped, catching (up) gold's lead...

Source: Bloomberg

Crude oil surged higher today too, with WTI back above $66...

Finally, as we detailed earlier, the banks sent another, even louder message to The Fed today with a near-record RRP...

Source: Bloomberg

The message is simple "f**k off, I'm full!"

Tyler Durden Mon, 05/24/2021 - 16:01
Published:5/24/2021 3:08:04 PM
[Markets] Dow Jones Holds Gain As Nasdaq Leads Market; These Stocks Trade In Buy Zones The Dow Jones Industrial Average rose in today's market, recovering some of its losses from last week. Technology stocks led the upside. Published:5/24/2021 1:05:34 PM
[Markets] Why Big Tech Is Melting Up Today Why Big Tech Is Melting Up Today

Bad news is great news for big-tech.

As we detailed over the weekend, with China's credit impulse reversal, it appears the market's rotating back to the deflation narrative, and with it the growth over value bet is back.

The latest Chinese credit data means that SocGen's forecast for sharply lower credit impulse in the coming years will be validated. And as this all too critical metric fades, virtually every asset across the globe will be affected (especially if it is joined by the double whammy of the Fed also tapering in late 2021/early 2022).

This surge is accelerated by the fact that hedgies just massively piled-in short...

Enabling yet another short-squeeze higher in the tech sector, sending Nasdaqa running stops above its 50DMA (after closing below its 100DMA on Friday)...

In the other major indices, The Dow is at a critical level...

And finally for the S&P 500, as SpotGamma notes, we see the upside volatility as capped by 4200, with more room for volatility to the downside.

This view is best shown by their EquityHub model, wherein you can see distinct changes in gamma at 4205 and 4055. This implies that dealer hedging changes sharply at these levels, which corresponds with where support and resistance has been seen over the past several weeks.

And in the meantime, bond yields are tumbling with 10Y back below 1.60%...

So, to sum it all up - blame China!

China's credit impulse is now officially in contraction, and while there is delayed impact across the globe, with the lag on various assets ranging between 1 and 22 months, the fact that China is now an active headwind to inflation suggests that in the very near future the market's fears about soaring inflation will soon transform into worried about disinflation or outright deflation, similar to what happened in the post-2011 episode.

Tyler Durden Mon, 05/24/2021 - 11:01
Published:5/24/2021 10:03:26 AM
[Markets] Dow Jones Rallies As Virgin Galactic Rockets On Successful Flight Test; Apple, Tesla Rebound The Dow Jones Industrial Average rallied 200 points Monday, as Virgin Galactic skyrocketed 21% on a successful flight test. Tesla stock rebounded. Published:5/24/2021 9:32:46 AM
[Markets] Stocks open higher after back-to-back weekly declines Stocks opened higher Monday, kicking off the last trading week of May on a positive note after back-to-back weekly declines for the Dow Jones Industrial Average and the S&P 500. Analysts said investor worries over a pickup in inflation may be moderating as Treasury yields remain relatively stable. The Dow was up 120 points, or 0.3%, at 34,327, while the S&P 500 advanced 0.5% to 4,178. The Nasdaq Composite advanced 0.6% to 13,552.31. Published:5/24/2021 9:03:21 AM
[Markets] PG&E stock gains after deal to sell San Francisco headquarters for $800 million Shares of PG&E Corp. rose 0.9% in premarket trading Monday, after the California-based utility announced an agreement to sell its San Francisco headquarters complex for $800 million to Hines Atlas U.S. LP. The utility said it proposing to distribute $390 million to $420 million in proceeds from the sale to its customers, pending approval by the California Public Utilities Commission (CPUC). The company said it remains on track to move into its new headquarters in Oakland, Calif., starting in the first half of 2022. "This sale and relocation will achieve cost savings that directly help reduce customer bills," said Chief Executive Patti Poppe. "At the same time, it will give us an efficient and effective Bay Area workspace as we focus on delivering for all of the communities we serve." Separately, the company said it plans to consolidate two other California properties, on in San Ramon and one in Concord, into the new Oakland headquarters. The stock has dropped 17.5% year to date through Friday, while the Dow Jones Utility Average has gained 5.1% and the Dow Jones Industrial Average has advanced 10.6%. Published:5/24/2021 8:32:15 AM
[Markets] Futures Jump As Inflation Fears Fade On China's Commodity Crackdown Futures Jump As Inflation Fears Fade On China's Commodity Crackdown

Now that the inflation narrative has been crippled with Bloomberg picking up on what we said last week about China's tumbling credit impulse...

... and the deflationary consequences thereof, while an acceleration of China’s crackdown on commodities speculation weighed on raw-material prices with steel dropping more than 5% and iron ore tumbling by close to the daily limit, stocks are again free to roam about the stratosphere as the risk of runaway prices is fading and S&P futures rose to 2-week highs on Monday as higher oil prices lifted energy stocks ahead of key inflation readings later this week when the personal consumption data is released on Thursday, the Fed’s preferred inflation measure. At 7:30 a.m. ET, Dow e-minis were up 118 points, or 0.%, S&P 500 e-minis were up 21 points, or 0.51%, and Nasdaq 100 e-minis were up 87.5 points, or 0.65%.

After falling as much as 4.3% from its May 7 record high, the S&P 500 is now only 2% off that level as investors picked up technology stocks that were beaten down the most. Risk sentiment also improved as cryptocurrencies rebounded from a weekend rout fueled by further signs of a gathering Chinese crackdown on the emerging sector. The dollar and Treasuries were steady. Implied volatility for major global indexes remains subdued, suggesting investors aren’t pricing in a surprise from the Fed in the next six months.

Some notable pre-market movers:

  • Bitcoin advanced above $37,000 following another weekend of big swings, with shares including Ebang International Holdings and Bit Digital falling in premarket.
  • Coinbase initiated with a buy rating at Goldman Sachs, with price target on the cryptocurrency exchange set at $306, the second-lowest among analysts tracked by Bloomberg. Shares gain 2.5% to $227 in U.S. premarket trading.
  • Chevron, Occidental Petroleum and Schlumberger rose between 1% and 2% in premarket trading as oil prices firmed more than $1 a barrel.
  • Jiuzi rises ~10% in U.S. premarket trading, set for a second day of gains after a 13% rally on Friday; the shares were volatile as they started trading last week.
  • Virgin Galactic soars as much as 36% in premarket trading after the company founded by British billionaire Richard Branson conducted a test flight to space for the first time in more than two years.
  • Cryptocurrency-exposed stocks including Riot Blockchain, Ebang and Bit Digital slipped after Bitcoin’s volatile moves over the weekend.
  • Beyond Meat adds 3.8% after the plant-based meat producer is upgraded to outperform at Bernstein.
  • Martin Marietta Materials said it would buy HeidelbergCement AG’s assets in California and Arizona for $2.3 billion.

“It’s going to be a very mixed market over the next several months until we get more information on what’s really going to happen with inflation and how the stimulus in the U.S. affects spending there, but also how the coronavirus really progresses,” JoAnne Feeney, a partner at Advisors Capital Management LLC, said in a Bloomberg TV interview.

In Europe, the Stoxx Europe 600 fell 0.1%, after rising as much as 0.2% amid low volumes, with travel and leisure shares leading gains among sectors while utilities fell the most. The FTSE 100 outperformed, rising 0.2%. German, Danish, Norwegian and Swiss stock markets are closed for holidays. In France, Solutions 30 SE shares plunged after a two-week halt as its troubles escalated amid a row with its auditor over the 2020 accounts. Here are some of the biggest European movers today:

  • Juventus shares rose as much as 6.1%, the steepest intraday advance since April 19, after the Italian soccer club qualified for the Champions League.
  • Cineworld gained as much as 4.5% after the company reported a strong opening weekend in the U.K., with the performance beating its own expectations.
  • Alpha Bank shares rose as much as 13%, the most intraday since December, as the lender gives details for its share capital increase plan to support growth projects.
  • Premier Foods shares climbed as much as 4.7% after analysts at Peel Hunt and Jefferies increased their price targets following the company’s FY results and bond refinancing.
  • Solutions 30 plunged as much as 77% as the stock resumed trading following a two-week halt. The technology- services firm said its auditor wasn’t in a position to express an opinion on its 2020 financial statement, and subsequently published its unaudited report on Sunday.
  • Indra Sistemas dropped as much as 5.2%, extending Friday’s losses after Spain, the company’s main shareholder, said it intended to name a new chairman.
  • Ted Baker rose as much as 3.7% after the company confirmed FY results will be in line with consensus expectations and reiterated its FY23 financial targets.

Earlier in the session, Asian stocks were little changed as weakness in technology shares offset gains in cyclical sectors such as banks and automakers. Taiwan Semiconductor Manufacturing and Japan’s SoftBank Group were among the biggest drags on the MSCI Asia Pacific Index, while Mitsubishi UFJ Financial Group and Toyota Motor climbed. The moves mirrored U.S. market performance on Friday, when the tech-heavy Nasdaq fell while the Dow Jones Industrial Average advanced. Sentiment in the Asia Pacific remained fragile as investors continued to assess risks, among them the resurgence of Covid-19 cases and the potential rolling back of stimulus by the region’s policy makers as inflation rises. Central bank decisions from South Korea, Indonesia and New Zealand due out this week will be closely monitored by investors. “Lingering inflationary pressure and viral concerns may continue to dampen sentiment in risk assets across the Asia-Pacific region,” said Margaret Yang, an strategist at DailyFX. Japan’s Mothers gauge of small cap and tech-heavy stocks and South Korea’s equivalent, the Kosdaq, each fell 1.8%. Meanwhile, Japan’s Topix benchmark advanced alongside benchmarks in Vietnam and China

Chinese stocks fluctuated in a narrow range, with further declines in health-care-related stocks offsetting gains for financial shares. The CSI 300 Index rose 0.4% at close after falling as much as 0.8%. The Shanghai Composite Index added 0.3%, while the small-cap ChiNext Index gained 0.9%. A gauge of health-care stocks fell 0.5%, dropping for the fifth consecutive day. Financial-related shares gained, led by brokerage stocks. Hong Kong’s Hang Seng Index slipped 0.2% on its first trading session after the gauge’s compiled announced the addition of three new members and lowered the weighting of the biggest stocks, including Tencent, which fell 5%. Xiaomi dropped 2.9% in Hong Kong amid concern over a global chip shortage after Taiwan’s Covid situation worsened. Xinyi Solar, BYD Added to Hong Kong Stock Gauge in Overhaul Chinese education stocks fell after President Xi Jinping urged regulation of the after-school education sector. China Education Group lost 2.1%, while Minsheng Education Group slipped 2.2%. Gainers

In rates, bunds and gilts drift off best levels (bund futures volumes are ~50% of recent averages), while Treasuries were steady in narrow ranges. A subdued Asia session has been followed by slow European morning action, with holidays in France and Germany, among others. U.S. auction cycle totaling $183b starts Tuesday. IG supply expected to be busy and front-loaded this week ahead of next week’s Memorial Day holiday.  Treasury 10-year yields around 1.615%, slightly richer vs Friday close with gilts slightly outperforming and bunds marginally underperforming; curve spreads also little changed.

In FX, the Bloomberg Dollar Spot Index fluctuated in a narrow range, staging a modest rally to fade Asia’s losses. The dollar was mixed versus its Group-of-10 peers in muted trading, with the exception of one sudden move higher in the greenback in European morning hours.  Norway’s krone led gains in G-10 after nearing a one-month low against the greenback on Friday amid higher oil prices, while the Australian dollar was the worst performer, tracking heavy losses in iron ore futures after China stepped up its campaign to cool a raw-materials boom. The pound inched lower, yet held onto most of its recent gains, with the U.K.’s economic reopening set to remain on track as data shows Covid vaccines are effective against a worrying variant, Cable’s retreat from last week’s high to $1.4172 in the spot market was met by strong demand for front-end calls that briefly traded above parity for the first time this year

In commodities, Crude futures grind higher: WTI rises 1.8% near $64.75, Brent extends above $67. Spot gold is ~$3 in the red, trading just off session lows near $1,878/oz. Most base metals are in negative territory with LME zinc underperforming; copper and nickel hold small gains. China’s crackdown on commodities speculation weighed on raw-material prices, with steel dropping more than 5% and iron ore tumbling by close to the daily limit. Bloomberg’s industrial metals subindex declined for a fourth day to a one-month low.

Looking at today's calendar, we get the April Chicago Fed National activity index followed by a bunch of Fed speakers, including Brainard, Mester, Bostic and George, while in Europe, the European Council meeting begins.

Market Snapshot

  • S&P 500 futures up 0.4% to 4,169.00
  • STOXX Europe 600 fell 0.05% to 444.23
  • MXAP little changed at 204.30
  • MXAPJ down 0.1% to 682.63
  • Nikkei up 0.2% to 28,364.61
  • Topix up 0.4% to 1,913.04
  • Hang Seng Index down 0.2% to 28,412.26
  • Shanghai Composite up 0.3% to 3,497.28
  • Sensex up 0.2% to 50,653.99
  • Australia S&P/ASX 200 up 0.2% to 7,045.93
  • Kospi down 0.4% to 3,144.30
  • Brent Futures up 1.8% to $67.64/bbl
  • Gold spot down 0.0% to $1,881.10
  • U.S. Dollar Index down 0.11% to 89.92
  • German 10Y yield rose 0.4 bps to -0.126%
  • Euro up 0.1% to $1.2200

Top Overnight News from Bloomberg

  • The next French presidential election is 11 months away but markets are already starting to get worked up. French bonds have been underperforming their German counterparts in recent weeks with the spread between their 10-year yields widening to the most since June. Part of the reason may be expectations for a slowdown in European Central Bank debt purchases, but strategists say the move is also being driven by fears of a potential election cliffhanger
  • Weeks after President Joe Biden pitched the first major set of tax increases since 1993, signs are mounting that anxiety among congressional Democrats will significantly temper any increases that manage to pass Congress
  • Bitcoin’s extreme volatility carried into the weekend as the world’s largest cryptocurrency continued to whipsaw investors with double-digit percentage moves
  • Flights are being re-directed to avoid Belarusian airspace after the government in Minsk forced a Ryanair Holdings Plc plane to land and arrested a journalist on board. The EU will consider further sanctions against President Alexander Lukashenko’s administration when its leaders meet for dinner in Brussels on Monday night for the start of a two-day summit
  • As the hunt for investments that can withstand rising interest rates gathers pace, frontier assets are gaining popularity over their larger emerging-market peers. The bonds of the world’s least-developed economies have returned 2.6% this year, keeping pace with their 2020 performance, while higher-ranked emerging-market debt has lost almost 2%, reversing some of last year’s 5.3% advance, according to JPMorgan Chase & Co. indexes

A quick look at global markets courtesy of Newsquawk

Asia-Pac equity markets began the week choppy following on from last Friday’s mixed performance on Wall Street, light weekend newsflow and heading into month-end. ASX 200 (+0.2%) swung between gains and losses with the index underpinned by strength in healthcare, tech and gold miners although gains in the broader market were briefly reversed alongside pressure in other commodity-related sectors after China’s NDRC vowed a zero-tolerance approach on commodities futures violations and with property names initially constrained after the recent increases in home loan rates among the big 4 banks. Nikkei 225 (+0.2%) shrugged off opening losses although was contained by the indecisive mood in the local currency and with Japan planning an extension to the virus state of emergency beyond May 31st. Hang Seng (-0.2%) and Shanghai Comp. (+0.3%) were mixed with risk appetite sapped by crackdown concerns after China’s State Council said it will prevent financial risks and crackdown on Bitcoin mining, while the NDRC also pledged zero tolerance on commodities futures violations and warned to severely punish commodity monopolies and price violations. Furthermore, it was also reported that the CSRC approved 6 companies for an IPO on the ChiNext board and that the Hang Seng Index compiler added 3 companies to the Hong Kong benchmark in its quarterly review to take the total constituents to 58 effective June 7th, which is part of the overhaul announced in March that would raise the total number of components to 80 by mid-next year and therefore, dilutes the individual stock weightings. Finally, 10yr JGBs were relatively flat with marginal gains due to the cautious mood in stocks and with the BoJ also present in the market for JPY 925bln in 1yr-5yr JGBs, while the Aussie 10yr yield was down about 1.5bps amid the RBA’s regular QE purchases.

Top Asian News

  • Thailand Says Its Tourism Industry May Not Recover Until 2026
  • JD Logistics Prices Low in Sign of IPO Market Cooling: ECM Watch
  • Xinyi Solar, BYD Added to Hong Kong Stock Gauge in Overhaul
  • China Auto Makers Fall as Huawei Says It Won’t Invest in Sector

Europe sees a raft of cash closures in observance of Whit Monday, with Germany and Switzerland among those away. The rest of the bourses trade relatively flat (FTSE 100 (+0.4%), CAC 40 (+0.2%), AEX (+0.1%), IBEX (+0.1%)) whilst the FTSE MIB (-0.4%) narrowly lags its peers. US equity futures also see broad-based gains to the tune of around 0.5% at the time of writing with Fed speak the main State-side highlight today. JPM highlights some factors that could lead to US inflation getting hotter before normalising is due - 1) global logistics and supply chain disruptions (cited by recent PMIs), 2) transitory factors like restrained labour supply, 3) oil price recovery, 4) release of pent-up consumer demand, 5) base effects of weak 2020 price prints. Meanwhile, Morgan Stanley suggests that correlations are breaking down amid the economic shift from early to mid-cycle, and this "should translate to a) dampened volatility for many investor portfolios (which can justify continued high leverage) and b) more dispersion driven by single-names instead of factors and themes (i.e. a good environment for stock picking)." Back to Europe, sectors are mixed with no clear overarching theme and with the breadth of the action shallow, although miners reside towards the bottom of the pile amid hefty losses in the Chinese base metals complex overnight - with Fresnillo (-3%) and Antofagasta (-1.2%) among the laggards in the UK. In terms of individual movers, Cineworld (+3.6%) is firmer after announcing a strong opening weekend in the UK, whilst anticipating most of its cinemas will be open by month-end. Co. has also received the full USD 203mln in tax refunds under the US CARES Act. Finally, given last week's focus on cryptos' ripple effect across other markets, it's worth noting that the crypto market saw another notable selloff over the weekend after China reiterated its stance whilst crypto exchange Huobi suspended some services and stopped miners from hosting services.

Top European News

  • How Belarus Snatched a Dissident Off a Ryanair Plane From Greece
  • Poland to Propose Sanctions on Belarus at EU Meeting: Minister
  • Solutions 30 Plunges as Auditor Fails to Sign Off Accounts
  • Johnson’s Plan to Open U.K. Economy Gets Boost From Vaccine Data
  • Nord Stream 2 Gas Pipelaying Vessels Move Into German Waters

In FX, the charts will record that the Dollar index managed to ‘close’ above the psychological, if not key technical 90.000 mark last Friday having pared some losses and successfully defending multiple waves of downside pressure, but the last traded price was still below the prior week’s final level to keep the Buck in a clear bear trend awaiting today’s lean data agenda that puts the focus firmly on another raft of Fed speakers including Brainard, Mester, Bostic and George. Back to the DXY, rather aimless trade either side of the round number within a tight 90.108-89.861 band in the absence of many European participants out of action due to Whit Monday and the start of Pentecost.

  • NZD/AUD - A much more robust recovery in NZ retail sales than most were anticipating in the run up to trade data and this week’s RBNZ policy meeting, is keeping the Kiwi underpinned between 0.7187-58 parameters vs its US counterpart alongside the NZIER shadow board noting that tightening is more appropriate likely over the year ahead than previously envisaged. Meanwhile, the Aud/Nzd cross has backed off from the high 1.0700 area as the Aussie feels the heat coming off Chinese commodity prices again, such as iron ore that plunged 5% overnight. Hence, Aud/Usd is languishing below 0.7750 and nearer 0.7700 amidst another ‘outbreak’ of COVID-19 in Melbourne, Victoria, albeit confined to just 2 cases at this stage.
  • EUR - The Euro has peered above 1.2200 against the Greenback, but not been able to extend much beyond and perhaps heavy option expiry interest at the strike (1.3 bn) is keeping a lid on the headline pair on top of offers with a more psychological leaning. However, by the same token Eur/Usd could remain supported around 1.2150 given expiries spanning the half round number between 1.2145-60 (1 bn), and as Eurozone yields rebound from earlier lows to marginally narrow spreads vs USTs.
  • GBP/JPY/CHF/CAD - All softer vs their US rival, with Sterling losing further momentum and sight of 1.4150 as Eur/Gbp tests 0.8650, while the Yen is slipping back to retest support circa 109.00 and the Franc is trying to stay afloat of 0.9000 in wake of some verbal intervention from SNB chair Jordan. Note, Switzerland is also observing Whit Monday so weekly sight deposit balances will be posted tomorrow, while Canada is celebrating Victoria Day, but the Loonie is deriving impetus to a degree from a rebound in crude prices to keep its head above 1.2100.

In commodities, WTI and Brent front-month futures continue the grind upwards adopted at the European entrance, with WTI now eyeing USD 65/bbl (vs low 63.63/bbl) and Brent inching towards USD 68/bbl (vs low 66.46/bbl). The focus for the energy complex this week remains on Iran, with a one-month technical agreement between Iran and the IAEA announced as expected - this is separate from the broader JCPOA deal. Meanwhile, assuming gaps are narrowed, participants expect an official nuclear deal to be announced later this week. "If and when the US re-joins the Iranian nuclear deal, this will likely hit sentiment in the oil market, however, we are still of the view that the market will be able to absorb this additional supply, so would expect price weakness to be short-lived.", ING says. Meanwhile, Citi continues to expect an early agreement on some aspects of the nuclear agenda between Iran and the US, though this would only be a partial return of Iranian supply to the market. The bank expects strong summer demand, with markets tight enough for mid-USD 70/bbl. Elsewhere, spot gold and silver move in tandem to the Buck and yields in the absence of any fresh catalysts, with the former back to levels around USD 1,875/oz and the latter meandering USD 27.50/oz. Finally, base metals overnight were back under pressure after China's NDRC reiterated zero tolerance on price manipulation, with Dalian iron ore ending daytime trading with losses of 5%, whilst the Singapore contract fell as much as 7.5%. LME copper fell in tandem but has since recouped most of its earlier losses as it sets its sights on USD 10,000/t to the upside once again.

US Event Calendar


  • 8:30am: April Chicago Fed Nat Activity Index, est. 1.10, prior 1.71
  • 9am: Fed’s Brainard Speaks at Crypto Currency Conference
  • 11am: Mester Speaks on Diversity and Central Bank Communication
  • 12pm: Fed’s Bostic Discusses Policy Response to Covid-19
  • 5:30pm: Fed’s George Speaks at Agricultural Symposium

DB's Jim Reid concludes the overnight wrap

I have a spring in my step this morning as there is now a golf major winner who is 4 years older than me and Liverpool qualified for the Champions League after a strong end to a dreadful season! This offset the outrage of the U.K. gaining “nul points” and finishing rock bottom at the Eurovision Song Contest on Saturday. I suspect given Brexit, even if “Hey Jude”, “Imagine”, “Stairway to Heaven”, or “Billy Jean” had been our original song we still would have come last. Just for the record our song wasn’t quite in this league!

From one poll to another now and we will publish our latest monthly survey results in the next hour. Many thanks to those who filled it in. We have some interesting results on inflation with fears rising over the past month according to respondents. It’s the first time this year where the majority expect a taper tantrum at some point in 2021. This is reflected in the least bullish 3-month views on equities since last July. The net bullish 3m view on the S&P 500 is down to +6% from +65% in February. Lots more stuff in the note.

On paper this doesn’t look like the most exciting week ahead but don’t panic as it’s only 11 days until the next payrolls report which will be a blockbuster a week on Friday. Oh and only 17 days until the next US CPI report which will possibly be one of the most-watched economic releases in history. Maybe that’s a slight bit of hyperbole but the inflation debate is probably the most important macro story in a generation.

Having said that it will be quiet, we do have a couple of important inflation markers on Friday with the April core PCE deflator and the final reading on the University of Michigan May consumer sentiment survey. On the former DB expect +0.77% MoM vs. +0.36% previously and +1.8% YoY to +3.1%. All eyes on any clues as to any non-transitory elements.

For the University of Michigan's consumer sentiment index (83.0 final vs. 82.8 preliminary), it will be the revisions to the median 5 - 10 year inflation expectations series that will be key. In the preliminary release this surged 40bps to 3.1% – the highest since August 2008. Was the first print an aberration or will expectations have increased still further? As a reminder DB’s 10yr UST view (2.25% by YE) is based on such expectations moving back into the higher 1998-2014 regime. The preliminary reading firmly knocked us back in this range after 7 years away.

Before we look at the other key highlights this week we’ll first look at the Asian session where it’s been a mixed start to the week. Both the Nikkei (+0.21%) and the Shanghai Comp (+0.16%) have advanced this morning, whereas the Hang Seng (-0.34%) and the KOSPI (-0.10% have both moved lower. Meanwhile in the US, S&P 500 futures are up +0.31% to point towards a positive open later on.

The more eventful moves have been in crypto-assets however, with Bitcoin continuing to be volatile after experiencing some sizeable swings last week. After being back above $40,000 on Friday we traded as low as $31,133 yesterday afternoon and are now at $35,336 this morning. Other cryptocurrencies including Ethereum, Litecoin and XRP have all seen similar moves over the weekend. Our monthly performance review isn’t out until next week, but as it stands Bitcoin is on track for its worst monthly performance in almost a decade, having lost over -37% since its closing level in April.

As for the rest of this week, we have a gathering of EU leaders meeting in Brussels today and tomorrow for a special European Council meeting. The items on the agenda include the Covid-19 response, climate change, a strategic debate on Russia, and discussions on the EU’s relations with the UK. They’re also expected to discuss the weekend news that Belarus ordered a Ryanair flight moving through its airspace to land before arresting a journalist on board.

Otherwise, data releases this week include the German Ifo tomorrow and final Q1 GDP alongside the US Conference Board’s consumer confidence. The other main releases are noted at the end in our day by day guide.

On the central bank side, the 2 decisions from G20 central banks next week are from Bank Indonesia tomorrow and the Bank of Korea on Thursday. In terms of what to expect, our economists think that Bank Indonesia will keep its policy rate steady at 3.5%, as it continues to prioritise the rupiah’s stability. Meanwhile the Bank of Korea is also likely to keep its policy rate steady at 0.5%, and the market will be closely watching for forecasts revisions for clues to its policy bias. Otherwise there are only a few speakers from the Fed and the ECB, including Fed Vice Chair Quarles who’ll be making multiple appearances, including a speech on the Economic Outlook.

For earnings, the season is really winding down to the end now, with just 15 companies each from the S&P 500 and the STOXX 600 reporting. Among the highlights are Intuit tomorrow, Nvidia on Wednesday, before Thursday sees reports from Salesforce, Medtronic, Costco, HP, Royal Bank of Canada and Dell Technologies.

Back to last week now and inflation worries eased slightly which allowed technology stocks to climb higher even as broader risk markets pulled back a touch. The S&P 500 fell -0.43% (-0.08% Friday) for a second straight weekly loss – the first consecutive losing weeks since the end of February. As mentioned the easing of inflation worries propped up technology shares in particular as the NASDAQ gained +0.31% (-0.48% Friday) while the FANG+ index was up a greater +1.03%. The weekly gains for the two tech indices were the first in five weeks, while cyclicals sectors underperformed their growth counterparts as banks (-0.91%) fell back as yields slid slightly. European stocks rose to within 0.25% of their all-time highs with the STOXX 600 climbing +0.43% over the week, with southern European bourses such as the FTSE MIB (+0.84%) and IBEX (+0.64%) outperforming.

Inflation expectations fell back markedly this week even as US 10yr yields finished the week just -0.7bps lower (-0.3bps Friday) at 1.622% - the fifth drop in the last seven weeks. Inflation expectations as measured by 10yr breakevens (-9.1bps) fell by the most since mid-April 2020, but remain up +4.1bps on the month and closed at an 8 year high last Monday. European rates fell back slightly as well with 10yr bund yields mostly unchanged (-0.1bps) last week but with UK gilt yields falling -2.7bps and OATs dipping -1.9bps. Commodities fell for a second straight week, with the Bloomberg commodity spot index losing -1.18%. Oil prices in particular fell back this week with WTI (-3.3%) and Brent crude (-2.7%) retreating partly on news that Iranian President Rouhani said that a broad outline had been reached to end oil sanctions.

In terms of economic data from Friday, the global flash PMIs were the main story with prints in both the US and Europe beating expectations. In the Euro Area, the headline PMI rose to a 3-year high of 56.9 in May, up from 53.8 in April and beating expectations of 55.1. The gains were mostly driven by the services PMI reaching a 35 month high of 62.8 as reopenings drove much of the improvement. In the US, the composite PMI rose to 68.1, the highest reading since 2009, on the back of a record services PMI at 70.1. Among the few misses was the lower-than-expected UK services data which was still a robust 61.8 (62.2 expected) and German manufacturing which was also at a robust 64.0 (65.9 expected).

Tyler Durden Mon, 05/24/2021 - 07:52
Published:5/24/2021 7:01:58 AM
[Markets] Market Snapshot: Stock futures point higher after Dow, S&P 500 post consecutive losing weeks Stock-index futures rise Monday, signaling a positive start for Wall Street after back-to-back weekly declines for the Dow Jones Industrial Average and the S&P 500.
Published:5/24/2021 7:01:58 AM
[Markets] US STOCKS-U.S. stocks end mixed as Dow recovers on strong economic data Wall Street closed mixed at the end of a volatile week of trading, with the Dow Jones Industrial Average being the only bright spot, as inflation concerns loom over growth names. The Dow was lifted by industrial heavyweights, including Boeing and Caterpillar Inc.. Boeing jumped 3.1% as industry sources said the planemaker has drawn up preliminary plans to increase in 737 MAX output to as many as 42 jets a month in fall 2022.. Banks, including Goldman Sachs, and JP Morgan , also supported the Dow. Published:5/21/2021 4:14:19 PM
[Markets] Cryptos Crushed, Commodities Crumbled, But 'Crappy' Stocks Soared This Week Cryptos Crushed, Commodities Crumbled, But 'Crappy' Stocks Soared This Week

Some notable headlines catalyzed weakness in stocks during today's US session but Small Caps (Russell) and Big Caps (Dow) outperformed as Big-Tech (Nasdaq) lagged and the S&P went nowhere (weak close as post-opex week looms)...

1015ET *CHINA REITERATES CALL FOR CRACKDOWN ON BITCOIN MINING, TRADING (slamming crypto and pushed the entire stock market lower too)








That's a lot of marginally hawkish speak considering "officially" they're not evening thinking about thinking about tapering. Which makes sense given that overnight RRPs are literally exploding...

Source: Bloomberg

Translation - banks are begging The Fed to taper!!

Nasdaq 100 was down 4 straight weeks going into Monday and avoided a 5th straight weekly loss - which would have been the worst streak since 2012. The rest of the majors whipsawed back from big midweek losses to end the week unch to marginally lower...

Unprofitable tech stocks rallied hard this week...

Source: Bloomberg

Tesla suffered its 5th weekly loss in a row - the longest losing streak in 3 years...

And before we leave equity-land, is the great rotation accelerating?

Source: Bloomberg

Cryptos were clubbed like a baby seal this week thanks to a double whammy of repeated news from China...

Source: Bloomberg

Worst week for ETH since March 2020...

Source: Bloomberg

Bitcoin was ugly too, but fell less than the previous week...

Source: Bloomberg

The Bitcoin Proxy stocks were mixed with Coinbase and MicroStrategy the worst hit on the week...

Source: Bloomberg

And everyone's favorite - DOGE - dumped over 20% this week...

Source: Bloomberg

The alternate currency to crypto... the dollar - ended the week marginally lower amid lots of vol...

Source: Bloomberg

Commodities fell for the 2nd straight week...

Source: Bloomberg

Copper was down for the 2nd straight week - its biggest weekly loss since September...

And the short-end term structure for copper has plunged negative (3m forward prices below spot) for the first time in a year suggesting buyers are finally taking a break...

Source: Bloomberg

Thanks to three limit-up moves from Wednesday's limit-down lows, Lumber managed gains on the week after last week's plunge...

Source: Bloomberg

Amid all this turmoil, Treasuries ended the week practically unchanged (long-end modestly outperforming -1bps vs the belly +1bps)...

Source: Bloomberg

Breakevens were all lower on the week...

Source: Bloomberg

Gold rallied for the 3rd week in a row (up 6 of the last 7 weeks) to its highest weekly close since January 1st (decoupling a little from real yields this week)...

Source: Bloomberg

Gold is also now up 7 days in a row (and up 12 of the last 13 days), closing above its 50DMA for the first time since January...

Source: Bloomberg

Oil suffered it first losing week in the last month...

And finally, we note that the US Macro Surprise Index went red for the first time since June 2020...

Source: Bloomberg

The big question is - will 'inflation' become the mindset (and what's cheap if it does)?

Source: Bloomberg

Tyler Durden Fri, 05/21/2021 - 16:01
Published:5/21/2021 3:15:25 PM
[Markets] Dow closes up over 100 points Friday but ends with weekly loss Dow closes up over 100 points Friday but ends with weekly loss Published:5/21/2021 3:15:25 PM
[Markets] Dow Jones Gains Fade; Apple Falls Amid Tim Cook Testimony; Bitcoin Dives As China Does This The Dow Jones saw its gains fade as the Nasdaq fell lower. Apple stock dipped as CEO Tim Cook took to the stand to defend against claims it is a monopoly. Published:5/21/2021 2:42:24 PM
[Markets] US STOCKS-Stocks mixed as Dow extends recovery after strong U.S. business surveys The S&P 500 and the Dow Jones Industrial Average rose on Friday, extending a recovery from the previous session, while inflation concerns still loom for growth stocks at the end of a volatile week of trading. Helping the Dow outperform was Boeing, which added 3.2% as industry sources said the planemaker has drawn up preliminary plans to increase in 737 MAX output to as many as 42 jets a month in fall 2022. Following a three-day slump, Wall Street's main indexes gained ground on Thursday after data showed the fewest U.S. weekly jobless claims since the pandemic-driven recession in 2020, pointing to a pickup in labor market. Published:5/21/2021 2:11:46 PM
[Markets] Dow Jones Fades Early Gain, But Boeing Stock Jumps 3% On 737 Max Plans The Dow Jones faded Friday along with the other major stock indexes, but Boeing was a bright spot along with JPMorgan and Goldman Sachs. Published:5/21/2021 1:13:56 PM
[Markets] Dow pushes higher, but on track for weekly loss in choppy U.S. stock market The Dow Jones Industrial Average trades higher Friday afternoon, while other major benchmarks slip at the end of a choppy week of trade marked by concerns about Federal Reserve policy in the face of rising inflation in the economy's COVID recovery. Published:5/21/2021 12:43:34 PM
[Markets] Dow Jones Rallies As Apple, Tesla Look To Retake Key Levels; Applied Materials Falls On Earnings The Dow Jones Industrial Average rallied more than 300 points early Friday, as Apple eyed a key level. Tesla stock continues to rebound from recent lows. Published:5/21/2021 9:44:28 AM
[Markets] Dow Jones Today Rises, Nasdaq Fights For 50-Day Line; Tesla, Applied Materials, Palo Alto Network, Deere Are Key Movers The Dow opened higher, with the Nasdaq fighting for its 50-day. Tesla, Applied Materials, Palo Alto, Deere were key movers. Published:5/21/2021 9:11:42 AM
[Markets] Stocks open higher, with S&P 500 erasing weekly loss U.S. stocks opened higher Friday, with the S&P 500 turning higher for the week as inflation-inspired jitters appeared to subside. The Dow Jones Industrial Average was up 157 points, or 0.5%, at 34,241, while the S&P 500 rose 0.5% to 4,179. The Nasdaq Composite gained 0.5% to trade at 13,606. The lift put the S&P 500 up 0.1% for the week, while the Dow remained on track for a 0.4% weekly loss. The tech-heavy Nasdaq was up solidly for the week, up 1.3%. Published:5/21/2021 8:41:05 AM
[Markets] Bitcoin, Big-Tech, Bullion, & Bonds Bounce As Breakevens, Black Gold, & The Buck Breakdown Bitcoin, Big-Tech, Bullion, & Bonds Bounce As Breakevens, Black Gold, & The Buck Breakdown

After yesterday's bloodbathery, today was the big bounce back. Big-tech had bounced off the intraday lows yesterday to end unchanged and were violently panic-bid from the cash open today (only briefly stalled in their gamma-squeeze surge into tomorrow's opex by a brief interruption as Yellen tanked crypto). Nasdaq ended up over 2% today (and up 4% from yesterday lows ahead of the cash open). The S&P erased yesterday's losses, but The Dow and Small Caps, despite today's gains, could not get back to even from Tuesday...

Nasdaq stalled today at its 50DMA...

Small Caps bounced back to their 100DMA...

Bitcoin bounced back above $42k intraday but was knocked down to $40k on the Treasury/IRS headlines - still well off the $30k lows from yesterday...

Source: Bloomberg

Ether bounced back up just shy of $3000 intraday...

Source: Bloomberg

For context, BTC is still down around 7% over the last two days, ETH down over 18%...

Source: Bloomberg

The buck's Fed-driven bounce yesterday has been erased...

Source: Bloomberg

And mirroring the Dollar, 10Y Yields fell back today, wiping out the Fed-driven spike yesterday...

Source: Bloomberg

Today's rally sent yields back down to unchanged on the week...

Source: Bloomberg

As Breakevens broke down significantly...

Source: Bloomberg

The relationship between breakevens and stocks appears to have broken...

Source: Bloomberg

Oil prices extended their losses today with WTI back to a $61 handle...

Spot Gold rallied further today, extending gains above its 200DMA and critical downtrend resistance line...

Source: Bloomberg

Lumber extended its big bounce from limit down yesterday to limit up at yesterday's close and limit up again today...

Source: Bloomberg

Finally, US Macro Surprise data has turned negative for the first time since June 2020 (after LEI and continuing claims disappointed today)...

Source: Bloomberg

And a quick reminder why none of that fundamental malarkey matters...

h/t @Not_Jim_Cramer

We're gonna need more stimmies.

Tyler Durden Thu, 05/20/2021 - 16:01
Published:5/20/2021 3:07:50 PM
[Markets] Dow Jones Rallies On Jobs Data; Bitcoin Falls As Biden Targets Crypto; Apple Stock Pops The Dow Jones rallied amid encouraging new jobs data. Bitcoin fell after the Biden administration announced a crackdown on transactions. Apple stock rose. Published:5/20/2021 2:35:58 PM
[Markets] Dow Jones Rallies As Jobless Claims Fall To Pandemic Low; Tech Stocks Bounce Stocks extended their gains midday Thursday, with the Dow Jones Industrial Average rallying 240 points as big-cap techs staged a rebound. Published:5/20/2021 12:04:02 PM
[Markets] Dow Jones Up 240 Points As Stock Market Rallies On Jobs Data; Tech Stocks Rebound Stocks extended their gains midday Thursday, with the Dow Jones Industrial Average rallying 240 points as big-cap techs staged a rebound. Published:5/20/2021 11:33:32 AM
[Markets] Dow Jones Rallies As Bitcoin Rebounds From Crash; Virgin Galactic Soars 25% On Test Flight News The Dow Jones Industrial Average rallied 50 points Thursday, as Bitcoin rebounded from Wednesday's crash. Virgin Galactic soared 25% on test flight news. Published:5/20/2021 9:33:17 AM
[Markets] U.S. stocks mostly higher after fall in jobless claims U.S. stock-index futures trim or erase losses after data shows a further fall in first-time claims for jobless benefits, but the Dow Jones Industrial Average and S&P 500 remain on track for a fourth straight decline. Published:5/20/2021 9:05:34 AM
[Markets] Stock futures head higher, erase losses after fall in jobless claims U.S. stock-index futures trim or erase losses after data shows a further fall in first-time claims for jobless benefits, but the Dow Jones Industrial Average and S&P 500 remain on track for a fourth straight decline. Published:5/20/2021 8:29:18 AM
[Markets] Dow finishes off day's lows, Nasdaq ends little-changed after volatile session Dow finishes off day's lows, Nasdaq ends little-changed after volatile session Published:5/19/2021 3:27:42 PM
[Markets] Dow Jones Down Over 300 Points But Stocks Remain Off Session Lows; Target Jumps On Earnings The Dow Jones Industrial Average fell in today's market, extending its losses from earlier this week. The tech-heavy Nasdaq also traded in the red. Published:5/19/2021 2:27:32 PM
[Markets] Dow Jones Slumps 375 Points As Bitcoin, Tesla Plunge; Cisco Systems Holds Up Ahead Of Earnings The Dow Jones moved off lows in afternoon trading Wednesday as it tests support at the 50-day moving average. rallied on an upgrade. Published:5/19/2021 2:05:35 PM
[Markets] Dow Jones Dives 587 Points As Bitcoin Crashes On These Warnings; Apple, Tesla Sell Off The Dow Jones Industrial Average dived 575 points, as Bitcoin plunged on warnings from Chinese regulators. Apple and Tesla stock sold off in morning trade. Published:5/19/2021 9:57:08 AM
[Markets] Dow Jones Dives As Bitcoin Crashes On These Warnings; Apple, Tesla Sell Off The Dow Jones Industrial Average dived 400 points, as Bitcoin plunged on warnings from Chinese regulators. Apple and Tesla stock sold off in morning trade. Published:5/19/2021 9:30:12 AM
[Markets] Dow sees May's gain vanish with 400-point slide at Wednesday open Dow sees May's gain vanish with 400-point slide at Wednesday open Published:5/19/2021 8:55:28 AM
[Markets] Dow falls 400 points as stocks open sharply lower on inflation jitters Stocks opened sharply lower Wednesday, with tech shares leading the way to the downside on worries over rising inflation pressures and plunging prices for bitcoin and other crypto assets. The Dow Jones Industrial Average was down 402 points, or 1.2%, at 33,859, while the S&P 500 skidded 1.3% to 4,076. The Nasdaq Composite dropped 1.5% to 13,108. Investors are awaiting the 2 p.m Eastern release of minutes from the Federal Reserve's April policy meeting for further insights into the central bank's views on inflation. Fed officials have largely reiterated that they believe it is too early to be begin contemplating rolling back monetary policy support despite a pickup in inflation. Published:5/19/2021 8:55:28 AM
[Markets] Dow Jones Today, Futures Tumble As Bitcoin, Tech, Commodities Stocks Slide; Target Rallies On Earnings, Salesforce Upgraded Target rallied, and topped the Dow Jones today, but stock futures and Bitcoin tumbled as bond yields climbed. Published:5/19/2021 7:25:02 AM
[Markets] U.S. stock-market futures point to 300-point Dow decline early Wednesday U.S. stock-market futures point to 300-point Dow decline early Wednesday Published:5/19/2021 6:56:42 AM
[Markets] Everything Is Crashing: Stocks, Bonds, Crypto, Commodities All Tumble Everything Is Crashing: Stocks, Bonds, Crypto, Commodities All Tumble

Everything is tumbling!

Global stocks and US index futures fell for the third straight session, led by the Nasdaq 100, bonds and commodities dropped and crypto crashed ahead of today's release of the April Fed minutes after the ECB warned the euro-area faces elevated risks to financial stability as it emerges from the pandemic with high debt burdens and “remarkable exuberance” coupled with resurgent worries over inflation and coronavirus flareups.

The yield on 10-year Treasury notes touched a one-week high of 1.67%, driving down shares of Apple, Microsoft and Facebook by about 1% premarket. Dow e-minis were down 252 points, or 0.65%, S&P 500 e-minis were down 42.25 points, or 1.0%, and Nasdaq 100 e-minis were down 170.75 points, or 1.24%.

On Tuesday, Wall Street stocks slid late in the session to end lower, unable to sustain gains made after bumper earnings from Walmart and Home Depot. The S&P 500 lost 0.85%, with telecom shares leading the decline, while the Nasdaq Composite dropped 0.56%.

"Now that investors are pre-occupied with inflation, they are probably reluctant to make big decisions until they see a clearer picture," said Hirokazu Kabeya, chief global strategist at Daiwa Securities. "Inflation worries will keep markets uncertain for now, even though I don't expect stock prices to collapse given economic re-openings."

Cryptocurrency-exposed stocks plunge after Bitcoin sank below $40,000 and other cryptocurrencies followed suit in part after the People’s Bank of China reiterated that digital tokens can’t be used as a form of payment. Among other notable premarket movers were:

  • LightPath Technologies soars 16% after saying that optical elements manufactured by its ISP Optics unit are being used in NASA’s Mars Curiosity Rover
  • gains 1% as Morgan Stanley upgrades to overweight from equal-weight.
  • Tesla drops 2.4% in U.S. premarket trading on data showing a slowdown in sales of the company’s electric cars in China last month
  • Wells Fargo slips 1.3% as UBS downgrades the bank to neutral from buy as its risk- reward profile is no longer attractive following the stock’s outperformance this year
  • Take-Two Interactive Software Inc rose 2.0% after reporting a quarterly profit and sales that beat analysts’ estimates.
  • Target Corp gained 2.1% after it beat estimates for quarterly same-store sales as a strong vaccination drive and stimulus checks encouraged shoppers to return to stores.

Looking at today's main event, investors will also focus on minutes from the Fed’s April policy meeting, where it stood pat on interest rates.

  • “We will scan the minutes for more details on policymakers’ view, but bearing in mind that we got to hear from some of them after the more-than-expected surge in inflation last week, we will treat the minutes as outdated,” said Charalambos Pissouros, senior market analyst at JFD Group.
  •  “Today’s FOMC minutes could give a sigh of relief to globally worried investors,” said Ipek Ozkardeskaya, a senior analyst at Swissquote. "Any tightening on the Fed end would be a punch in the market’s face. But we know that the Fed will do its best to prevent that from happening."

The Stoxx Europe 600 Index fell the most in a week, with commodity and leisure shares sliding the most. The Stoxx Europe 600 Basic Resources Index (SXPP) fell for a second day, down as much as 3%, as iron ore futures halt a two-day rebound, with Chinese steel prices extending declines on the back of more government curbs. Diversified miners fell: Rio Tinto -2.5%, BHP -3.4%, Glencore - -2.1%, Anglo American -3.1%. Steelmakers also drop as China’s steelmaking hub of Tangshan tightens steel output curbs on pollution: ArcelorMittal -2.9%, Evraz -2.4%, Salzgitter -1.5%

Earlier in the session, Asian stocks declined with MSCI's broadest index of Asia-Pacific shares outside Japan down 0.3%, ending a three-day win streak, as commodities-heavy Australia paced losses. Mainland China's CSI300 slipped 0.6% while Japan's Nikkei lost 1.1%. The Australian benchmark dropped almost 2%, the most since February and leading declines across the region. Materials and energy shares paced the selloff, as oil dropped on a rise in U.S. stockpiles and hopes for progress on an Iran nuclear deal. Mining giant BHP and Commonwealth Bank of Australia were the biggest drags on Australia’s key gauge. They also contributed most to losses in the MSCI Asia Pacific Index, after tech titan Taiwan Semiconductor Manufacturing Co. U.S. index futures slipped in Asian trading hours, extending the two-day slide in the cash market amid concerns over inflationary pressure from recent rises in commodity prices. Benchmarks in Singapore, New Zealand, Malaysia and Indonesia also posted drops of about 1% or more. Hong Kong and South Korea were closed for holidays.

China’s equities fell for the first time in four days, driven by declines in energy shares as crude price headed for a back-to-back loss amid climbing U.S. stockpile and Iranian nuclear talks. The CSI 300 Index closed 0.3% lower. China Oilfield Services sank 4.9% to be one of the worst performers, while PetroChina and China Petroleum & Chemical Corp were some of the biggest drags on the gauge. Financial stocks were also a key driver for Wednesday’s loss, with China Merchants Bank sliding 2.1% after a three-day gain. Information technology was one of the rare bright spots in the market, as shares of Apple suppliers rallied after the U.S. company was reported to be preparing to release several new Mac laptops and desktops. Chinese authorities fired a warning shot about a recent surge in speculation on virtual currency, with a notice posted on the central bank’s official Wechat account banning financial and payment institutions from pricing products or services with the asset.

While investors are concerned about rising inflation, the Fed has stuck to the narrative that a recent rise in inflation would be transient and that it therefore should keep its easy monetary policy settings. The minutes from the Fed's April meeting, to be published late on Wednesday, are expected to repeat that message.

"Inflation remains the biggest theme, whether it is real and whether the Fed may need to change its policy because of that," said Kazushige Kaida, head of forex sales at State Street Bank's Tokyo branch. "At the moment, markets are putting faith, after a fashion, in the Fed's narrative."

In rates, as stocks sold off so did bonds, with Treasury futures near lows of the day into early U.S. session, leaving yields cheaper by almost 3bp across belly of the curve despite weakness in equity index futures. Supply is a factor with $27b 20-year new-issue auction at 1pm ET.  Treasury 10-year yields cheaper by ~2.6bp at 1.663%, wider by ~1bp vs bunds, 0.5bp vs gilts; 2s10s spread steeper by ~2.7bp with front-end yields relatively anchored. In Europe, Italian bonds fell as traders unwound long positions and as bets mounted the ECB will taper its pandemic bond-buying program in the summer. Germany’s 2-year yield rose to the highest since August and the 10-year yield climbed to peaks last seen in May 2019. Another soft German auction weighed on bunds during European morning.

In FX, the Bloomberg Dollar Spot Index rebounded after approaching a three-year low on Tuesday, and the dollar rose against all of its Group-of-10 peers. The euro erased gains after earlier climbing to $1.2245, the highest level since January. The pound was a tad lower, with data showing Britain’s inflation rate doubled in April, in line with expectations. Risk-sensitive Scandinavian and Antipodean currencies fell, led by Norway’s krone which traded on the back-foot as oil headed for a back-to- back loss after an industry report showed a rise in U.S. crude stockpiles and traders tracked talks between world powers on a revival of the Iran nuclear deal

In cryptos, Bitcoin dropped as much as 15% to hit its lowest level since early February and last stood at $38,250 , having lost almost half of its value from a peak of $64,895 hit just over a month ago. Ether, the second largest cryptocurrency, changed hands at $2,677, down more than 25% from its record peak hit last Wednesday.

While cryptocurrencies were bruised by China's fresh ban on their transactions, they were not alone in facing pressure. Some commodities that have benefited from reflation trade have also lost steam, with U.S. lumber futures losing almost 25% in the last three sessions.

Oil prices pulled back also after media reports the United States and Iran have made progress on reviving a deal restricting the OPEC country's nuclear weapons development, a development that could lead to increased supply from Iran. U.S. crude futures dropped 0.9% to $64.9 per barrel while Brent futures lost 0.9% to $68.12 per barrel.

To the day ahead now, and the highlights include the release of the FOMC minutes from the April meeting, along with the ECB publishing their Financial Stability Review. Central bank speakers include the ECB’s Panetta, Rehn, Lane and Hernandez de Cos, along with the Fed’s Bullard and Bostic. Data highlights include the UK and Canadian CPI readings for April, along with EU new car registrations for April. Finally, earnings releases include Cisco Systems, Lowe’s, Target and TJX.

Market Snapshot

  • S&P 500 futures down 0.69% to 4,094.75
  • STOXX Europe 600 down 1.12% to 438.06
  • MXAP down 0.6% to 203.38
  • MXAPJ down 0.6% to 681.68
  • Nikkei down 1.3% to 28,044.45
  • Topix down 0.7% to 1,895.24
  • Hang Seng Index up 1.4% to 28,593.81
  • Shanghai Composite down 0.5% to 3,510.97
  • Sensex down 0.4% to 49,994.19
  • Australia S&P/ASX 200 down 1.9% to 6,931.66
  • Kospi up 1.2% to 3,173.05
  • Brent Futures down 1.21% to $67.88/bbl
  • Gold spot down 0.35% to $1,862.92
  • U.S. Dollar Index up 0.16% to 89.894
  • German 10Y yield rose 1.5 bps to -0.088%
  • Euro little changed at $1.2216

Top Overnight News

  • The euro-area faces elevated risks to financial stability as it emerges from the pandemic with high debt burdens and “remarkable exuberance” in markets as bond yields rose, according to the European Central Bank
  • European Union lawmakers will vote to formally halt an investment agreement with China in response to sanctions against members of the bloc, Politico reported, adding to growing tensions between Brussels and BeijingBitcoin has erased all the gains it notched following Tesla Inc.’s Feb. 8 announcement that it would use corporate cash to buy the digital asset and accept it as a form of payment for its vehicles

A quick look at global markets courtesy of Newsquawk

Asian equity markets were mostly negative and US equity futures also extended on the losses seen during the prior session where energy led the declines as oil prices wobbled on reports of progress being made in the Iranian nuclear deal talks and housing names suffered following disappointing Housing Starts and Building Permits data. ASX 200 (-1.9%) underperformed after softer Consumer Confidence data and amid weakness in the commodity-related sectors with notable losses in the energy names after expectations of returning Iranian supply were stoked by comments from the Russian envoy to JCPOA talks who suggested important news is likely to be released this Wednesday and that negotiations have had major progress. However, it was then speculated that the announcement could be an extension of the temporary IAEA nuclear activity monitoring deal which is set to expire on Friday rather than a full return to the JCPOA, while the envoy also clarified that he didn’t say there was a breakthrough at the Vienna talks and noted that significant progress has been achieved but unresolved issues still remain with negotiators needing more time to finalise an agreement. Nikkei 225 (-1.3%) was also subdued and retreated beneath the 28k level with exporter sentiment in Tokyo not helped by a choppy currency and the ongoing COVID-19 state of emergency, while news of Japan boosting its support for domestic production of advanced semiconductors and batteries did little to spur risk appetite. Shanghai Comp. (-0.5%) conformed to the downbeat tone amid the absence of Hong Kong participants as the city, along with South Korea, observed the Buddha’s Birthday holiday. Nonetheless, the losses in the mainland were moderate compared with regional peers after US President Biden’s administration delayed the revamp of former US President Trump's blacklist for China investments which gave investors an additional 2 weeks to buy or sell securities in companies tied to the Chinese military with the deadline to complete transactions pushed backed to June 11th. Finally, 10yr JGBs were flat with prices kept afloat by the weakness in stocks but with upside also capped after the recent choppy performance in T-notes and following lacklustre results at the 5yr JGB auction which showed a slump in the b/c from previous despite relatively inline accepted prices.

Top Asian News

  • Thailand Said to Plan $22 Billion Borrowing for Covid Relief
  • Bank Employees Among New Covid-19 Cases Found in Singapore
  • Adani Green to Buy SoftBank’s $3.5 Billion Renewables Unit
  • QIA Is Said to Mull Injecting HSBC Headquarters Into REIT

Stocks in Europe have continued drifting lower since the cash open (Euro Stoxx 50 -1.5%) in what has thus far been a continuation of the price action seen across equity futures overnight, and as APAC also traded with losses. The soured risk tone comes amid elevated yields, with the German 10yr topping -10bps for the first time in two years and its US counterpart steady above 1.65% ahead of FOMC Minutes. This sentiment has also reverberated into the US, with equity futures lower across the board and the NQ underperforming its peers, alluding to focus on the yield narrative. Back to Europe, broad-based losses are seen across the majors, but the periphery fares slightly better as the FTSE MIB (-1.0%) and the IBEX 35 (-0.5%) are somewhat cushioned by their significant exposure to the banking sector against the backdrop of higher yields. As such, banks reside as a top performer among European sectors that are in the red across the board. Meanwhile, some of the more defensive sectors have also made their way to the top of the pile since the cash open - with Food & Beverages, Health Care, Telecoms and Personal Household goods among the better performers. The other end of the spectrum is largely comprised of cyclical sectors, with Basic Resources, Travel, Oil & Gas, Autos and Tech among the straddlers. Individual movers are relatively scarce today, given the overarching macro theme and the simmering down of earnings. In terms of commentary on European equities, analysts at Barclays believe that the rally has faltered, although EPS upgrades and robust Q1 results point to equities having cheapened. The bank acknowledges that rising inflation expectations and policy jitters are taking their told on valuations, but “So long as EPS momentum is positive, equities can withstand higher rates, although future risk-adjusted returns may be lower”, the bank says as it forecasts above-trend GDP and EPS growth to persist in 2022.

Top European News

  • EU Lawmakers to Freeze China Investment Deal, Politico Says
  • Deutsche Taps Barclays’s Ross to Run U.K. Investment Banking
  • Inflation Rekindles Niche Market for Duration-Proof Credit (1)
  • London Tops Hong Kong For World’s Priciest Warehouse Space

In FX, the Greenback appears to have repelled the latest bout of selling pressure and clawed back some losses vs most major and EM rivals with the aid of a firmer rebound in US Treasury yields and curve re-steepening ahead of Usd 27 bn 20 year note supply. However, the concession for issuance has been more pronounced in EGBs, and the DXY has fallen into a lower range having edged a smidge closer to nearest support ahead of 89.500, at 89.686 before regaining composure to register an 89.959 recovery high thus far. Hence, the Dollar could well require more impetus and incentive to mount a meaningful rebound, like strong data in the ilk of last Wednesday’s inflation metrics, or severe risk aversion amidst the debt rout as today’s agenda is bare aside from further Fed commentary and the official account of April’s FOMC policy meeting.

  • AUD/NZD - No surprise to see the high beta, activity and commodity based currencies bear the brunt of the Buck revival, while the Aussie also has a downturn in Westpac consumer sentiment to consider before the spotlight shifts to jobs on Thursday. Aud/Usd is now testing support around 0.7750 after fading just shy of 0.7800 and topping the round number yesterday, with Nzd/Usd hovering around 0.7200 compared to almost 0.7250 and a fraction over 0.7270 on Tuesday ahead of NZ budget balance and net debt forecasts.
  • CHF/CAD/JPY - All unwinding recent gains vs their US counterpart, as the Franc retreats through 0.9000 and Loonie backtracks towards 1.2100 following a test of the big figure below against the backdrop of recoiling crude prices and awaiting Canadian CPI to see whether expectations for a pronounced acceleration in headline y/y inflation pans out. Elsewhere, the Yen is back under 109.00, though contained within a narrow range and still in an upward trend while holding well off recent lows.
  • GBP/EUR - Relative G10 outperformers, or rather displaying a decent resilient streak in the face of the Dollar comeback, and yield differentials are playing a key role as noted above given the heavy declines in Eurozone bonds and Gilts before, but not necessarily for German and UK auctions. Sterling may have gleaned some traction from firmer than forecast inflation prints, on balance, but Cable is looking toppy circa 1.4200 in contrast to Eur/Usd and Eur/Gbp appearing more underpinned above 1.2200 and 0.8600 respectively.

In commodities, WTI and Brent July contracts remain suppressed amid the positive omens emanating from JCPOA talks and against the backdrop of a firmer Dollar and soured market sentiment. Elaborating on the former, there has been no breakthrough on core sanction issues and nuclear issues – which are the key pillars for this deal. Negotiations will be taking a short break after today. However, according to WSJ's Norman, this is not a negative sign, and the “next stop likely IAEA-Iran extension", speculated to be announced today (timing TBC). ING maintains its view that the market should be able to absorb both Iranian oil and OPEC+ supply. The Dutch bank expects the return of 3mln BPD of Iranian supply by Q4 2021, whilst the National Iranian Oil Co.’s most optimistic scenario points to pre-sanction production of almost 4mln BPD in as little as three months. The morning also saw commentary from Russian Deputy PM Novak, who suggested that global oil prices being broadly stable remarked that the market is balanced, and demand is slightly exceeding supply. Over in the West, the smaller-than-expected build in the Private inventory report last night was largely overlooked ahead of today's EIA numbers (crude forecast +1.62mln bbls) which are expected to be distorted by the Colonial Pipeline outage. As a reminder, a significant draw is expected in East Coast product stocks alongside builds in crude and products from US Gulf Coast and a decline in refining activity. WTI resides near USD 64.00/bbl (vs high 65.35/bbl) while its counterpart has dipped below USD 67.50/bbl (vs high 67.46/bbl). Elsewhere, spot gold and silver have been on a downward path as the earlier countering yield/Dollar dynamics shifted as the Buck saw a rebound, thus providing a bearish environment for precious metals in terms of higher yields and a firmer Dollar. Precious metals are also on the backfoot, with LME copper pulling back after topping USD 10,500/t yesterday, with some also attributing Glencore’s plans for a new copper mine next year as a near-term headwind.

US Event Calendar

  • 7am: May MBA Mortgage Applications, prior 2.1%
  • 10am: Fed’s Bullard Discusses Economic Outlook
  • 10am: Fed’s Quarles Testifies Before House Financial Services Panel
  • 11:35am: Fed’s Bostic Interviewed at Businessweek/Bloomberg Event
  • 2pm: April FOMC Meeting Minutes

DB's Jim Reid concludes the overnight wrap

After a quiet day a late session US sell-off was the main theme yesterday. The S&P 500 fell back in the last couple of hours of trading, most of it in the last 15 minutes, and closed -0.85% lower. The S&P earlier traded in a tight 16pt range (0.4%) for much of the day before the move lower. The catalyst seemed to be partly due to news filtering through that the Biden administration have delayed updating the Trump-era ban on China investments. This at the same time as headlines came through that Speaker Pelosi has proposed a diplomatic boycott of the 2022 Olympic games, citing human rights concerns.

Tech stocks “outperformed”, with the NASDAQ (-0.56%) and the FANG+ (-0.55%) both beating the S&P, though that’s in the context of a relatively poor month for them on the back of fears over higher interest rates. Europe’s STOXX 600 (+0.17%) earlier experienced modest gains and missed the late sell-off.

On the earnings side, Walmart rose +2.11% after the company announced another strong performance in Q1, with comparable sales ex fuel up +6.0% year-on-year, whilst they raised their Q2 and full-year outlook. Staying with corporates Bank of America became the latest company to raise its minimum wage (from $20 to $25/hr). It seems this is partly to attract talent and partly for social reasons. ESG has been a part of minimum wage increases in recent times and maybe we’re seeing a perfect storm of this plus labour supply shortages. The thing is once you raise your minimum wage you are not going to then reduce it.

For sovereign bonds there weren’t too many headlines either, though 10yr bund yields were up +1.2bps to -0.10%, marking their highest level in almost 2 years. Elsewhere however, yields ended the day lower, with those on 10yr Treasuries (-1.2bps), gilts (-0.3bps) and BTPs (-0.3bps) all falling back. A reminder that my CoTD looked at the AA government bond that has lost 40% of its value since December and would take nearly half a century to make up those loses from coupons alone. See here for the full details.

Asian markets have largely taken Wall Street’s lead this morning with the Nikkei (-1.42%), Shanghai Comp (-0.41%) and Asx (-2.05%) all down. Markets in Hong Kong and South Korea are closed for a holiday. Futures on the S&P 500 are down -0.33% at this point while the Stoxx 50 is down a larger -0.97% as they try to play catch up with yesterday’s late US equities move. Elsewhere, Bitcoin is down -c.9% this morning (c.-3% yesterday) to under $40,000 after the PBoC reiterated that digital tokens can’t be used as a form of payment. It’s down around -30% over the last 10 days now. Other cryptocurrencies are also under pressure.

In other overnight news, Politico reported that the EU law makers will mostly vote yes on the motion to freeze the Comprehensive Agreement on Investment with China tomorrow. They will demand that China lift sanctions before any progress is made on the deal, which took seven years to negotiate.

In terms of the latest on the Pandemic, India’s Serum Institute has said that it will prioritise making vaccines for India and would delay deliveries to other nations and the WHO backed Covax initiative until the end of the year. Meanwhile, Singapore has decided to increase the time between two vaccine doses in an effort to administer first shots to more adults as it races to stem transmissions. The Country recorded 27 new cases in the past 24 hours of which 11 cases have not been traceable in the community.

Elsewhere in markets yesterday, there were some notable moves in FX, as the dollar index weakened a further -0.46% to its lowest level in over 4 months. The greenback now sits less than 0.4% away from its 3 year lows. Simultaneously, that saw the Euro move back above $1.22 in trading for the first time since February.

Speaking of currencies, our FX Research colleagues released their latest blueprint yesterday, which you can read here. They started the year cautious on selling the dollar ahead of American vaccine and fiscal leadership, but now see catchup as the main theme. Their view is that we’re past the peak of repricing US exceptionalism, global growth should broaden and the vaccine and growth laggards should bounce back. In turn, this should be conducive to a return of broader USD weakness and they see European currencies as the prime beneficiaries.

In the commodities sphere, Brent crude oil had been trading above $70/bbl at one point for the first time in a couple of months, though it gave up its gains later in the session to close -1.08% lower at $68.71, while WTI was also down -1.18%. This slight pullback was in line with that elsewhere in commodity market, with the Bloomberg Commodity Spot index losing -0.11%. WTI and Brent are also down a further c. -1% overnight as a report from the American Petroleum Institute showed that the US oil stockpiles increased by 620,000 barrels last week. Oil prices have also been weighed down by the likelihood of a return to the 2015 Iranian agreement which could pave the way for the removal of US sanctions and raise their crude oil exports.

From central banks, BoE Governor Bailey testified before the House of Lords yesterday. He hit on a refrain that we have mostly heard from the other side of the Atlantic in recent weeks when he said that while he and his colleagues see inflation rising in the next month or so, these effects will be “temporary.” Deputy Governor Ramsden sees inflation expectations “well anchored” but the MPC “remains vigilant”.

Running through yesterday’s data, US housing releases saw a slight miss relative to expectations, with housing starts down to an annualised rate of 1.569m in April (vs. 1.704m expected), while building permits came in at 1.760m (vs. 1.770m expected). Construction may have been held back in recent weeks due to higher material costs, especially lumber. There was also possibly some weather effects as the previous housing starts in March was much larger than expected after bad weather in February caused fewer starts. Elsewhere there was a decent labour market report from the UK, with the unemployment rate unexpectedly falling back to 4.8% in the three months through March (vs. 4.9% expected), while the number of payrolled employees in April was up +97k on the previous month according to HMRC estimates.

To the day ahead now, and the highlights include the release of the FOMC minutes from the April meeting, along with the ECB publishing their Financial Stability Review. Central bank speakers include the ECB’s Panetta, Rehn, Lane and Hernandez de Cos, along with the Fed’s Bullard and Bostic. Data highlights include the UK and Canadian CPI readings for April, along with EU new car registrations for April. Finally, earnings releases include Cisco Systems, Lowe’s, Target and TJX.

Tyler Durden Wed, 05/19/2021 - 07:49
Published:5/19/2021 6:56:42 AM
[Markets] Market Recap: Tuesday, May 18 Stocks dipped on Tuesday, with the Nasdaq erasing earlier gains to join the S&P 500 and Dow in the red. The S&P 500 drifted lower and headed for a second straight day of declines. The Nasdaq also sank, and the Dow shed more than 100 points, or 0.3%. Walmart shares gained more than 2.5% after the company posted first-quarter earnings that handily exceeded estimates and raising full-year guidance. However, Home Depot and Macy's shares declined even after both companies topped Wall Street's first-quarter earnings estimates. Jason Ware, Albion Financial Group CIO and Carillon Tower Advisors, Vice President & Portfolio Specialist Matt Orton, joined Yahoo Finance Live to discuss. Published:5/18/2021 3:50:30 PM
[Markets] Dow ends nearly 270 points lower as tech shares lose steam in afternoon trade Stocks ended lower Tuesday as a bounce for tech-related shares ran out of steam in afternoon trading. The Dow Jones Industrial Average fell around 267 points, or 0.8%, to close near 34,061, according to preliminary figures, while the S&P 500 declined around 36 points, or 0.9%, to finish near 4,128. The Nasdaq Composite ended with a loss of around 75 points, or 0.6%, near 13,304. Stocks saw a mixed performance in early activity, with tech shares holding gains. A round of upbeat earnings from retailers were seen providing support but was offset by a weaker-than-expected reading on housing starts, analysts said. Published:5/18/2021 3:20:23 PM
[Markets] Dow ends down over 260 points as energy, communication services weigh on market Dow ends down over 260 points as energy, communication services weigh on market Published:5/18/2021 3:20:23 PM
[Markets] GLOBAL MARKETS-Stocks mostly slip; dollar touches lowest since late February Wall Street stocks fell on Tuesday, with technology shares turning lower in late trading, while the U.S. dollar touched its lowest level since late February. The Dow and S&P 500 added to declines in late-day trading, while the Nasdaq briefly turned lower. The S&P 500 technology index reversed early gains. Published:5/18/2021 2:49:52 PM
[Markets] Dow Jones Falls As Yellen Touts Higher Taxes, Unions, Walmart Surges On Earnings The Dow Jones Industrial Average slipped lower as Treasury Secretary Janet Yellen touted the benefits of higher taxes and unions. Walmart stock gained. Published:5/18/2021 2:20:24 PM
[Markets] Dow Jones Dips 40 Points, But Walmart Stock Pops On Earnings; MGM Resorts Jumps On Upgrade The Dow Jones lagged the Nasdaq composite in afternoon trading Tuesday, but Walmart stock was a bright spot on strong earnings. Published:5/18/2021 1:20:55 PM
[Markets] Dow, S&P edge lower after weaker-than-expected housing data Major U.S. stock benchmarks struggle for direction Tuesday, with support tied to a strong round of earnings from major retailers, including Dow components Home Depot Inc. and Walmart Inc., offset by weaker-than-expected housing data. Published:5/18/2021 11:49:13 AM
[Markets] US STOCKS-S&P 500, Dow slip as telecom stocks eclipse upbeat results from retailers The S&P 500 and the Dow fell on Tuesday as sharp declines in telecom stocks and a weak housing starts data overshadowed upbeat earnings from Walmart and Home Depot. AT&T Inc shed 7%, the top drag on the benchmark S&P 500, as it extended declines from Monday, when the telecoms firm said it would cut its dividend payout ratio as a result of its $43 billion media asset deal with broadcaster Discovery Inc . Published:5/18/2021 9:48:35 AM
[Markets] Stocks struggle for direction after weaker-than-expected housing data Major U.S. stock benchmarks struggle for direction Tuesday, with support tied to a strong round of earnings from major retailers, including Dow components Home Depot Inc. and Walmart Inc., offset by weaker-than-expected housing data. Published:5/18/2021 9:18:35 AM
[Markets] Dow, S&P 500 struggle for altitude early Tuesday, even as Walmart shares climb U.S. stock benchmarks traded flat to lower Tuesday morning, even amid better-than-expected quarterly results from retailers, including Home Depot Inc. [: HD] and Walmart Inc. , with declines in communication services and energy offsetting gains in technology shares. Worries about surging inflation have been weighing on investor sentiment as the economy enters the recovery phase of the COVID pandemic and market participants fret about high valuations of stocks and the threat of the Federal Reserve removing accommodative policies faster than projections imply. The Dow Jones Industrial Average [: DJIA] was declining 0.1% at 34,308, the S&P 500 index retreated less than 0.1% at 4,161, while the Nasdaq Composite Index added 0.2% to 13,397. Shares of Dow component Walmart were up nearly 4% after delivering earnings and revenue that topped forecasts and raised its full-year guidance. Home Depot shares, however, were flat to slightly lower. Published:5/18/2021 8:48:22 AM
[Markets] Dow futures edge higher as Home Depot, Walmart deliver strong earnings The Dow Jones Industrial Average on Tuesday is poised to open slightly higher, with Wall Street sentiment scoring a lift from better-than-expected quarterly results from retailers, including Home Depot, Walmart and Macy's. Published:5/18/2021 8:20:24 AM
[Markets] Futures, Global Stock Rise As Dollar Rout Accelerates Futures, Global Stock Rise As Dollar Rout Accelerates

US equity futures rose for the 3rd day in 4 and world stocks pushed higher on Tuesday while the dollar tumbled to three-month lows as  optimism that economic reopening will boost growth outweighed concern about a pick-up in virus cases in parts of Asia even if it leads to higher prices. Oil gained and 10Y yields dropped marginally.

At 7:30 a.m. ET, Dow e-minis were up 77 points, or 0.22%, S&P 500 e-minis were up 9 points, or 0.3%, and Nasdaq 100 e-minis were up 73 points, or 0.55%. Retailers Walmart and Macy’s jumped in premarket trading after raising their full-year guidance, while Home Depot gained as its results beat estimates. Commodity and automotive shares boosted the Stoxx Europe 600 Index, while Asian equities also climbed.


Nasdaq 100 contracts led U.S. futures higher after dovish remarks on Monday from Fed Vice-Chair Richard Clarida, who pointed to the weak April jobs report as proof of slack in the economy, and from other Fed policymakers helped to reassure markets that U.S. monetary policy will remain easy. The comments came ahead of Wednesday’s release of the minutes from the Fed’s policy meeting last month, which will be closely watched for any indications about where monetary policy is headed this year.

“Investors welcomed reassuring words from Fed Vice Chairman Richard Clarida yesterday as he continued to downplay inflation data, highlighting lingering lack of progress on employment numbers,” said Pierre Veyret, an analyst at ActivTrades in London. “The trading stance remains bull-oriented so far and investors are ready to seize any opportunity to buy dips on stocks.”

“In short, the Fed’s music is still the same. It is not yet time for tapering, and will not be for a while,” said Giuseppe Sersale, fund manager at Anthilia in Milan.

Here are some notable premarket movers:

  • AMC Entertainment jumped 9.5%, adding to recent gains fueled by a social-media frenzy about meme stocks and crypto-currencies
  • AT&T shares extend Monday’s slide in premarket trading after the communications giant said it will spin off its media operations and merge them with Discovery. Shares fall 4.3%
  • Baidu reported revenue for the first quarter that beat the average analyst estimate. Shares rise 3.2%
  • Shares of EV charging equipment makers Chargepoint Holdings and Blink Charging gained 1.7% and 2.6% as President Joe Biden was set to make the case for his $174 billion electric vehicle plan on Tuesday
  • Eastman Kodak falls 5.4% after Reuters reports that the New York Attorney General’s office is preparing an insider-trading lawsuit against the firm and its executive chairman, Jim Continenza. Reuters cites the company and people familiar with the matter
  • Home Depot shares rose as much as 2.6% ahead of the bell after the home improvement retailer reported first-quarter results that handily topped analysts’ estimates. Shares of competitor Lowe’s, which reports premarket Wednesday, may also rise
  • II-VI was downgraded to equal weight from overweight at Barclays, which wrote that the stock offered limited upside given its acquisition of Coherent. Shares fall 0.6%
  • MGM Resorts International rises as much as 2.5% after JPMorgan analyst Joseph Greff raised his recommendation on the stock to overweight from neutral
  • Macy’s Inc. soared after posting first-quarter sales that outpaced Wall Street’s expectations -- a sign that shoppers are venturing back to department stores and malls as vaccination rates rise. Shares rise 4.8%
  • Performance Food has agreed to buy Core-Mark in a cash and stock deal with $2.1 billion equity value, according to Bloomberg data. Shares climb 6.3%
  • Tencent Music analysts were mostly positive on the China-based online music entertainment company after it reported first- quarter revenue that beat expectations. However, at least two firms trimmed their price targets on account of higher investments. U.S.-listed shares rose 0.7%
  • Walmart Inc. posted strong quarterly sales growth and boosted its profit outlook, an impressive feat as the retailer was facing a difficult comparison with last year’s pandemic-fueled stockpiling. The shares rose 3.5% in premarket trading.

Market volatility had risen in recent weeks on worries that abundant stimulus and rising inflationary pressure in the United States could force the Federal Reserve to reduce its support in order to prevent the world’s largest economy from overheating. “Taper talk is the new taper,” said Mike Kelly, head of multi-asset at PineBridge Investments. “Structural inflation is still some way off but temporary supply-side bottlenecks will last at least until September. The Fed will try to talk their way through it and markets will get frustrated. But the more temporary inflation overshoots, the harder it will be to avoid taper talk."

Connected with that, tomorrow traders will parse the Fed minutes for policy discussion about inflation and hints of a timeline for reducing stimulus, after Vice Chair Richard Clarida said Monday that the weak U.S. jobs report showed the economy had not yet reached the threshold to warrant scaling back asset purchases.

Clarida's comments spilled over to global markets, and bourses in Europe rose, with the STOXX 600 regional benchmark closing in on its previous record high, up 0.4% led higher by energy and basic resources firms on optimism around easing economic restrictions. Italy’s FTSE MIB outperforms peers. Vodafone fell 6.5% after Chief Executive Officer Nick Read’s strategy showed higher capital expenditure on network investments will hit free cash flow. Here are some notable European movers:

  • Sonova shares climb as much as 12% to a record high after the company reported better-than-expected 2H results. Analysts were particularly impressed by the company’s guidance, which exceeded expectations.
  • Ubisoft shares advance as much as 6.8%, its biggest intraday rise since Jan. 13, after Exane upgrades the video game maker to outperform from neutral on outlook for net booking growth acceleration.
  • Oxford Biomedica shares rise as much as 12% after the company announced an increase to the expected quantity of AstraZeneca vaccine it will be manufacturing this year and raised guidance.
  • Scor shares jump as much as 5.6%, their biggest intraday increase in more than 4 months, after the French insurer named a new CEO and announced the earlier than expected departure of long-standing CEO Denis Kessler, who stays on as chairman.
  • Vodafone shares fall as much as 8.3% in their biggest one-day drop since March last year as analysts flag that the telecoms group’s higher spending plans could weigh on its free cash flow.

Earlier in the session, MSCI’s broadest index of Asia-Pacific shares outside Japan rallied 1.6%, rising for a third-straight session, with Taiwan leading the charge Tuesday in a dramatic rebound from a week-long selloff amid concerns over a resurgence of the coronavirus. Taiwan’s benchmark gauge climbed more than 5% in its best day since March 2020 on news the country is in talks with the United States for a share of the vaccine doses Washington plans to send abroad. Gains were driven by tech giants including chipmaker TSMC and iPhone assembler Hon Hai Precision, which also ranked among the biggest boosts to the MSCI Asia Pacific Index. Stocks were also strong in Japan, where investors shrugged off data showing Japan’s economy shrank more than expected in the first quarter as a slow vaccine rollout and new COVID-19 infections hit spending and engaged in dip-buying after recent declines. Among larger names, human-resources firm Recruit and the nation’s largest bank MUFG climbed after encouraging outlooks. South Korean shares gained as local institutional investors added tech and auto names. MSCI’s key regional index has gained over 3% in the past three days of trading after tumbling 4.9% over three days last week. In addition to rising virus infections in places including India, Taiwan and Singapore, global markets have been spooked by fears of accelerating inflation as economies ramp back up, especially in the U.S.

“Despite the optics, underlying growth is still favorable given the conducive external backdrop -- aggressive U.S. stimulus and U.S. economic reopening will lend further impetus to Asia’s export recovery,” Morgan Stanley analysts led by Terence Cheng wrote in a note. “We see recent Covid-19 flare-ups across Asia as a temporary speed bump” and “inflation should still stay benign in Asia.”

China stocks rose slightly, with the CSI 300 Index climbing 0.1% to close at 5,187.60, in its third straight day of gains and led by energy and material companies, as investor caution weighed on market sentiment. China Oilfield Services rose 4.7% to lead gains in the energy sector as Brent oil edges toward $70 a barrel. Meanwhile, vaccine makers were the biggest decliners on the gauge, as investors took profit following gains over the past week. Shanghai Fosun Pharmaceutical and Shenzhen Kangtai Biological Products fell more than 6.5% each. Semiconductor products manufacturer JCET Group was also one of the biggest drags on the index, falling 5% after saying a state chip fund planned to trim its stake in the firm.

Morgan Stanley said it remained cautious on the broader Chinese stock market despite the recent rebound, with lingering uncertainties including limited room for upside earnings revisions as they are already priced in and a reflationary environment putting pressure on company margins. There are also concerns around liquidity tightening and continued regulatory risks for internet and fintech stocks, the Wall Street broker said. Stocks in China and Hong Kong will only see gains of mid -to high-single digits over the next year, “marginally higher” than the broader emerging market universe, analysts including Laura Wang wrote in the note.

In FX, the dollar fell toward a four-month low, while U.S. 10-year Treasuries were steady as investors awaited key housing data ahead of minutes due Wednesday from the Federal Reserve’s last meeting.

The Bloomberg dollar index fell against all of its Group-of-10 peers while the euro advanced beyond $1.22 for the first time in almost three months. The New Zealand dollar outperformed led by a rally in equity and commodity markets after the Fed’s Richard Clarida played down the risk of policy tightening. The pound climbed to its highest level since February and neared amulti-year high, with the focus turning to Bank of England speeches later Tuesday, and Wednesday’s inflation data. The U.K. labor market strengthened more than expected and added more payrolls in April than any month since early 2015. The Norwegian krone touched a one-week high versus the greenback as Brent crude topped $70 a barrel in London for the first time since mid-March amid signs that recovering consumption has whittled away a glut of oil built up at the height of the Covid-19 pandemic. The yen advanced a fourth consecutive day versus the dollar.

In rates, treasuries were little changed in early U.S. session, off lows despite gains for stock futures; regional support for U.S. debt emerged during Asia session in light trading. 10-year yield near flat around 1.65% with belly of the curve slightly richer, long-end marginally cheaper on the day, steepening 5s30s by ~1bp; bunds and gilts underperform by less than a basis point. Curve slightly steeper although yields remain within a basis point of Monday’s closing levels. U.S. data includes housing starts, while Fed’s Kaplan is expected to speak. IG dollar issuance slate includes World Bank 5Y, CDP Financial $1b 5Y and Cades 3Y; another active session is expected after almost $20b was priced Monday, led by $7b UnitedHealth offering whose order book was said to approach $27b

In commodities, Brent crude topped $70 a barrel for the first time since March, as expectations of demand recovery following reopenings of the European and U.S. economies offset concern over spreading coronavirus cases in Asia. Brent crude was up 0.8% at $70.03 and U.S. West Texas Intermediate crude gained 0.7% at $66.75. Copper rose toward a record as the potential for tighter regulation and higher taxes in Chile fueled concerns about the long-term supply outlook; zinc jumped amid speculation about disruptions to Chinese output. Spot gold rose to its highest in nearly four months as a weaker U.S. dollar and growing inflationary pressure bolstered the metal’s appeal as an inflation hedge. It was last up 0.1% at $1,867.9 per ounce.

Bitcoin rose 4%, paring some of its steep losses since Tesla boss Elon Musk said he would stop taking bitcoin as payment due to environmental concerns. Ether jumped 6.7%.

Looking at the day ahead now, and data releases include US housing starts and building permits for April, UK unemployment data for March, and the second estimate Q1 GDP in the Euro Area. Central bank speakers include BoE Governor Bailey and Deputy Governors Broadbent and Ramsden, the ECB’s Villeroy and the Fed’s Kaplan. Finally, earnings releases include Walmart and Home Depot.

Market Snapshot

  • S&P 500 futures up 0.4% to 4,172.50
  • STOXX Europe 600 up 0.33% at 443.8
  • MXAP up 1.7% to 204.56
  • MXAPJ up 1.7% to 684.94
  • Nikkei up 2.1% to 28,406.84
  • Topix up 1.5% to 1,907.74
  • Hang Seng Index up 1.4% to 28,593.81
  • Shanghai Composite up 0.3% to 3,529.01
  • Sensex up 1.3% to 50,231.13
  • Australia S&P/ASX 200 up 0.6% to 7,065.98
  • Kospi up 1.2% to 3,173.05
  • German 10Y yield rose 0.2 bps at -0.113%
  • Euro up 0.5% to $1.2215
  • Brent Futures up 0.8% to $70.01/bbl
  • Gold spot up 0.1% to $1,869.23
  • U.S. Dollar Index down 0.41% to 89.79

Top Overnight News from Bloomberg

  • The surge in commodities prices is failing to trigger some of the traditional responses in bonds and currencies. Unlike recent commodities rallies in 2008 and 2011, yields on Treasuries and currencies of major exporters like Australia have barely budged. Likewise, the Federal Reserve’s favored measure of inflation expectations has disconnected from moves in raw materials
  • There’s currently no risk of a lasting return of inflation in the euro area even as the outlook for economic growth improves, European Central Bank Governing Council member Francois Villeroy de Galhau says
  • Germany’s top court rejected bids to enforce its controversial 2020 ruling on the ECB’s PSPP program with more orders against the Bundesbank and the nation’s government
  • Almost every day for the past week, in the European morning a chunky buyer of Eurodollar futures has shown up. Assuming the trades are new positions, the recent slide in USD Libor has the trades mostly coming good so far
  • In a world awash with U.S. currency, the premium for lending dollars in funding markets is disappearing as investors turn elsewhere for positive yields

A look at global markets courtesy of Newsquawk

Asian equities traded mostly positive as the region shrugged off the negative lead from Wall Street where sentiment was dragged lower by lingering inflationary concerns and following somewhat mixed NY Fed Manufacturing data, while US equity futures also staged a rebound after-hours. ASX 200 (+0.6%) was underpinned as the mining-related sectors benefitted from the continued strength in underlying commodity prices and amid reports that Australian PM Morrison is pushing states to remove domestic restrictions on vaccinated citizens as part of a plan to boost travel freedom. Nikkei 225 (+2.1%) notched firm gains with the index unfazed by the wider than expected contraction in Japan’s Q1 GDP which printed -1.3% vs exp. -1.2% Q/Q and -5.1% vs exp. -4.6% for the annualized reading. The decline in the world’s 3rd largest economy was widely anticipated due to the state of emergency for nearly a dozen prefectures including Tokyo which lasted for almost the entirety of Q1, although there was also plenty of jawboning from Economic Minister Nishimura who stated the decline was smaller than during last year's state of emergency as spending on durable goods was solid and that the economy still has potential to recover with exports continuing to increase due to the overseas recovery. Furthermore, Nishimura suggested that job and income conditions are improving, consumer spending appetite appears strong and that the government will take flexible action including using reserves set aside to address the virus as required. Hang Seng (+1.4%) and Shanghai Comp. (+0.3%) were varied whereby the mainland lagged despite a lack of direct catalysts, but there were reports that the US Senate voted overwhelmingly to open the debate on the bill that would provide USD 110bln for technology research to address China competition, while the TAIEX (+5.2%) was the outperformer in an aggressive resurgence from yesterday’s COVID-triggered slump. Finally, 10yr JGBs languished amid strength in Japanese stocks and following the recent pullback in T-notes, while the lack of BoJ purchases also contributed to the subdued demand with the central bank only in the market today for treasury discount bills.

Top Asian News

  • Vodacom, Alibaba Look to Boost South Africa Sales With Super- App
  • China’s Neusoft Medical Said to Mull $400 Million Hong Kong IPO
  • Citi Hires 650 Wealth Professionals in Hong Kong, Singapore
  • India Seeks to Defer Prompt LNG Deliveries as Virus Curbs Demand

Major bourses in Europe have drifted off best levels but still hold onto modest gains (Euro Stoxx 50 +0.4%) amid a distinct lack of catalysts throughout the European morning and as earning seasons simmers down. US equity futures meanwhile hold onto a bulk of overnight gains but have lost momentum as Europe wanes alongside a pickup in the EUR. Bank of America’s May Fund Manager survey suggested the first signs of “peak optimism” on growth, whilst tech stocks overweight is at a three-year low as investors load up on resources and banking names, whilst suggesting that the most prominent tail risks include inflation and a taper tantrum. Back to Europe, major bourses largely see broad-based gains with some mild outperformance in the FTSE MIB (+0.7%) and AEX (+0.7%) with the former lifted by banks and the latter underpinned by its tech exposure. In fitting with this, Tech and Banks reside as top performers, but Oil & Gas and Basic Resources outpace amid price action in those respective complexes (see commodities section). Meanwhile, the Telecoms sector is the marked laggard following its outperformance yesterday as Vodafone (-10%) and Iliad (-9.0%) shares slump after earnings underwhelmed. Healthcare resides at the bottom of the pile, pressured by Novartis (-0.8%) after the US supreme court rebuffed the Co’s appeal over its arthritis drug. Overall, the sectors are portraying a pro-cyclical bias. In terms of individual movers, BT (+1.8%) bucks the telecoms trend amid reports its CEO has purchased another GBP 2mln worth of shares, whilst Vivendi (+1.7%) is also firmer on the back of news that it could offload a further 10% of its Universal Music Group business.

Top European News

  • German Top Court Rejects Bids to Enforce ECB PSPP Ruling
  • ECB’s Villeroy: No Inflation Risk, Monetary Policy to Stay Loose
  • U.K. Ministers Stuck in Talks Over Australia Trade Deal
  • Watch Food Delivery Stocks on Report DoorDash Plans German Entry

In FX, the Greenback has now given up all and more of its post-US CPI recovery gains amidst almost universal declines and a resumption of the bear trend that was prevalent prior to last Wednesday’s inflation data. Indeed, the DXY has fallen to a new sub-90.000 multi-month low at 89.751 to expose the only remaining trough ahead of 89.500 from late February (89.677 on the 25th of that month) and before Buck bears train crosshairs on the current 2021 trough (89.206 from January 6). The negative narrative for the Dollar remains the same and is compounded by renewed strength in commodities on the ROTW reopening bandwagon, bar recent/latest COVID-19 outbreak hotspots, as vaccine rollouts catch up to the US, while the Fed continues to hold back on tapering and policy normalisation in contrast to other Central Banks that have started the process of removing pandemic levels of accommodation. Ahead, housing data and more from Fed hawks Bostic and Kaplan, but it’s hard to imagine anything that might turn the tide for the index and Greenback in general at present.

  • CHF/NZD/AUD/EUR/GBP - Not much to pick between the best performing majors, or the ones extracting most from Buck’s downfall to be more precise. However, the Franc and Kiwi are just about edging it relative to fellow G10 currencies and perhaps in quid pro quo fashion following heavier depreciation when the boot was on the other foot, with the former up over 0.8975 and latter back above 0.7250, albeit facing formidable option expiry interest between 0.7260-70 in 1.4 bn before attention switches to NZ PPI later today. Conversely, the Aussie appears to have pulled far enough away from 1.2 bn expiries at the 0.7750 strike to probe 0.7800 irrespective of yet another set of dovish RBA minutes overnight ramming home the no rate hike likely before 2024, at the earliest. Elsewhere, the Euro has breached 1.2200 and Pound has climbed beyond 1.4200, as the single currency and Sterling tussle either side of the 0.8600 handle in cross terms.
  • CAD/JPY - The major ‘laggards’, though the Loonie continues to set almost daily highs against its US rival and has been close to 1.2000 as the clock ticks down to Canadian CPI tomorrow, while the Yen has rallied through 109.00 even though Japanese Q1 GDP and Capex fell short of expectations and subsequent coronavirus restrictions will take more toll on the economy.
  • SCANDI/EM - Somewhat conflicting impulses for the Nok as Brent finally overcomes resistance to scale Usd 70/brl, but Norway’s trade surplus narrows to leave the Crown under 10.0000 vs the Eur, while the Try has given up post-Turkish holiday corrective gains in stark contrast to the rest of the community that are reaping rewards of strength in underlying crude, metals and raw material prices plus Usd weakness and relatively buoyant risk sentiment overall. Note also, the Brl could well get an extra fillip from Brazilian Federal tax revenues beating consensus by some distance in March.

In commodities, WTI and Brent July contracts have been choppy but ultimately firmer, with Brent topping USD 70/bbl (vs low 69.44/bbl) alongside the European cash open in what seemed to be a tech-driven move at the time, whilst WTI tested USD 67/bbl to the upside (vs low 66.24/bbl). News flow for the complex has again been on the lighter side, with eyes remaining on the fallout of COVID across the globe, whilst geopolitical risks also remain heightened. Meanwhile, the private inventory data later today will be followed for any hints towards tomorrow’s DoEs, which is expected to be distorted by the Colonial Pipeline outage. As a reminder, a significant draw is expected in PADD1 (East Coast) product stocks alongside builds in crude and products from PADD3 (US Gulf Coast) and a decline in refining activity. Elsewhere, spot gold and silver see sideways trade as upside from softer Dollar is countered by elevated yields. LME copper meanwhile eyes USD 10,500/t to the upside with the aid of risk appetite alongside the weaker Dollar. On this front, BHP sees a rise in average copper production over the next five years of over 300k tonnes per year and predicts that there will be strong demand in steel-making as the world decarbonises. Overnight, Dalian iron ore and Shanghai zinc surged, with traders citing robust domestic demand and expectations for overseas demand to rise significantly.

US Event Calendar

  • 8:30am: April Building Permits MoM, est. 0.6%, prior 2.7%, revised 2.3%
  • 8:30am: April Housing Starts MoM, est. -2.1%, prior 19.4%
  • 8:30am: April Building Permits, est. 1.77m, prior 1.77m, revised 1.76m
  • 8:30am: April Housing Starts, est. 1.7m, prior 1.74m

DB's Jim Reid concludes the overnight wrap

Yesterday I hinted at the need for fresh knee surgery. Well today I’m putting out a public health announcement in the hope that I save others. About 2 months ago I felt tightness and swelling at the back of my knee one morning as I started on my exercise bike. There was no specific catalyst or pain. 2 months later, and with my knee constantly swollen, the scan revealed a hole in my cartilage. There were only two things that could have caused it. Speed swing training for golf or trampolining with the kids. When I cited these two things to my consultant on Friday I fully expected him to blame golf and tell me I had to take it easier at my age. However when I said the word trampolining he looked at me in horror and said if there was one thing he would rip out of every garden that has one it would be a trampoline. He said he’s treated nearly as many of these injuries as he has skiing ones. My kids were devastated over the weekend when I told them that I had to officially retire from bouncing them on the trampoline. This is an extended list that now includes running, tennis, football and cricket. Secretly I was very relieved that golf hadn’t caused it though. So full throttle with that while I decide when to have microfracture surgery for a second time and on a different knee. This will involve 6 weeks on crutches with no weight bearing and then rehab. Sigh. So next time your kid asks you to bounce them give it a second thought.

Markets are bouncing around at the moment without quite working out what to do about the onslaught of important data since payrolls. Net net, 10yr yields are c.8.3bps higher since just before that employment report and the S&P 500 and Nasdaq are down -1.64% and -2.71% respectively. So although there have been some big daily moves in the opposite direction we’ve generally seen small risk off at the same time as higher yields over this period.

Yesterday saw a similar trend alongside a rebound in commodity prices that only served to bolster the existing inflationary pressures argument. In terms of the moves, the S&P 500 (-0.25%) and Europe’s STOXX 600 (-0.05%) both fell back by the close of trade, with technology stocks underperforming in both regions as the NASDAQ fell a larger -0.38%. This coincided with higher volatility, with the VIX index up +0.9pts to 19.7pts, though this was some way beneath the intraday high of 28.93 reached on Thursday of last week. Energy stocks were more buoyant with the S&P energy sector gaining +2.30% and the STOXX 600 Oil and Gas sector up a lesser +0.38%, aided by the fact that WTI oil prices were up +1.38% to just about reach a post-pandemic high of $66.27/bbl.

The market moves came as yesterday’s Fed speakers continued to strike their overall dovish tone, as well as their belief that the inflationary pressures seen will prove temporary. In terms of tapering, Vice Chair Clarida said that the weak jobs report in April demonstrated that “we have not made substantial further progress” that the Fed needs to see in order to begin that process. This message was also reiterated by Atlanta Fed President Bostic, who said that “We are still 8 million jobs short of where we were pre-pandemic. Until we make substantial progress to close that gap, I think we have got to have our policies in a very strongly accommodative situation or stance”.

Against this backdrop, US Treasuries were fairly steady yesterday, with the 10yr yield seeing a modest +2.0bps rise to 1.649%. The rise was driven by inflation expectations with the 10yr breakevens increasing +2.6bps to 2.56% - a new 8 year high. The moves were similar in Europe, where yields climbed to fresh pandemic highs as nervousness over ECB tapering and higher inflation remained in the background. 10yr bunds saw yields rise +1.4bps to -0.12%, which is their highest level in almost 2 years, while French OATs were up +2.7bps to 0.289%, their highest level in over a year themselves. The risk-off tone meant that bunds outperformed their counterparts across the continent, with the Italian (+2.0bps) and Spanish (+1.6bps) spreads over bunds both moving wider. The taper story is gathering some momentum here. Elsewhere the greenback fell -0.17% for its 6th daily loss in its last 8 sessions and is now trading near three month lows.

Asian markets are mostly trading higher this morning with the Nikkei (+2.24%), Hang Seng (+1.25%) and Kospi (+1.07%) all posting gains. Chinese markets are trading a bit more mixed though with the CSI (-0.16%) and Shenzhen Comp (-0.06%) down while the Shanghai Comp (+0.08%) is up. Meanwhile, Taiwan’s TAIEX exchange is up as much as +4.96% as the country’s financial stabilisation fund said it was monitoring stocks after the worst rout in more than a year. Futures on the S&P 500 (+0.23%) are also pointing towards a positive open for nowalongside the Stoxx 50 and Dax futures being up +0.68% and +0.55% respectively. In terms of overnight data, Japan’s preliminary 1Q21 annualised GDP print came in at -5.1% qoq (vs. -4.5% expected) while the previous quarter was revised down to 11.6% qoq from 11.7% qoq. In other news, Variety reported that Amazon is in discussion to buy MGM movie studio for about $9bn. Small change for a company worth $1.65tn.

In other market news, Bitcoin rose +1.63% bouncing as it reached a 3-month low, closing at $44,816. That’s just the second gain in the last week for the cryptocurrency after a variety of tweets from Elon Musk, including a new one yesterday where he clarified in a fresh tweet that “Tesla has not sold any Bitcoin”. Companies exposed to cryptocurrencies struggled yesterday, with Coinbase down -4.07% as it caught up with the moves over the weekend. Tesla was down another -2.34% and is now down -34.7% from its peaks in late-January and -18.3% YTD.

In terms of the pandemic, cases continue to decline at the global level with the number of new cases in India also having now peaked for the time being. But other areas have experienced a renewed surge, particularly in Asia, and fresh restrictions were being imposed yesterday to deal with this. In Singapore, the Ministry of Health said that they’d found a further 21 cases, of which 11 weren’t linked to existing clusters. It comes as the World Economic Forum announced that they were cancelling their annual meeting that had been scheduled to be held in Singapore, saying that it would instead happen in the first half of 2022, at a location to be determined. Given I was planning to attend I’ve recommended the Bahamas. Meanwhile, Hong Kong moved to classify Singapore as a high-risk virus destination, and will now require a 21-day quarantine for arrivals from the city-state. Elsewhere, a flareup in Taiwan saw them ban foreigners from entering for a month from May 19 until June 18. However, there was better news out of the US, where John Hopkins data showed that Sunday saw the lowest number of new cases since March 2020, at the start of the pandemic. President Biden announced that the US will send an additional 20 million vials of vaccine abroad by the end of June. The shots will be a mix of Pfizer, Johnson & Johnson and Moderna vaccines, and will be on top of the 60 million Astrazenca shots that have already been promised.

There wasn’t a great deal of data out yesterday, though the New York Fed’s Empire State manufacturing survey for May fell slightly to 24.3 (vs. 23.9 expected). Notably however, the prices paid index rose to an all-time record of 83.5, as did the prices received index at 37.1, so adding to those signs of building inflationary pressures. Separately, the NAHB’s housing market index for May remained at 83 as expected.

To the day ahead now, and data releases include US housing starts and building permits for April, UK unemployment data for March, and the second estimate Q1 GDP in the Euro Area. Central bank speakers include BoE Governor Bailey and Deputy Governors Broadbent and Ramsden, the ECB’s Villeroy and the Fed’s Kaplan. Finally, earnings releases include Walmart and Home Depot.

Tyler Durden Tue, 05/18/2021 - 08:19
Published:5/18/2021 7:21:27 AM
[Markets] Dow Jones Futures Rally As Tesla Gives Up Key Level; Baidu Jumps On Earnings Dow Jones futures were higher early Tuesday following Monday's stock market losses. Tesla stock gave up a key support level, as Bitcoin plunged. Published:5/18/2021 5:48:02 AM
[Markets] Dow Jones Futures Rally: Stock Market Slashes Losses, But Tesla Gives Up Key Support Level Dow Jones futures were in focus following Monday's stock market losses. Tesla stock gave up a key support level, as Bitcoin plunged. Published:5/17/2021 10:15:42 PM
[Markets] Dow Jones Futures: Stock Market Slashes Losses, But Tesla Gives Up Key Support Level Dow Jones futures were in focus following Monday's stock market losses. Tesla stock gave up a key support level, as Bitcoin plunged. Published:5/17/2021 4:16:58 PM
[Markets] Market Recap: Monday, May 17 Stocks fell on Monday, resuming last week's declines as investors' concerns around rising inflation persisted. The Dow was off by about 0.2% by market close, and the S&P 500 also declined. The Nasdaq extended losses after the index fell for a fourth straight week last week, as technology and growth stocks gave back more gains amid jitters over rising rates. Published:5/17/2021 3:46:47 PM
[Markets] Dow Jones Slips As Tech Stocks Fall Again; Microsoft Stock Drops Amid Bill Gates Revelations The Dow Jones slipped while tech stocks got walloped again. Microsoft stock dropped amid reports Bill Gates left the firm's board amid a relationship probe. Published:5/17/2021 2:45:35 PM
[Markets] Dow Jones Drops As Disney Weighs; Tech Stocks Lead Downside; Multiple Financial Stocks Trade Inside Buy Zones The Dow Jones Industrial Average fell modestly in today's market, extending its losses from last week. The tech-heavy Nasdaq led on the downside. Published:5/17/2021 1:13:19 PM
[Markets] Dow Jones Slides As Bitcoin Plunges On Elon Musk Tweet; Apple, Tesla Skid The Dow Jones Industrial Average fell 150 points Monday, as Bitcoin plunged on Tesla CEO Elon Musk's tweet. Tesla stock skidded. Published:5/17/2021 9:43:34 AM
[Markets] U.S. stocks open moslty lower after worst week in 3 months Stocks opened modestly lower Monday, under renewed pressure after major benchmarks saw their biggest weekly declines since February --- a selloff blamed on worries over rising inflation pressures. The Dow Jones Industrial Average was down 9 points, or less than 0.1%, at 34,373, while the S&P 500 fell 0.3% to 4,162.33. The Nasdaq Composite shed 0.7% to trade at 13,328.45. Shares of Discovery Inc. rose more than 10%, while AT&T Inc. shares rose 4.7% after the companies announced a $43 billion deal to combine WarnerMedia with Discovery. Published:5/17/2021 8:41:55 AM
[Markets] Futures Slide, European Stocks Drop On Fresh Infection, Inflation Fears Futures Slide, European Stocks Drop On Fresh Infection, Inflation Fears

US equity futures and European stocks dipped in a quiet overnight session to start the week amid renewed concerns about rising inflation and a spike in Covid-19 cases in parts of the world. Gold briefly reached a three-month high, while oil and the dollar were little changed; 10Y TSY yields rose after dropping earlier in the session.

At 715am ET, Dow e-minis were down 125 points, or 0.36%, S&P 500 e-minis were down 17 points, or 0.39%, and Nasdaq 100 e-minis were down 46 points, or 0.34%, reversing much of Friday’s rebound.

Wall Street's main indexes rebounded on Thursday and Friday as investors picked up beaten-down stocks following a pullback earlier in the week on concerns around inflation and a possible tightening by the U.S. Federal Reserve. However, the mood reversed on Monday with travel, oil & gas and industrials the weakest sectors, while telecoms and autos were strong. Shares of Discovery jumped 12.5% in premarket trading after AT&T neared a deal to combine its media assets, including CNN and HBO, with the company. AT&T shares gained 3.1%.

The MSCI World Index was flat in European trade, albeit less than 2% from a recent record high. That followed its best day since February on Friday after an early week inflation-driven selloff. “What markets are doing is hoping for the best and preparing for the worst,” said Fahad Kamal, chief investment officer at Kleinwort Hambros, although adding he felt the inflationary pressures would dissipate.

Europe's Stoxx 600 Index fell 0.4% and stocks in Asia were mixed, with shares in Taiwan dropping as the country raced to contain its worst outbreak of the coronavirus. U.K. resumed international leisure travel Monday, but Portugal is only major destination on the “green list” with other destinations either prohibited or requiring travelers to quarantine on return. Most European airline stocks slid Monday, including EasyJet (-1.6%), Wizz Air (-1.4%), British Airways owner IAG (-1.4%) and Lufthansa (-1%). Ryanair gained 0.3% following an earnings update. Here are some of the biggest European movers today:

  • Danone shares climb as much as 1.3% amid expectations Antoine de Saint-Affrique will become the French yogurt maker’s new CEO after a report saying an announcement is imminent.
  • Diploma shares gain as much as 8.9%. Jefferies says FY consensus EPS estimates are expected to increase by double digits after the company reported 1H results.
  • Ryanair gains as much as 2.6% in Dublin; Davy notes the low-cost carrier’s FY loss was helped by cost savings and ancillaries and FY22 guidance of “close to breakeven” is maintained.
  • Bayer shares drop as much as 3.2% after the company lost its second appeal of three jury verdicts finding that the Roundup weed killer causes cancer. “Losing another appeal isn’t supportive,” says Commerzbank (hold).
  • RCS MediaGroup shares fell as much as 13% in Milan (trades ex dividend); Banca Akros notes a Milan court rejected all claims advanced by RCS against Blackstone related to the sale of RCS’s headquarters in Milan in 2013, and cuts to neutral from accumulate.

Asian stocks were little changed on Monday following last week’s selloff on weak sentiment as worries over global inflation and the region’s ongoing struggle to contain the coronavirus continued to linger. The MSCI Asia Pacific Index fell as much as 0.4% before erasing its losses. The measure lost 3.2% last week in its worst weekly performance since February. Technology stocks continued to weigh the most heavily on the Asian benchmark, dragged lower by declines in chipmaking giants Taiwan Semiconductor Manufacturing and Samsung Electronics. Gains in consumer discretionary stocks like Meituan, however, cushioned the market’s drop. Taiwan’s benchmark was the region’s worst performer, extending its biggest weekly rout in more than a year after the government tightened restrictions on people and businesses to control its coronavirus outbreak. It closed down 3%.

Japan’s small caps and Indonesian stocks also posted notable declines. “Inflation concerns continue to weigh, with the University of Michigan consumers’ inflation expectations showing a jump to amulti-year high,” Yeap Jun Rong, a market strategist at IG Asia wrote in a note. “Concerns on virus resurgences may continue to linger in the region, which have caused renewed restrictions in several countries, fueling concerns on the pushing back of the timeline on reopening and economic recovery.” U.S. consumer sentiment deteriorated unexpectedly in early May as Americans grew increasingly concerned about rising prices. The University of Michigan’s preliminary sentiment index fell to a three-month low of 82.8 in May. Consumers said they expect a 4.6% increase in inflation over the next year, in the highest reading in a decade. Chinese shares outperformed. The CSI 300 Index rose more than 1% despite a notable miss in retail sales growth, which slowed to 17.7% in April, below the projected 25% rise. Analysts saw the data as boosting hopes that Beijing will maintain policy support for an economic recovery that’s losing steam.

China stocks rose strongly even after retail sales data for April missed, gaining 17.7% y/y vs. est. 25%. Industrial Production of 20.3% Y/Y also missed expectations of 21.1% as China's economic data is clearly slowing down.

The Shanghai Composite climbed 1% and the Chinext jumped 3%; the Hang Seng, India’s Sensex and Australia’s S&P/ASX 200 advanced. Index futures declined 0.3% for the S&P 500 and the Nasdaq 100; the Topix, Kospi and Thailand’s SET Index also retreated. Bitcoin slid under $43,000, down more than 10% since Friday after Elon Musk dueled over the weekend on Twitter with critics of his decision to suspend payments using the crypto currency. The Aussie dollar fell 0.3% and the New Zealand currency slid 0.5%. Treasuries were steady after rallying on Friday, with the 10-year yield sitting at 1.62%. WTI rose 0.1% to above $65 per barrel, gold advanced 0.5%.

Japanese stocks fell for the fourth day in five, extending losses after last week’s rout as concerns over rising inflation and China’s mixed economic data damped investor demand for equities while April wholesale prices in Japan, the world’s third-largest economy, rose at their fastest pace in six and a half years, as rising energy and commodities costs ate into corporate margins, although consumer price inflation remains subdued. Information companies and electronics makers were the heaviest drags on the Topix, which erased an earlier gain of as much as 0.8%. Tokyo Electron Ltd. and Fast Retailing Co. weighed down the Nikkei 225, which slid 4.3% last week in the gauge’s worst rout in almost 10 months. Sumitomo Mitsui Financial Group Inc. fell 1.1% after the bank forecast Friday that its profit will miss analyst estimates as provisions for soured loans remain elevated. Honda Motor Co. dropped 2.7% after the automaker issued a profit outlook that was short of analysts’ estimates. “Markets are still anxious about inflationary risks,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd. in Tokyo. “Japanese stocks will fluctuate along with sways in U.S. rates.”

In rates, After reaching a six-week peak just above 1.70% last week, 10-year Treasury yields edged lower and were last around 1.63%, with corresponding U.K. and German yields higher by around 2bp each; across long-end of the curve 20-year sector continues to lag, cheaper by 1.3bp on the 10s20s30s fly. Volumes during the Asia session were heavy as yields declined, pointing to stop-driven action. Also during the Asia session there was heavy buying in Sep21 eurodollar futures after Morgan Stanley and JPMorgan strategists called for a continued drop in Libor; incidentally 3M dollar Libor dropped -0.55bp to 0.14963%, a new record low. Italy’s 10-year bond yield rose to its highest level in over eight months, rising above 1.10% as unease over the future of Italian economic reforms as well as a slowing down of central bank bond buying triggered fresh selling.

In FX, the Bloomberg Dollar Spot Index fluctuated in a tight range between losses and gains even as the greenback was higher against most of its Group-of-10 peers as risk-sensitive Antipodean and Scandinavian currencies lead declines; most of the other crosses traded in tight ranges. The euro was steady against the dollar while bunds were flat, underperforming Treasuries, which inched higher. The pound was steady after swinging between small gains and losses as most of the U.K. relaxes coronavirus restrictions further; Prime Minister Boris Johnson said the next step out of lockdown must be taken “with a heavy dose of caution” amid concern over the highly transmissible virus strain that originated in India. Japan’s new inflation- linked bonds were were met with stellar demand, helped by the global reflationary theme; the yen inched up versus the dollar while the Bloomberg Correlation-Weighted Currency Index, which measures relative strength in the yen against other G-10 currencies, touched the lowest level since February 2018 before rebounding. The Hungarian forint neared the strongest level this year against the dollar after central bank Deputy Governor Barnabas Virag said the nation will respond to surging inflation by tightening monetary policy as soon as next month following the release of new economic forecasts.

Bitcoin fell 8.5% to its lowest since February after tweets from Elon Musk hinted that Tesla may have sold, or will sell, its holdings, the drop reversed around 2am when Musk tweeted that Tesla had not in fact sold its Tesla holdings.

In commodities, the dip in U.S. yields combined with inflation concerns helped gold to a three-month peak of $1,855 an ounce before pulling back to trade up 0.4% at $1,849 an ounce. Oil traded around flat, with Brent and U.S. crude last down 0.1% at $68.62 a barrel and $65.29 a barrel, respectively.

With the earnings season nearing its end, overall earnings for S&P 500 companies are expected to have climbed 50.6% from a year ago, the strongest pace of growth in 11 years. Walmart, Home Depot and department store operator Macy's are set to report on Tuesday, with Target, Ralph Lauren and TJX Cos on tap later in the week.

Amid a light U.S. data calendar this week, all eyes will be on Wednesday's minutes of the Federal Reserve’s last policy meeting for clues about any tightening in monetary policy. So far, the Fed has argued the inflation spike is transitory, yet last week’s University of Michigan consumer survey showed the highest long-term inflation in the past decade

“We believe inflation has reached an important inflection point, and we expect it to be structurally higher than during the last cycle, but not so high as to create major disruptions in markets,” said Joseph Amato, chief investment officer for equities at Neuberger Berman. “This drives our positive view on risk assets and equities.”

U.S. economic data slate includes May Empire manufacturing (8:30am), NAHB housing market index (10am) and March TIC flows (4pm); building permits/housing starts, FOMC meeting minutes and Markit manufacturing PMI are ahead this week.

Market Snapshot

  • S&P 500 futures down 0.4% to 4,149.75
  • MXAP little changed at 200.80
  • MXAPJ little changed at 672.66
  • Nikkei down 0.9% to 27,824.83
  • Topix down 0.2% to 1,878.86
  • Hang Seng Index up 0.6% to 28,194.09
  • Shanghai Composite up 0.8% to 3,517.62
  • Sensex up 1.4% to 49,404.91
  • Australia S&P/ASX 200 up 0.1% to 7,023.56
  • Kospi down 0.6% to 3,134.52
  • STOXX Europe 600 down 0.23% to 442.3
  • German 10Y yield up 0.2 bps at -0.127%
  • Euro little changed at $1.2140
  • Brent Futures little changed at $68.72/bbl
  • Gold spot up 0.5% to $1,853.07
  • U.S. Dollar Index little changed at 90.35

Top Overnight News from Bloomberg

  • China’s recovery remained unbalanced in April, with industrial output and investment buoyed by strong exports and a hot property market, while retail sales missed forecasts. Industrial output rose 9.8% in April from a year earlier versus the median estimate for a 10% increase. Retail sales expanded 17.7% in the period, far slower than a projected 25% rise
  • President Joe Biden’s prospects for passing a major infrastructure bill through Congress with bipartisan support -- seen unlikely in the wake of his Democrat-only pandemic-relief package in March -- are now rising, though disagreements over funding could still scupper a deal
  • Interbank borrowing rates are already at record lows and set to remain under pressure, prompting strategists to ask how low dollar Libor may go
  • Iran is preparing to ramp up global oil sales as talks to lift U.S. sanctions show signs of progress. But even if a deal is struck, the flow of additional crude into the market may be gradual. State-controlled National Iranian Oil Co. has been priming oil fields -- and customer relationships -- so it can increase exports if an accord is clinched, officials said

Quick look at global markets courtesy of Newsquawk

Asian equities traded somewhat mixed and only partially benefitted from last Friday’s rebound on Wall St. where the major indices gained as weaker than expected US Industrial Production and Retail Sales data supported the narrative for prolonged Fed accommodation, although further pandemic-related concerns and fresh restrictions have left some regional markets in the lurch. ASX 200 (+0.1%) was kept afloat by outperformance in gold miners after the recent advances in the precious metal and with energy also underpinned following the government announcement of a AUD 2.3bln support package to keep Australia's two remaining refineries open which are being run separately by Ampol and Viva Energy. Nikkei 225 (-0.9%) failed to hold on to opening gains with sentiment subdued by the recent widening of the state of emergency to three additional prefectures lasting through to month-end and with some of the biggest movers driven by earnings releases, while the TAIEX (-3.0%) slumped 3% at the open due to a record increase of domestic cases and tightened COVID-19 measures. Hang Seng (+0.6%) and Shanghai Comp. (+0.8%) were positive after the PBoC injected funds through a CNY 100bln MLF operation but with gains capped as participants digested mixed Chinese activity data in which Industrial Production printed inline with estimates and Retail Sales disappointed but still showed respectable growth. Finally, 10yr JGBs were supported by the weakness in Japanese stocks and following similar upside in T-notes, while the results of the 10yr inflation-indexed auction from Japan were inconclusive with a higher b/c than previous but lower accepted prices.

Top Asian News

  • Hong Kong, Singapore Delay Anticipated Air Travel Bubble Again
  • MUFG Sees Profit Topping Estimates on Lower Bad-Loan Costs
  • Vaccine Costs to Strain India’s Already Frail State Budgets
  • Shimao Dollar Bonds Slide in Latest Developer to See Price Drop

Major European bourses kick the week off relatively contained and with little conviction (Euro Stoxx 50 -0.2%), following on from a mixed APAC handover with news-flow also on the lighter side once again. US equity futures are similarly caged but with a mild downside bias following Friday’s rally, with no significant outliers in terms of performance as participants await this week’s risk events, including the FOMC minutes and flash PMIs. Back to Europe, the FTSE 100 (-0.3%) narrowly underperforms as the GBP remains elevated while base metal miners unwind some recent gains, oil & gas names also remain pressured. Sectors see a mixed picture after a primarily positive open with defensives now faring better than cyclicals. The Telecoms sector outpaces peers, led by Telefonica (+3.3%), BT (+2.4%) and Deutsche Telekom (+2.5%) – with the latter also underpinned by a broker upgrade at Barclays. Travel & Leisure has made its way to the bottom of the pile despite the UK kick-starting travel to designated countries, with COVID developments in Asia potentially providing some sectorial headwinds as the Hong Kong-Singapore travel bubble has been deferred again. However, Ryanair (+1.2%) bucks the overall trend in the sector after earnings topped forecasts whilst providing a rosy outlook contingent on vaccination efforts. In terms of commentary, analysts at JPM have revisited their equity strategy for the Euro Stoxx 50. They maintained their overall bullish view and reaffirmed the medium-term positive growth-policy trade-off. The bank reiterated their tactical call favouring defensives vs manufacturing cyclicals during this current consolidative phase which is expected to last 1-3 months before the next run higher, according to the analysts. “We think that better tactical showing of lower beta will ultimately end up a good staging post for the renewed Value and Cyclicals rally in 2H.” Contrary to a widespread view, JPM disagrees that UK will be the most profitable exposure this year and suggests that overweight EZ vs the UK makes more sense and is backed by current performance.

Top European News

  • IPhone Maker Foxconn Finalizes Auto Partnership With Stellantis
  • Merkel Rejects Calls to Bring Coal Exit Forward: FAZ
  • Bayer Falls on Appeal; Decision ‘Isn’t Supportive’: Commerzbank
  • Hungary Central Bank Readies June Rate Hike After Inflation Jump

In FX, the Dollar is somewhat mixed against G10 counterparts, but lagging vs precious and base metals, like Gold and Copper, albeit the latter partly due to heightened prospects of strike action at BHP’s Spence and Escondida mines in Chile following the rejection of a contract offer. Conversely, spot bullion has taken advantage of softer US Treasury yields and a flatter curve that are keeping the Greenback capped in wake of last Friday’s disappointing retail sales data to breach a key technical level that was protecting Usd 1850/oz (200 DMA at Usd 1845.98), with bulls (or bugs) now eyeing another upside objective in the form of a declining trend-line that crosses the y axis around Usd 1858.40. Back to the Buck, 90.500 in the index has not been reclaimed and 90.153 may offer some support ahead of 90.000 on any further pull-back through the prior session low (90.278) as this represents the midweek base outside of the 90.429-220 range thus far. Ahead, NY Fed manufacturing, NAHB and 3 Fed speakers including hawk and current FOMC voter Bostic twice.

  • JPY/GBP - Both holding up better than other majors, though only marginally firmer against the Dollar as the Yen meanders between 109.15-50 in the absence of anything Japanese specific ahead of Q1 GDP tomorrow, while the Pound is pivoting 1.4100 in the run up to several BoE speeches and a packed UK data agenda this week, also kicking off from Tuesday. However, Sterling is losing a bit more traction vs the Euro below 0.8600 amidst the ongoing post-Brexit rift over NI Protocol and some concerns that Britain may want to rewrite the agreement that PM Johnson’s advisor Frost has already said is dead in the water.
  • EUR/CHF/CAD - The Euro is sitting comfortably enough above 1.2100, but could struggle to clear 1.2150 convincingly ahead of the NY cut given the fact that 1.9 bn option expiries reside at the half round number, while the Franc is rangebound just under 0.9000 and straddling 1.0950 vs the single currency following firmer Swiss producer and import prices compared to previously and a decline in weekly domestic bank sight deposits and the Loonie is also hovering shy of a big figure at 1.2100 amidst flattish crude prices before Canadian housing starts.
  • NZD/AUD - Having run into offers bang on 0.7250 against its US rival, the Kiwi has waned to test bids ahead of 0.7200 and derived little lasting traction via a rise in NZ’s services PMI, but the Aussie is showing more resilience around 0.7750 after mixed Chinese ip and retail sales releases and a foray above 1.4 bn option expiry interest from 0.7755-60 that may yet tether Aud/Usd in advance of RBA minutes.

In commodities, WTI and Brent front-month futures remain within tight ranges in early European trade, in-fitting with the indecisive mood across the markets and as participants weigh the global recovery with the worsening COVID situation in Asia – which has seen a considerable slower inoculation drive vs the UK, US and now the EZ. COVID remains the overarching theme, but geopolitics has also been increasingly in vogue amid the tensions between Israel/Gaza, prompting the US, EU, Russia and China to take opposing sides, with these developments worth keeping on the radar against the backdrop of JCPOA talks and a potential US-Sino meeting by month-end. Further on Iran, reports over the weekend suggested that state-controlled National Oil Co. has begun priming oil fields and customers in a bid to swiftly increase exports if a JCPOA deal is clinched, according to officials – with the most optimistic scenario pointing to pre-sanction production levels of almost 4mln BPD in as little as three months. COVID and geopolitics aside, the Colonial Pipeline has restarted operations after last week’s ransomware attack. Still, last week’s shuttering is expected to be reflected in this week’s EIA release, which is seen printing a significant draw in PADD1 (East Coast) product stocks alongside builds in crude and products from PADD3 (US Gulf Coast) alongside a decline in refining activity. WTI Jun meanders around USD 65.50/bbl (vs USD 65.12-74/bbl range) while Brent July trades just under USD 69/bbl (vs USD 68.34-69.07/bbl range). Russian Deputy PM Novak meanwhile suggested that prices around USD 62-66/bbl reflects the current market conditions. Elsewhere, spot gold and silver trade firmer in tandem with the softer Buck and yields, with the yellow metal hovering around USD 1,850/oz (vs low 1,822/oz) and the latter marginally above USD 27.50/oz (vs low USD 27.35/oz). In terms of base metals, LME copper prices have been edging higher amid Chilean strike action at two BHP mines after contract offers were rejected. Iron ore futures overnight nursed some of Friday’s losses after Chinese steel producers were warned about price manipulation. However, the recent surge in prices has not convinced Vale’s CEO of a supercycle as he expects demand to flatten out after a couple of years of tightness.

US Event Calendar

  • 8:30am: May Empire Manufacturing, est. 24.0, prior 26.3
  • 10am: May NAHB Housing Market Index, est. 83, prior 83
  • 4pm: March Net Foreign Security Purchases, prior $4.2b
  • 4pm: March Total Net TIC Flows, prior $72.6b

DB's Jim Reid concludes the overnight wrap

I didn’t have the greatest weekend. I found out late on Friday that I need another knee operation and six weeks on crutches with no weight bearing at some point this year, I got soaked most of Saturday running the kids around, and then finished a poor 75th out of 110th in a golf tournament on Sunday and got soaked again on the way round for good measure. However it was salvaged by a sensational (and absolutely crucial) Liverpool winner after injury time was up via a flying header from a corner from our goalkeeper. I have never seen anything like it. I ran round the TV room shouting and scaring all my family. One of the twins said “Daddy, why you do funny dance?” More on the knee later in the week as there is a very cautionary tale about how I injured it. Hopefully my celebrations didn’t make it worse.

The inflationists were the ones celebrating last week and you would have had to have just got back from an uninhabited desert island without Wi-fi to not know that inflation is the number one theme at the moment. However the market reactions wouldn’t have been that easy to predict had you known the US CPI data in advance last week. The S&P closed the week above it’s pre CPI levels and 10yr US yields ended up within a basis point of where they were prior to the release.

Although CPI stole the show, perhaps Friday’s UoM survey that showed 5-10 year consumer expectations for inflation had climbed to 3.1% (a 10 year high) will ultimately prove more important. The 1-yr view at 4.6% was also at the highest since 2011. Note that neither index slumped during the pandemic so this is not a bounce back or a make up for undershooting. The DB rates view in 2021 is that there’s a decent chance we go back into the 1998-2014 inflation expectations regime after 6-7yrs of very low expectations that never recovered after the oil slump of 2014. If correct we could say ultimately say goodbye to a 1% handle on 10yr treasuries for an extended period of time. We would probably need a few more readings to confirm this but it’s looking increasingly likely.

Overnight we have just seen China’s April economic data dump which included a large retail sales miss with a print of +17.7% yoy (vs. +25% yoy expected). There were also marginal misses for industrial output (at +9.8% yoy vs. +10% yoy expected) and YtD fixed investment (+19.9% yoy vs. +20% yoy expected). The surveyed jobless rate printed at 5.1% (vs. 5.2% expected). Asian markets are mixed this morning with the Shanghai Comp (+1.02%) and Hang Seng (+0.39%) up while the Nikkei (-1.47%) and Kospi (-0.91%) are down. The Nikkei seems to be weighed down by the planned extension of the state of emergency to three more regions over the weekend while the Shanghai Comp seems to be gaining as the weaker retail sales print might lead to a slower wind down of stimulus by the authorities. Futures on the S&P 500 are -0.23%. Elsewhere, Bitcoin is down around -11.5% from Friday’s close to c.$43,500 as Elon Musk implied in a tweet that Tesla might sell its holdings of the cryptocurrency or may have already sold. It is now down more than $20,000 from its peak in April. Other cryptocurrencies such as Ether and Dogecoin are also under pressure.

Turning to the latest on the pandemic, the global 7-day average growth in new cases has continued to decline and is now at the lowest level since March this year. Nonetheless, many countries in Asia are moving ahead with imposing fresh restrictions. Taiwan’s Taipei City has decided to close high schools, elementary schools and kindergartens for two weeks until May 28. Meanwhile, Singapore’s ministry of education said yesterday that all primary, secondary, junior college and Millennia Institute students will shift to full home-based learning from May 19 until the end of the school term on May 28. However, pre-schools and student care centers will remain open to support parents who have to work.

Looking forward to this week, the flash PMIs for May (Friday) will likely be the data highlight but it’s tough to know what they’ll tell us that we don’t already know. Having said that, our equity strategist Binky Chadha has previously said that they’ll likely be an equity correction once the ISM rolls over from its current lofty peaks even as growth stays strong. The ISM has fallen for one month from its peak so it’ll be interesting to see what the flash PMI shows as a guide. April’s composite number was the highest on record at 63.5. The Euro Area composite PMI was at 53.8, the highest since July.

Otherwise, there’ll be some further April data from the US, including on housing starts, building permits (both tomorrow) and existing home sales (Thursday), while the weekly initial jobless claims will also be in focus, after they fell to a post-pandemic low last week of 473k. In the all important inflation watch, keep an eye out for U.K. inflation on Wednesday. Everything I seem to be buying is going up in price here!!

It’s a fairly quiet week ahead on the central bank front, with the next big round of meetings not taking place until mid-June. However, there’ll be a lot of focus on Federal Reserve speakers in particular as they react to the much stronger-than expected CPI reading for April, which as we know came in at +4.2% year-on-year, the highest since 2008 last week. So far Fed speakers have largely kept to their dovish “transitory” script so it feels unlikely that anyone will go rogue. We’ll also get the minutes from the FOMC’s last meeting (Wednesday), which will be a little out of date but will be examined for tapering clues amongst other things.

Earnings season will continue to wind down over the week ahead, with more than 90% of the companies in the S&P 500 having now reported. There are still a few companies left however next week, including 20 from the S&P 500 and a further 27 from the STOXX 600.

Now to quickly recap last week. In the end a Thursday/Friday rally helped limit the S&P 500’s losses to -1.39% on the week and from their record highs at the end of the previous week. The loss was the largest weekly decline since since late February, despite a strong rally on Thursday (+1.22%) and Friday (+1.49%). It was also just the second weekly loss for the index in the last 8 weeks. Inflation worries weighed on technology shares in particular as the NASDAQ fell -2.34% (+2.32% Friday) while the FANG+ index was down a greater -3.98%, and the latter is now just above flat (+0.37%) on an YTD basis. Cyclicals sectors outperformed their growth counterparts as banks (+1.07%) gained with the uptick in yields. The VIX volatility index rose +2.1pts to 18.8, which is largest weekly rise in the implied volatility index since the end of February. It peaked at 28.86 intra-day early on Thursday morning European time and at its highest level in 2 months. European stocks reached a record high last Monday before the STOXX 600 finished the week down -0.54% over the week, with the FTSE MIB (+0.63%) and IBEX (+0.95%) outperforming other bourses.

US 10yr yields finished the week +5.1bps higher (-2.9bps Friday) at 1.628% - just the second weekly rise in the last six weeks. However we were at 1.620% just before CPI was released so not much follow through. The week’s move was driven by the rise in inflation expectations (+3.3bps) which came in addition to the smaller rise in real yields (+1.2ps). The US 10yr breakeven rate is now at 8 year highs and US 5yr breakevens are at their highest since 2008. European rates rose further with 10yr bund yields gaining +8.6bps last week and UK gilt yields gained a similar +8.2bps, while yields on OATs rose +9.2bps. The rise in commodities took a breather this week, with the Bloomberg commodity spot index falling back -1.82% - the biggest pullback for the index since late January. The index is still up +19.1% on an YTD basis and up +62.5% over the last year.

In terms of economic data from Friday, US retail sales were the main highlight and came in weaker than expected, though there was some expectations of a softer print after last month’s stimulus-fueled increase, which was actually revised up 0.9pp to +10.7% MoM. In the end retail sales in April were flat (+0.0%), with the median survey response expecting a +1.0% increase. US industrial production came in under expectations as well, increasing just +0.7% last month (+0.9% expected) after the +2.4% rise in March. The initial May reading of the University of Michigan survey fell to 82.8 from 88.3, the biggest drop since last July as year-ahead inflation expectations rose to 4.6% – the highest since 2011. As discussed at the top, and more importantly, 5-10 year expectations hit 3.1% - the highest since 2011.

Tyler Durden Mon, 05/17/2021 - 07:58
Published:5/17/2021 7:11:29 AM
[Markets] Buchanan: Are The Halcyon Days Over For Joe Biden? Buchanan: Are The Halcyon Days Over For Joe Biden?

Authored by Pat Buchanan,

On taking the oath of office, Jan. 20, Joe Biden may not have realized it, but history had dealt him a pair of aces.

The COVID-19 pandemic had reached its apex, infecting a quarter of a million Americans every day. Yet, due to the discovery and distribution of the Pfizer and Moderna vaccines, the incidence of infections had crested and was about to turn sharply down.

By May, the infection rate had fallen 80%, as had the death toll.

Thanks to the Operation Warp Speed program driven by President Donald Trump, the country made amazing strides in Biden’s first 100 days toward solving the major crises he inherited: the worst pandemic since the Spanish flu of 1918-1919 and the economic crash it had engendered.

But Biden’s pace car has hit the wall.

Where economists had predicted employment gains of a million new jobs in April, the jolting figure came in at about a fourth of that number.

One explanation: The $300-a-week in bonus unemployment checks the Biden recovery plan provides may have been a sufficient inducement for workers to stay home until their benefits ran out.

Workers might reasonably ask: Why go back to work when we can take the summer off, with full unemployment, plus $300 a week?

After the crushing jobs report came the inflation figure from April.

Consumer prices had risen 4.2%, the highest rate in a dozen years.

April’s combination of inflation and near-stagnant job growth recalls the “stagflation” of the Jimmy Carter years, which led to the Democratic rout of 1980 at the hands of Ronald Reagan.

And while we may not be suffering from stagflation just yet, the present symptoms in the U.S. economy are certainly consistent with it.

The bad news from the inflation front also sent the Dow and other markets plunging and raised fears of future Fed intervention to raise interest rates to choke off the inflation.

Moreover, rising prices, driven in part by our historic federal deficits, stiffened the spines of Republicans in their resistance to Biden’s $2.3 trillion infrastructure and jobs program, his $1.8 trillion in added domestic spending and his $4 trillion in taxes to pay for it all.

Sen. Mitch McConnell came out of Wednesday’s White House meeting with Biden to say that any tampering with the Trump tax cuts crosses a “red line” for him and Senate Republicans.

The odds on Biden getting any of his taxes has just fallen dramatically. And he may be forced to come down closer to the GOP proposal if he hopes to get any of his infrastructure package through.

At present, Biden does not have a single sure Republican vote for his spending proposals — and even some Democrats in the evenly divided Senate oppose his plans for social spending and higher taxes.

Added to this economic news was a stunning ransomware attack on Colonial Pipeline, which feeds fuel to states from Texas to New Jersey.

Within days, the shutdown of the pipeline had induced panic buying of gas at the pumps, resulting in a sweeping closure of gas stations from Delaware to the Gulf Coast.

As alarming as the ransomware attack was, more alarming is what it portends if cybercriminals abroad can, with the flick of a switch, inflict such instant damage on the U.S. economy.

If cybercriminals can pull this off, what can our adversaries, with their sophisticated and superior weapons of cyberwarfare, not do to the United States?

But that was not the end of the bad news for Biden this week.

A shooting war erupted between Hamas and Israel after a dispute over ownership of homes in East Jerusalem led to clashes between Arab protesters and Israeli police at the al-Aqsa Mosque on the Temple Mount.

The clashes brought barrages of over 1,000 rockets directed at Israeli towns and cities including Jerusalem and Tel Aviv. The Ben Gurion International Airport was forced to shut down.

Those who believed Trump’s Abraham Accords, where Israel was recognized by the UAE, Bahrain and Morocco, had ensured a more tranquil future suddenly seemed to have been as wrong as previous generations of optimists.

Today, even inside Israel, Arabs and Jews, both Israeli citizens, are battling in the streets.

Meanwhile, in Kabul, three bombs outside a high school killed 50 people and wounded scores more, many of them teenage girls — a portent of what may be coming when the Americans and allied troops are gone from the country by the 20th anniversary of 9/11.

But the defining crisis of the Biden presidency may be the crisis on America’s southern border, where another 170,000 illegal immigrants entered the country in April after an equally high number in March.

That is an annual rate of 2 million people walking into our country uninvited, the advance guard of a Third World invasion that will change the character and composition of the United States.

The America we grew up in is disappearing — without our consent.

Tyler Durden Fri, 05/14/2021 - 20:20
Published:5/14/2021 7:24:48 PM
[Markets] GLOBAL MARKETS-U.S. stocks surge in recovery; dollar, bond yields dip U.S. stocks rallied in a sharp rebound on Friday as investors set aside inflation worries and bought shares hammered by the week's volatility, with the shift back into riskier assets dragging on the dollar. The jump in shares was in step with buoyant global stocks as investors put on the back burner concerns that rising prices could lead the U.S. Federal Reserve to raise interest rates sooner than expected and reduce the gush of cash that has propelled financial markets. The Dow Jones Industrial Average climbed 1%, the S&P 500 jumped 1.5%, the most on any day since March 26, and the Nasdaq Composite leaped 2.3%, its biggest one-day rise in about two months. Published:5/14/2021 4:22:44 PM
[Markets] Dow Jones Gains As Rally Continues; Google Stock Offers Buy Point; Apple Retakes Key Level The Dow Jones rose again as the stock market rally continued. Google stock Alphabet is offering a new buy point, while Apple stock retook a key benchmark. Published:5/14/2021 2:24:38 PM
[Markets] GLOBAL MARKETS-U.S. stocks extends recovery; dollar, bond yields dip U.S. stocks extended their recovery on Friday as investors set aside inflation worries and bought shares hammered by the week's volatility, with the shift back into riskier assets dragging on the dollar. The bounce in U.S. equities was in step with gains in global stocks, as investors heeded assurances from the U.S. Federal Reserve that there would be no imminent move to tighten monetary policy, and reduce the gush of cash that has propelled financial markets higher. By early morning, the Dow Jones Industrial Average was up 0.7%, the S&P 500 climbed 1.1%, and the Nasdaq Composite climbed 1.7%. Published:5/14/2021 10:22:36 AM
[Markets] Dow Jones Rallies As Disney Dives On Earnings; Tesla Looks To Rebound From Key Support The Dow Jones Industrial Average rallied 300 points, as Disney dived 5% on earnings. Tesla stock is looking to rebound from a critical support level. Published:5/14/2021 9:21:56 AM
[Markets] Futures, Global Markets Storm Higher As Inflation Fears Fade Away Futures, Global Markets Storm Higher As Inflation Fears Fade Away

US index futures rose with for a second day alongside global markets as a continued drop in commodity prices helped ease fears about inflation risks. Treasuries advanced, cryptocurrencies rebounded from a Thursday rout while the dollar slumped. After a bruising week that saw the biggest one day drop for the S&P since February, higher S&P 500 and Nasdaq 100 contracts signaled a market recovery was gaining momentum.

The three main U.S. stock indexes snapped a three-day losing streak on Thursday after better-than-expected weekly jobless claims data while ignoring the highest annual PPI increase on record. At 7:15a.m. ET, Dow e-minis were up 150 points, or 0.44%, S&P 500 e-minis were up 26 points, or 0.63%, and Nasdaq 100 e-minis were up 132 points, or 1.00%.

As Bloomberg notes, markets are regaining their equilibrium at the end of their biggest retreat in 11 weeks, with the focus of the benefits of an economic rebound overriding worry about the negative side-effect of inflation, for now. That may help to reinvigorate the reflation narrative of picking value shares tied to economic growth over pandemic stay-at-home favorites. Meanwhile, the Fed again reassured markets about the transitory nature of inflation. Among Fed speakers overnight, Governor Christopher Waller signalled that rates won't rise until policymakers either see inflation above target for a long time or excessively high inflation. He also said he would only get worried if inflation rose above 4%, defining the Fed's first real "red-line."

Some notable pre-market moves:

  • FAAMG mega-caps led gains in early trading rising about 1% each
  • Tesla rebounded from yesterday's rout which saw its stock drop below the 200DMA briefly, adding about 3%.
  • Disappointing Walt Disney subscriber additions overshadowed better-than-expected overall profits, driving down shares of the entertainment company by 3.8%.

Repeating what everyone knows by now, Louise Dudley, global equities portfolio manager at the international business of Federated Hermes said that “stocks with more attractive valuations and slower growth will do well in a higher-interest rate environment” Expensive growth stocks, by contrast, “are sensitive to higher interest rates,” she wrote in a note to clients. In signs that life was returning to normal, revised guidance from the CDC said fully vaccinated people do not need to wear masks outdoors and can avoid wearing them indoors in most places.

Gains in European stocks were led by banks, while miners fell amid a retreat in some raw-material prices. Eurostoxx 600 rose 0.6% bolstered by banks, tech and retail sectors with basic resources the sole sector in the red. Here are some of the biggest European movers today:

  • Sanne shares rise as much as 28%, the most on record, to 770p after the private equity firm Cinven made a proposal to the asset management services provider regarding a possible cash offer of 830p a share, which was rejected earlier this week.
  • Datalogic shares jump as much as 12% after the bar code reader maker reported 1Q results late yesterday, which Equita says are better than expected.
  • Man Group shares jump as much as 4.6% as Credit Suisse raises its 2021 EPS estimate by 30% on higher revenue estimate.
  • Banco BPM shares gain as much as 3.7% after Deutsche Bank upgraded their rating to buy from hold on expectations that its “speculative appeal” will significantly increase as merger talks among Italian lenders should intensify in the 2H following benign earnings.
  • ERG shares fall as much as 9.1% in Milan trading, the steepest intraday decline since March 2020, and is the day’s worst-performer on the FTSE Italia All- Share Index; Banca Akros notes the 2025 Ebitda target is lower than its estimates and consensus.
  • Geox shares drop as much as 6.9% in biggest intraday decline since October after the Italian shoe manufacturer said its 1Q sales were heavily affected by lockdowns.
  • SICIT shares fall as much as 4.7% after Syngenta and Valagro decided against pursuing their interest in the Italian agriculture biostimulants maker.

Earlier in the session, Asian stocks also stormed higher, with the regional benchmark snapping a three-day slump that plunged it into a technical correction. The MSCI Asia Pacific Index rose 1.2%, with equities in China and Japan leading the region. Technology stocks, which have been at the forefront of the recent rout, were the biggest boost to the gauge’s advance. The rebound comes after the Asian index lost 4.9% in a three-day slide that was its worst since June last year, owing to rising investor concern over inflation and a resurgence in virus infections in many countries. Sentiment worsened further after data showed U.S. consumer prices climbed in April by the most since 2009, with the Asian equities gauge extending its losses from a mid-February peak to more than 10% as of Thursday. "The U.S. CPI was higher than expected, but with that, the rise in inflation has been priced it for the time being and the market didn’t respond that much to the U.S. PPI data," said Nobuhiko Kuramochi, a market strategist at Mizuho Securities Co. “With the latest data, people were able to grasp how high U.S. inflation could get and, while the numbers may remain high for the next few months, the extent of the surprise will likely be limited,” Kuramochi said. Chinese shares also rallied after the MSCI China Index tumbled into a bear market on Thursday as losses from its mid-February high extended to more than 20%.

Equities in Hong Kong and on the mainland have suffered as Beijing cracks down on heavyweight tech firms over monopolistic practices, adding to concerns of liquidity tightening in China. Chip-making giants Taiwan Semiconductor Manufacturing and Samsung Electronics were among the biggest contributors to the Asian benchmark’s gain Friday. Financials and industrials were other top-performing sectors. Yet even with Friday’s advance, the MSCI Asia Pacific Index dropped more than 3% this week, putting it on course for its worst weekly loss since February. Mark Matthews, head of Asia research at Bank Julius Baer & Co., expects “choppy” trading ahead for the region’s equities in the near term, as slow progress in vaccinations could lead to a divergence in economic fundamentals with places like the U.S. “You have to have a strong vaccination program in order to open up and rejoin the rest of the world and keep the virus at bay,” Matthews said, noting how some Asian countries are resorting to lockdowns again. “The longer that this persists I think it’s bad for Asia.”

Japanese shares led the rebound in Asian markets on Friday, building on the lead from investors on Wall Street snapping up stocks that would benefit most from an economic recovery. Japan's Nikkei jumped 1.3%. The rally interrupted a three-day rout for stocks globally, as market jitters over accelerating U.S. inflation were calmed by Federal Reserve officials reiterating that price pressures from the reopening of the economy would prove transitory.

"U.S. equities were up, so there is a bit of relief in Asia," said Frank Benzimra, head of Asia equity strategy at Societe Generale in Hong Kong. However, "we certainly are going to have some volatility near-term," as markets react to CPI and other economic indicators for clues on the path for U.S. monetary policy. The Fed may open the discussion on tapering its asset purchases as soon as the policy meeting next month, he said.

In rates, the 10-year Treasury yield fell to 1.63% and Treasuries recovered from the prior session’s weakness, and outperformed Bunds. Treasuries rose with stock futures after regional bond buyers returned during Asia session. Treasury 10-year yields around 1.634% are ~2bp richer on the day; long-end-led gains flatten 5s30s and 2s10s by more than 1bp. Gains were sustained during European morning led by gilts with bunds lagging, as S&P 500 futures exceeded Thursday’s highs. A busy U.S. economic data slate includes retail sales and industrial production. U.S. swap spreads widen by up to 2bp across long-end following Thursday’s sharp tightening move.

In FX, the U.S. currency was steady against a basket of its major peers, with the dollar index consolidating around the 90.70 level for a second day on Friday, following Wednesday's 0.6% jump. The Bloomberg Dollar Spot Index extended losses in the European session as the greenback fell versus all of its Group-of-10 peers and the euro climbed back above $1.21. Norway’s krone led G-10 gains, paring some of this week’s losses, after nearing the 55-DMA yesterday; the pound was the weakest G-10 performer on the day, but still headed for a second week of gains against a bruised dollar. The Aussie steadied but still headed for its biggest weekly decline in seven weeks, with losses driven by faster-than-expected U.S. inflation data and a slide in iron ore. Australia’s government said it’s ready to resume dialog with China. Japan’s bonds rose as the central bank’s purchases encouraged investors to take advantage of the recent increase in yields; the yen headed for a weekly loss. The yuan gained while most other emerging Asian currencies stayed in narrow ranges as investors assessed the impact of rising global inflation and coronavirus cases on the economic growth.

The market may still be finding its equilibrium after the post-CPI USD spike,” says Terence Wu, FX strategist at foreign- exchange strategist at Oversea-Chinese Banking Corp. “Expect major USD-Asia pairs to be implicitly heavy for now, save for the USD-SGD, which is higher on idiosyncratic COVID-19 developments”; he also said that the market is not yet in an outright risk-on mode, and sentiment could turn south again.

Some wondered if the bubble in commodities had popped as iron ore continued its fall from a record amid efforts by China to clamp down on surging prices, with the metal set for the biggest two-day plunge since 2019. Copper prices were on course for their first weekly decline since the start of April on Friday as rising inflation fears and a dip in demand from China dragged prices down. Oil prices remained subdued following a drop on Thursday as a recent rally paused as investors turned their attention to the coronavirus crisis in India, and as the top U.S. fuel pipeline network resumed operations. Brent crude was little changed at $67.02 a barrel, while U.S. West Texas Intermediate crude edged up 0.1% to $63.85 a barrel. Gold traded at around $1,824 an ounce at the end of the week, largely unchanged from the previous day, when it recovered some of Wednesday's losses.

In cryptocurrencies, bitcoin recovered back over $50,000 on Friday, after plunging to a 2-1/2-month low of $45,700 in the previous session, while Ethereum was back over $4000, when a media report of a regulatory probe into crypto exchange Binance added to pressure from Tesla chief Elon Musk’s reversing his stance on accepting the digital currency.  Much smaller rival dogecoin jumped as much as 20% to $0.52 after Musk said on Twitter that he was involved in work to improve the token’s transaction efficiency.

To the day ahead now, and the data highlights from the US include April’s retail sales, industrial production and capacity utilisation, along with the University of Michigan’s preliminary consumer sentiment index for May. From central banks, the ECB will be publishing the account of its April meeting, and Dallas Fed President Kaplan will be speaking.

Market Snapshot

  • S&P 500 futures up 0.6% to 4,130.25
  • STOXX Europe 600 up 0.3% to 438.83
  • MXAP up 1.3% to 200.43
  • MXAPJ up 0.8% to 670.04
  • Nikkei up 2.3% to 28,084.47
  • Topix up 1.9% to 1,883.42
  • Hang Seng Index up 1.1% to 28,027.57
  • Shanghai Composite up 1.8% to 3,490.38
  • Sensex down 0.1% to 48,620.49
  • Australia S&P/ASX 200 up 0.5% to 7,014.24
  • Kospi up 1.0% to 3,153.32
  • Brent Futures up 0.4% to $67.29/bbl
  • Gold spot up 0.5% to $1,834.96
  • U.S. Dollar Index down 0.32% to 90.46
  • German 10Y yield down -0.9 bps at -0.130%
  • Euro up 0.4% to $1.2124

Top Overnight News from Bloomberg

  • U.K. ministers may bring forward second vaccine doses for millions of people and local restrictions could be imposed to curb the spread of a Covid-19 variant from India
  • Bitcoin was on course for a weekly slump of more than 10% after Tesla Inc.’s Chief Executive Officer Elon Musk doubled down on his attack on the token’s energy demands
  • Iron ore’s slump from a record accelerated as China ramps up efforts to control a dizzying surge in prices. Tangshan city banned steelmakers from fabricating or spreading price-hike information, the latest in a list of measures targeting the hub, after Premier Li Keqiang earlier this week urged China to deal with surging prices
  • The U.K. Debt Management Office (DMO) announces the appointment of a syndicate to sell by subscription the forthcoming launch of the new 0 1/8% Index-linked Treasury Gilt 22-March-2039. The transaction is planned to take place in the week commencing 24 May 2021, subject to demand and market conditions
  • Israel’s ground forces fired artillery into the Hamas-run Gaza Strip early Friday after a blistering four-day air assault failed to quell militant rocket attacks, sweeping aside international appeals for de-escalation and possibly preparing for an assault by troops

Asia-Pac stocks were higher as the region took impetus from the firm performance in the US where the major indices recovered from the recent inflation-triggered sell-off and snapped a 3-day losing streak, with sentiment helped by data releases including pandemic-low jobless claimant numbers and although PPI printed firmer than expected, it remained within the range of analysts’ estimates unlike the recent blow out CPI. ASX 200 (+0.5%) was led higher by commodity-related stocks and with the energy sector atoning for the underperformance in US counterparts despite the continued retreat of oil prices from cyclical highs, while Treasury Wine Estates was among the biggest gainers as it plans to pivot to the US market and focus on its profitable Penfolds brand in an effort to spur profit growth amid the impact from Chinese tariffs. Nikkei 225 (+2.3%) benefitted from recent favourable currency moves and the global stock rebound, which has helped participants look past the ongoing COVID concerns and looming inclusion of 3 additional prefectures to the state of emergency list. Hang Seng (+1.1%) and Shanghai Comp. (+1.8%) were also firmer but with gains initially moderated as US-China tensions lingered following comments from US Secretary of State Blinken who reiterated support for Australia against economic coercion from China and USTR Tai suggested new trade laws are required to address the anti-competitive threats from China against key high-tech US industries. Earnings releases also provided a catalyst for price moves with Alibaba shares the biggest laggard in the Hang Seng. Finally, 10yr JGBs were positive as they tracked the rebound in T-notes and with the BoJ also present in the market for nearly JPY 1.4tln of JGBs with 1yr-10yr maturities, although gains in the 10yr benchmark were capped amid the outperformance in Japanese stocks.

Top Asian News

  • JD Logistics $3.5 Billion IPO Said to Draw SoftBank, Temasek
  • IPhone Maker Hon Hai Again Warns Components Crunch Worsening
  • Japan Post Insurer Will Buy Back $3.3 Billion of Its Shares
  • China Orders Didi, Meituan to Rectify Ride-Hailing Abuses

Bourses in Europe trade with broad-based gains across the board (Euro Stoxx 50 +0.6%) following the recovery seen on Wall Street yesterday which resulted in a positive vibe reverberating across APAC after a tumultuous week. US equity futures also see modest gains with participants awaiting fresh fundamental catalysts and further US data releases in what has, thus far, been a quiet morning. Sectors in Europe are mostly in the green except for Basic Resources amid a pullback in base metal prices (see commodities section), but it is difficult to discern a particular risk profile. Banks, Insurance, Retail, Household Goods, Oil & Gas, and Tech reside as the top performers while Healthcare and Travel & Leisure dwell among the laggards. Travel & Leisure has been underwhelmed by reports of uncertainty regarding UK tourism in Portugal after the Portuguese “state of calamity” was extended. In terms of individual movers, Adidas (+1.2%) are firmer amid source reports that Authentic Brands Group has teamed up with Wolverine World Wide to offer around USD 1bln for Reebok, albeit sources valued the unit at around EUR 1.2bln back in February. Meanwhile, French heavyweight Danone (-1.7%) is pressured after being downgraded at Goldman Sachs.

Top European News

  • U.K. Fraud Prosecutor Opens Investigation Into GFG
  • German Curbs Set to Ease as Covid Cases Drop Below Key Level
  • Londoners Eye a Return to City Center as Rental Viewings Soar
  • Sanne Rises 28% After Rejecting Proposal at 830p/Share

In FX, the Dollar continues to cool off after its midweek melt-up in response to significantly stronger than forecast US CPI data, awaiting the remaining releases of the week that comprise retail sales, ip and preliminary Michigan sentiment with updates to year ahead and 5 year inflation expectations, all before another speech from Fed hawk Kaplan. The Buck is also drifting back amidst renewed bull-flattening along the Treasury curve, albeit fairly mild and more in relief that the latest Quarterly Refunding has been completed rather than a positive reaction to the long bond finale that was far from well received. Moreover, broad risk sentiment has recovered somewhat following a positive Wall Street session to ‘end’ a 3-day run of consecutive losses to leave the DXY prone to further retracement from Wednesday’s peaks and a test of support around 90.500 having narrowly failed to scale technical resistance ahead of 91.000 when the headline and core inflation heat was full on.

  • CHF/EUR/NZD - All taking advantage of the Greenback’s loss of impetus, with the Franc now considerably closer to 0.9000 compared to just shy of 0.9100 at the current w-t-d peak and Euro looking appreciably more comfortable on the 1.2100 handle than it has of late, while the Kiwi is probing 0.7200 again irrespective of a marked slowdown in NZ’s manufacturing PMI.
  • AUD/CAD/GBP/JPY - The Aussie has overcome another pretty sharp reversal in copper and iron ore overnight to bounce firmly from the low 0.7700 area vs its US counterpart, but may find the half round number above tough to breach again given 1.3 bn option expiry interest rolling off at the NY cut. Conversely, a recovery in oil has helped the Loonie pare declines and regain 1.2150+ status even though BoC Governor Macklem expressed concerns about further Cad appreciation and the adverse impact this might have on Canadian exports plus policy settings if the Loonie rallies a lot further. On that note, and for reference Usd/Cad hit circa 1.2046 lows only 2 days ago to set yet another multi-year trough and was as high as 1.2654 before the BoC tapered QE and swivelled hawkishly on rates. Elsewhere, the Pound is still pivoting 1.4050, but looks increasingly bearish against the Euro as the cross rebounds a bit further above 0.8600, while the Yen is straddling 109.50 where 1.1 bn option expiries reside and not displaying too much dismay over Japan’s deteriorating COVID-19 situation at this stage against the backdrop of more favourable (softer) UST yields.
  • SCANDI/EM - Some relief for the Nok after Thursday’s slide via the aforementioned revival in risk appetite and crude prices, while the Mxn has reclaimed 20.0000+ status in wake of Banxico maintaining rates as expected, but retaining a commitment to ensure that headline inflation converges to the 3% target within the policy horizon. However, the Czk has not gleaned much upward thrust from CNB minutes largely confirming a hike in June.

In commodities, WTI and Brent front month futures have trimmed overnight losses and some more, with traders citing yesterday's weakness to an unwind in the Colonial pipeline premium alongside the worsening COVID situation in Asia - with India still in a critical condition whilst Taiwan and Singapore see rising cases which prompted the latter to tighten restrictions. Meanwhile, geopolitics remain in vogue as the Israeli/Palestinian conflict remains heated, as headlines also emerged regarding an Azeri/Armenian violation and Russia is reportedly involved as a mediator. Meanwhile, there is little to report on the JCPOA front. WTI Jun has reclaimed a USD 64/bbl handle (vs low 63.33/bbl) whilst Brent Jul extends gains above USD 67/bbl (vs low 66.50/bbl). Elsewhere, precious metals have been moving in tandem with yields and the Buck and thus have been grinding higher, with spot gold just under USD 1,850/oz (vs low 1,826/oz) whilst spot silver inches higher above USD 27/oz. Base metals meanwhile have been seeing losses with LME copper back below USD 10,250/t at the time of writing following the recent run, whilst iron ore and coke futures in Dalian hit limit down overnight as China top steel-making Tangshan said it requires firms to control price surges and will severely punish price manipulation.

US Event Calendar

  • 8:30am: April Import Price Index YoY, est. 10.2%, prior 6.9%; MoM, est. 0.6%, prior 1.2%
  • 8:30am: April Export Price Index YoY, est. 14.0%, prior 9.1%; MoM, est. 0.8%, prior 2.1%
  • 8:30am: April Retail Sales Advance MoM, est. 1.0%, prior 9.8%, revised 9.7%
    • April Retail Sales Ex Auto MoM, est. 0.6%, prior 8.4%
    • April Retail Sales Control Group, est. -0.4%, prior 6.9%;
  • 9:15am: April Industrial Production MoM, est. 0.9%, prior 1.4%; Manufacturing Production, est. 0.3%, prior 2.7%
  • 10am: March Business Inventories, est. 0.3%, prior 0.5%
  • 10am: May U. of Mich. Sentiment, est. 90.0, prior 88.3; Expectations, est. 84.5, prior 82.7;  Current Conditions, est. 99.8, prior 97.2
  • 10am: May U. of Mich. 5-10 Yr Inflation, prior 2.7%; 1 Yr Inflation, est. 3.5%, prior 3.4%

DB's Jim Reid concludes the overnight wrap

Following a torrid start to the week, markets finally showed signs of recovering their footing yesterday, something that’s extending overnight. The S&P 500 (+1.22%) and the MSCI World Index (+0.55%) both advanced after a run of 3 successive declines. The mood got better as the day went on, with Europe’s STOXX 600 pulling back from an intraday low of -1.75% to close just -0.14% lower, while S&P 500 futures were also pointing lower during the morning in Europe (-0.72% at the lows). Markets are hanging on the current dovish words from Fed officials to offset some of the inflation shock but relatively positive data on US jobless claims also helped to support the mood, which saw 444 companies in the S&P 500 move higher on the day, the broadest advance in over a month. Technology stocks continued to underperform, with the NASDAQ up “just” +0.72% and with the NYFANG+ index declining -0.73%, with the latter heavily-concentrated index now down -2.25% YTD.

Indeed yesterday’s Fed speakers helped to reassure investors that the central bank was in no hurry to raise rates, and expectations for future rate hikes moved down marginally from where they were the previous day. Richmond Fed President Barkin said that he didn’t see persistent recurring inflation as likely, while later on Fed Reserve governor Waller joined the chorus saying that the rise in prices is “temporary”. This comes even as he forecasts inflation remaining above the 2% target through 2022, though he acknowledged that persistent 4% monthly increase would be “very concerning”. Waller wants to observe a few months of economic data before calling any point an outlier or adjusting any policy stances. Waller explained that, “despite the unexpectedly high CPI inflation report yesterday, the factors putting upward pressure on inflation are temporary, and an accommodative monetary policy continues to have an important role to play in supporting the recovery.” St. Louis Fed President Bullard, a non-voter this year, thinks that inflation “is likely to be meaningfully above 2% over the forecast horizon,” but that an inflation outcome modestly above the 2% inflation target in the short term “would be a welcome development for the FOMC, as inflation has generally been below target for many years.” So no real concern. Overall the Fed are seemingly doubling down on the transitory inflation message which will help the market in the short-term but creates more asset price risk if they are forced to admit that there is a permanence to some of the inflation further down the road.

Another small respite on the inflationary front yesterday came from declines in a number of key commodities, with Bloomberg’s commodity spot index down -2.31% yesterday in its worst day for nearly two months. Obviously this is just one day lower in what’s generally been a strong march upwards over the last year, but the rise in a number of key inputs has been a contributing factor to the strong price pressures we’ve seen lately. In terms of the specific moves, both WTI (-3.42%) and Brent crude (-3.27%) oil prices lost ground, copper (-0.99%) fell for a 2nd day running, and corn futures were down -5.08% as they remained on track to end a run of 6 successive weekly advances.

Nevertheless, while commodity prices were falling, the latest data on US producer prices added to the theme of building inflationary pressures, with the month-on-month reading coming in at a stronger-than-expected +0.6% in April (vs. +0.3% expected), which in turn sent the year-on-year number up to +6.2%. All eyes will be on today’s retail sales reading to see where that comes out for April, with our economists expecting a +2.0% monthly gain on the headline number. The CoTD yesterday (link here) showed that we’ve already pulled forward around 5yrs of retail sales growth since the pandemic started. Remarkable.

Ahead of this report, we also got some positive signs on recent labour market progress following the disappointing April jobs report, as the initial jobless claims for the week through May 8 fell to 473k (vs. 490k expected), their lowest level since the pandemic began. Interestingly, in yet another sign that firms were struggling to hire in the current labour market, McDonald’s announced that they’d be raising hourly wages in company-owned restaurants by 10% on average. Amazon joined in yesterday announcing that its hiring 75k employees across the US and Canada with a focus on positions in its warehouses. In order to entice potential employees, the retailer is offering a $100 bonus if workers are already vaccinated and signing on bonuses of as much as $1000 in some locations. Wages also reportedly have increased to $17/hr, a marked increase from the $15/hr starting wage typically offered by the firm. Is the “Amazonification” impact becoming more balanced rather than just disinflationary?

Back to markets and Sovereign bond yields hit fresh highs in Europe yesterday, although they came off these heady heights towards the close. Yields on 10yr bunds were up a further +0.5bps to their highest level in nearly 2 years, as were 10yr gilts with their own +1.2bps increase. Treasuries had a much stronger performance however, with 10yr yields coming down -3.4bps to 1.657%, which included a decline in inflation breakevens (-2.6bps) to 2.54%, coming off their 8-year high the previous day.

Overnight in Asia, markets have taken Wall Street’s lead with the Nikkei (+2.27%), Hang Seng (+0.95%), Shanghai Comp (+1.21%) and Kospi (+0.81%) all up. Futures on the S&P 500 are also up +0.47%. Elsewhere, in a further sign of easing commodity prices, iron ore prices are down -8.87% this morning while SHF steel rebar prices are also down -6%. In other news, the Federal Reserve in its new schedule, which runs from May 14 to June 11, has tweaked the US treasury purchases to buy more securities maturing in seven years or longer while keeping the monthly pace at about $80bn. The Fed will now buy $20.25bn in those longer terms tenors (vs. $17.75bn previously).

Elsewhere, bitcoin (-9.5%) saw a significant slump yesterday as the cryptocurrency fell back beneath the $50,000 mark again, closing beneath that level for the first time since April 25. It’s fairly flat overnight. As we touched on in yesterday’s edition, this followed Elon Musk tweeting that Tesla was suspending vehicle purchases using bitcoin, saying that they were concerned about its use of fossil fuels. Later in the day, he went on to put out another tweet highlighting its electricity consumption, which is something that we previously highlighted in a CoTD back in February (link here). Nevertheless, even before Musk’s tweets there were already signs that the astonishing rally we saw in bitcoin around the turn of the year has begun to peter out, with April seeing its first monthly decline since September, and its performance so far in May leaving it on track for a second one.

On the pandemic, the news continued to brighten somewhat at the global level, with the rate of new cases continuing to decline since their peak 2 weeks ago. However, a number of countries in Asia are continuing to impose fresh restrictions to deal with the pandemic. Overnight, the Japanese government has said that it will be expanding the state of emergency to three more prefectures to include the northern island of Hokkaido as well as the Hiroshima and Okayama prefectures, effective from May 16 through to the end of the month. Japan’s current emergency measures covers Tokyo, Osaka, Hyogo, Kyoto, Aichi and Fukuoka prefectures, which make up about 40% of the country’s economy and the imposition of emergency rules in the additional prefectures increases the risk that the economy might slip back into recession. Singapore’s local cases have now also risen to the highest since July and this is leading to concerns that a travel bubble with Hong Kong may get delayed again.

Meanwhile, here in the UK, the government might bring forward second vaccine doses for millions of people, according to a Bloomberg report. This comes as the spread of a Covid-19 variant from India has risen to 1,313 new cases from 520 over the past week and Public Health England has assessed the strain to be “at least as transmissible” as the so-called Kent variant that took hold in December. Elsewhere the US announced passing another marker on the path-to-normal, as the CDC said fully vaccinated Americans no longer need to physically distance or wear masks indoors or outside. However the mask guidance remains in place for airports, trains and other forms of public transportation. 59% of American adults have now received at least one shot, though vaccination raters have slowed somewhat over the last few weeks. In a move that could have follow-through to employment numbers, the president of the largest teacher union in the US (American Federation of Teachers) called on a full reopening of schools in the Fall, a critical shift from an important voice in the effort.

To the day ahead now, and the data highlights from the US include April’s retail sales, industrial production and capacity utilisation, along with the University of Michigan’s preliminary consumer sentiment index for May. From central banks, the ECB will be publishing the account of its April meeting, and Dallas Fed President Kaplan will be speaking.

Tyler Durden Fri, 05/14/2021 - 08:01
Published:5/14/2021 7:21:59 AM
[Markets] Dow finishes up over 400 points as stocks snap 3-day skid Dow finishes up over 400 points as stocks snap 3-day skid Published:5/13/2021 3:25:32 PM
[Markets] Dow Jones Spikes As Bitcoin Dives On Elon Musk Tweet; Tesla Loses Key Level; Apple Bites Back The Dow Jones rallied and the Nasdaq erased losses as the stock market powered higher. Bitcoin crashed on a tweet from Tesla CEO Elon Musk. Apple stock rose. Published:5/13/2021 2:49:52 PM
[Markets] GLOBAL MARKETS-U.S. stocks rebound following rout, bond yields edge down U.S. shares rebounded on Thursday after falling for three consecutive days and benchmark Treasury yields edged lower as investors snapped up technology stocks and shrugged off worries over rising prices, for now. By early morning, the Dow Jones Industrial Average rose 1.5%, the S&P 500 was up 1.4%, and the Nasdaq Composite jumped 1.3%. "We’re certainly oversold here, so remember our 5-percent maxim: buy every S&P 500 down 5 percent close after the first one," said Nicholas Colas, co-founder of DataTrek Research. Published:5/13/2021 10:16:05 AM
[Markets] Dow Jones Surges 500 Points As Bitcoin Plunges On Elon Musk Tweet; Apple Rebounds, Tesla Reverses Lower The Dow Jones Industrial Average rallied 300 points Thursday, as Bitcoin plunged on Tesla CEO Elon Musk's tweet. Tesla stock rebounded. Published:5/13/2021 9:46:09 AM
[Markets] Market Snapshot: U.S. stock futures mostly lower after rout triggered by inflation fears U.S. stock-index futures point to a mixed start for U.S. equities Thursday, a day after hot inflation data sent the Dow Jones Industrial Average to its biggest one-day loss since January.
Published:5/13/2021 6:47:06 AM
[Markets] Dow ends down 680 points, Nasdaq falls 2.7% as rising inflation spooks investors Dow ends down 680 points, Nasdaq falls 2.7% as rising inflation spooks investors Published:5/12/2021 3:08:54 PM
[Markets] Stagflation Scare Sparks Carnage In Crypto, Stocks, & Bonds Stagflation Scare Sparks Carnage In Crypto, Stocks, & Bonds

Taken together a much weaker-than-expected payroll and much higher-than-expected CPI report suggests more than a whiff of stagflation...

Source: Bloomberg

Stagflation? Inconceivable?

Stocks are down for a third straight session, which hasn’t happened since March. Small Caps were the biggest loser on the day followed by Nasdaq after the plunge oin CPI and immediate bounceback failed (with stocks ending at the lows of the day)...

Today was the biggest loss for S&P since Feb and Dow's worst day (-700) since January.

Small Caps are down 6% since Friday's close but the rest of the market is a shitshow too...

Heading into the 1430ET 'margin call' time, a major sell-program hit markets (and another around 1525ET). Note that there was barely any aggressive BTFD programs...

Source: Bloomberg

And today's Nasdaq-led plunge leaves the tech-heavy index up less than 1% YTD...

Source: Bloomberg

Small Caps and Nasdaq closed below their 100DMAs...

Tech and Consumer Discretionary are the big laggards this week with Staples and Healthcare down least...

Source: Bloomberg

FANG Stocks erased all of yesterday's bounce (-8% from highs), falling back to their lowest close since March

Source: Bloomberg

AAPL and AMZN closed below their 200DMA...

Cathie Wood was clubbed like a baby seal again today...

Source: Bloomberg

Unprofitable Tech stocks tumbled to their lowest in 6 months (down 37% from highs)

Source: Bloomberg

"Most Shorted" Stocks tumbled to their lowest

Source: Bloomberg

Recent IPOs extended their losses today, now down over 28% from highs...

Source: Bloomberg

Growth/Value is at a critical level...

Source: Bloomberg

VIX surged above 27 today - its highest since early March...

And as Larry McDonald's Bear Traps Report notes, our 21 Lehman Risk Indicators are flashing. The spread between the 2nd and 8th month volatility futures contracts is the highest since March.

Source: Bloomberg

As this spread rises (money managers paying-up for near-term volatility), it is a major warning sign for the market. Once it blows positive, it speaks to a capitulation buying opportunity (with the exception of March 2020).

Treasuries were dumped along with stocks today...

Source: Bloomberg

10Y Yields topped at last week's spike highs before rotating modestly lower

Source: Bloomberg

The odds of a rate hike before Dec 2022 are rising...

Source: Bloomberg

The combined drop in bonds and stocks was the biggest daily loss since February...

Source: Bloomberg

Real yields and gold remain tightly coupled...

Source: Bloomberg

Gold was hit too, back to pre-payrolls levels....

Oil ended higher, but well off its highs with WTI back below $66...

The dollar spiked today - amid the smell of widespread liquidation in everything - erasing the payrolls plunge losses...

Source: Bloomberg

Bitcoin rallied overnight but was dumped along with everything else today after CPI...

Source: Bloomberg

Ether ended back below $4000 after surging to a new record high just shy of $4400...

Source: Bloomberg

Finally, there's no inflation if we just ignore the things we need to live (food) and work (gas - which just topped $3 for the first time since 2014)...

Source: Bloomberg

Tyler Durden Wed, 05/12/2021 - 16:00
Published:5/12/2021 3:08:54 PM
[Markets] Dow's down over 650 points in final half-hour as stock selloff intensifies Dow's down over 650 points in final half-hour as stock selloff intensifies Published:5/12/2021 2:40:29 PM
[Markets] Dow Jones Sells Off 460 Points As Inflation Fears Boost Bond Yields, Maul Stocks Key market indexes extended already sharp losses midday Wednesday as the Dow Jones industrials lost over 400 points as big techs weighed. Published:5/12/2021 11:38:21 AM
[Markets] Dow sinks over 450 points Wednesday midday as inflation-fueled slump deepens A slide in U.S. stock indexes accelertaed Wednesday midday, after a reading on inflation for the year to April climbed 4.2%, marking the highest rate in about 13 years, reigniting fears that the Federal Reserve may need to dial back its easy money policies earlier than expected. The Dow Jones Industrial Average was trading 450 points, or 1.3%, lower at 33,838, trying to defend its 50-day moving average at 33,328. The S&P 500 index was trading 1.5% at 4,089, while the Nasdaq Composite Index off 2.3% to around 13,087. Published:5/12/2021 11:10:17 AM
[Markets] Dow Jones Slides, Tech Stocks Tumble As Yields Jump On Accelerating Inflation; Apple, Tesla Sell Off The Dow Jones Industrial Average dropped by more than 200 points Wednesday, as Treasury yields jumped on key inflation data. Apple and Tesla stock sold off. Published:5/12/2021 9:37:19 AM
[Markets] Stock market news live updates: Stocks pinned in red after selloff, investors spooked by inflation Stock futures dipped Tuesday evening after posting back-to-back sessions of losses at the close of the regular trading day, with the Dow swinging to its worst one-day decline since February. Published:5/12/2021 7:36:29 AM
[Markets] Futures Slide With All Eyes On "Big Jump" In CPI Futures Slide With All Eyes On "Big Jump" In CPI

US equity futures continued their slide, and a sell-off in global shares extended to its longest losing streak in two months on Wednesday as investors awaited the latest inflation figures to assess the risk that soaring prices will snuff a recovery in the world’s biggest economy, prompting bets on earlier interest rate hikes and higher bond yields.

At 7:15am Dow e-minis were down 136 points, or 0.4%, S&P 500 e-minis were down 17 points, or 0.42%, Nasdaq 100 e-minis were down 84 points, or 0.62% while futures tracking the small-cap Russell 2000 index dropped 1%. The dollar advanced with Treasuries.

Notable pre-market movers included:

  • FAAMG mega-caps - Facebook,, Apple, Google and Microsoft - which all fell between 0.4% and 0.9%.
  • Streaming platform FuboTV surged 20% after it raised its full-year revenue and subscription forecasts.
  • Electronic Arts Inc inched up 1.2% as it forecast annual adjusted revenue above analysts’ estimates, betting that demand for its titles like “FIFA 21” and “Apex Legends” would stay strong.
  • Upstart Holdings jumped 23% in premarket trading after the online lending platform published an earnings outlook that exceeded analyst expectations

The tech-heavy Nasdaq 100 underperformed after hedge funds emerged on Tuesday to cover their shorts, although reflation fears returned with a vengeance overnight. Investor focus is locked on the U.S. CPI report to be released at 830am with analysts expecting a 3.6% lift in year-on-year prices, boosted by last April’s low base. More notable is the sequential jump in core CPI which at 0.3% avoids volatile food and energy prices as well as the 2020 base effect, and will be the biggest monthly increase this century.

Looking at the CPI print, consensus expects a rise in the year-on-year reading to +3.6%. That would be the highest annual CPI number since September 2011 if realised, and up from 2.6% in March. Since the underwhelming payrolls release on Friday, the market narrative has turned to the question of whether labor supply constraints are the issue, which could prove inflationary moving forward.

The expected “big jump” in the April consumer price growth will be largely driven by volatile food and energy prices, as well as base effects, according to Michael Hewson, chief market analyst at CMC Markets in London, who probably did not see the chart above. “The Federal Reserve would have us believe that today’s move higher is likely to be transitory,” he said. “Unfortunately, we won’t know if they are right for another 2-3 months, which means we can probably expect to see further gyrations in global equity markets until the picture becomes clearer.”

Soaring commodity prices and signs of a labor shortage have fueled worries over rising prices this week, triggering a broad selloff that sent the S&P 500 2% below its record closing high on Friday, even as the Fed has reassured that any inflationary pressures would be transient.

Analysts said a combination of inflation fears and some investors cutting their exposure to overstretched stocks or sectors was behind the recent downturn.

“It’s a battle of two narratives: one of reflation and roaring 20s, with fiscal stimulus creating higher levels of growth; and the other is the lower-for-longer idea where ultimately inflation proves hard to generate and interest rates stay at low levels,” Kiran Ganesh, head of multi asset at UBS Global Wealth Management in London. “These two narratives are conflicting and are in investors’ minds at the same time.”

The said, other analysts doubted the broader equities sell-off would extend much further in a world of easy accommodative policy and fiscal largesse: "Despite the severity of the moves, we sensed limited panic in our client conversations with many using (the) weakness as an opportunity to buy the dip, particularly in the value orientated areas e.g. banks, energy and insurance,” JPMorgan analysts wrote.

European stocks rose, lifted by gains in miners and optimism about economic re-openings. The Stoxx Europe 600 Index gained 0.3% led by London’s FTSE 100 which was buoyed by data showing Britain’s pandemic-battered economy grew more strongly than expected in March. Basic-resources companies led gains while the tech industry underperformed. Diageo jumped 3.5%, the most in more than a month after the world’s biggest distiller and producer of Johnnie Walker said it would restart a share buyback. Bayer advanced the most in two months after better-than-expected earnings.  European tech stocks trade little changed ahead of a key U.S. inflation data release, following declines of at least 2% on Monday and Tuesday. Prosus gets a boost from Naspers’s share swap plans and pandemic winners recover, while Jst Eat Takeaway falls after rival Delivery Hero plans to re-enter German market.

Here are some of the biggest European movers today:

  • Diageo shares rise as much as 3.6%, the most since Feb. 2. The distiller’s trading update is upbeat, with a good performance across the board, RBC (sector perform) writes in a note.
  • Commerzbank shares rise as much as 9%, hitting the highest since February 2020. The lender’s strong fee momentum, focus on costs and better capital ratio should be taken positively, RBC (sector perform) writes in a note.
  • Evolution shares gain as much as 5.9% and founder and chairman Jens von Bahr says he thought the timing of the Osterbahr Ventures stake sale was “fairly good” after several banks and brokers had testified to strong international demand in past weeks, newspaper Dagens Industri reports, citing an interview.
  • Prosus shares advance as much as 3.6% and global tech investor Naspers climbs 5.5% after the companies announced a share-swap plan for Naspers investors.
  • Ubisoft shares slump as much as 9.2% after results, with Jefferies (buy) saying that the video game maker’s growth and margin guidance may disappoint investors even against low expectations.

Earlier in the session, Asian stocks tumbled for a second day, hit by declines in chipmakers rattled by signs of a resurgence in global inflation as well as a massive slump in Taiwan stocks. The MSCI Asia Pacific Index extended its two-day drop to almost 3%, heading for its biggest such decline since Jan. 29, while MSCI’s broadest index of Asia-Pacific shares outside Japan slumped 0.9%, having earlier touched its lowest since March 26.A subgauge of information-technology firms including Taiwan Semiconductor Manufacturing and Samsung Electronics contributed most to the day’s share price losses. Japan’s Nikkei reversed early gains to shed 1.9%, a day after the Topix tumbled more than 2% without the BOJ stepping in to buy ETFs.

The highlight of the Asian session however were Taiwan stocks which plunged as much as 8%, the most in 14 months to levels seen in February on fears it may raise its COVID-19 alert level in coming days, which would lead to closure of shops dealing in non-essential items as infections rise. Fears of a further tightening of coronavirus-linked restrictions added to pressure from the global tech sell-off in dragging shares like TSMC down. The Taiwan Stock Exchange Weighted Index lost as much as 8.6% in morning trading, in its worst intraday loss since 1969.

“Investor anxiety continues to hang over markets,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. “People appear conscious of the U.S. inflation trends.” Investors are worried that price rises will endure and force the Federal Reserve into tightening policy sooner than current guidance suggest. The yield on 10-year Treasuries advanced two basis points, climbing for its fourth straight day, the longest winning streak since March 19, ahead of U.S. CPI data.

“One may place caution on the 1.75% level for 10-year yields, which constitutes its one-year high,” Yeap Jun Rong, a market strategist at IG Asia Pte. wrote in note. “A break above that level may potentially trigger further market volatility on inflation concerns. The inflation narrative may continue to linger in the markets for the months ahead.”

China stocks bucked a broad loss in Asian shares to end higher on Wednesday, after the central bank downplayed inflation concerns and promised to maintain sufficient liquidity in a report. The benchmark CSI 300 Index climbed 0.4% at the close, driven by the strength in the health care and energy sectors. Walvax Biotechnology and PetroChina were among the biggest contributors to the gauge’s gain. Morgan Stanley has upgraded the Hong Kong-listed shares of China Petroleum & Chemical Corp to overweight and lifted targets on the stock and PetroChina on higher earnings estimates, after the firms’ “stronger-than-expected” first-quarter results. The rise in Chinese shares contrasted with losses in other major stock markets in Asia on concern about growing signs of global inflation. The People’s Bank of China in its first-quarter monetary policy implementation report published late Tuesday said that higher global commodity prices have little impact on domestic consumer inflation. It also promised to keep liquidity reasonably ample

Hong Kong-listed technology stocks also provided another silver lining to the otherwise gloomy markets. The Hang Seng TECH Index rose 2.8%, marking its biggest gain in more than a month, with Tencent Holdings, and Meituan providing it with its biggest boosts.

In rates, US Treasury yields remained stuck in a tight range with the yield on benchmark 10-year Treasuries drifting lower to 1.6130%, below the recent peaks of late March levels and far from the 1.9% level at the start of 2020 before the coronavirus pandemic. Yields were lower by ~1bp across long-end of the curve, flattening 5s30s by 0.6bp; 10-year yields around 1.61% lag gilts by ~1.5bps. Treasury gains were led by long-end, flattening the curve ahead of April CPI data and auction of a new 10-year note.Today, the Treasury auction cycle continues with the sale of $41BN in 10-Year notes at 1pm ET ahead of a sale of $27BN in 30-years on Thursday.

Euro zone bond yields held below recent highs touched on Tuesday. Germany’s 10-year yield was down 1 basis point to -0.17%, after rising to the highest since March 2020 at -0.152% on Tuesday. Italy’s 10-year bond yields climbed above 1% for the first time in eight months, reigniting concern over the nation’s debt burden amid prospects for less ECB support later this year

In FX, the Bloomberg Dollar Spot Index inched higher as the greenback advanced against most of its Group-of-10 peers. Curiously, the equity rout barely helped drive any safe haven flows into the greenback even as futures pointed to another negative open for Wall Street.  “What is unusual about the last two days is that the equity-market angst did not provide the U.S. dollar with a notable lift,” said Alvin T. Tan, head of Asia FX strategy at RBC Capital Markets.

The euro touched its weakest level this week against the dollar; 10-year Treasury yields inched lower after rising for four consecutive days. The pound pared small losses after U.K. GDP data rose 2.1% following a revised 0.7% increase in February, versus a median estimate for a 1.5% increase; it was later weighed down by a Bloomberg News report saying France aims to delay U.K. financial firms’ access to the European single market. The currencies of major natural resource suppliers such as Canada have been buoyant amid rising commodity prices. The loonie was not far from a 3-1/2-year high of C$1.2078. The Australian and New Zealand dollars decline; Aussie 10-year yields jumped after the government announced a higher-than-expected budget deficit, while N.Z. yields climbed after low prices were offered into the QE buying operation.

In commodities, oil prices were higher, with U.S. crude adding 1% to $65.94 a barrel. Brent crude added 0.9% to $69.20 per barrel. Copper prices rose and were not far from a record high hit earlier this week, with three-month copper on the London Metal Exchange adding 1.1% to $10,579 a tonne. Spot gold was 0.2% lower at $1,832 an ounce. In cryptocurrencies, ether hit a fresh record high touched on Monday and was last at $4,315.41. The value of the second-biggest digital token has surged over 5.5 times so far this year.

To the day ahead now, and the highlight will be the aforementioned April CPI reading from the US. Otherwise, data releases include the US monthly budget statement for April. Central bank speakers include BoE Governor Bailey, the Fed’s Clarida, Bostic and Harker, and the ECB’s Centeno. Otherwise, President Biden will be meeting with Congressional leaders from both parties, while the European Commission will be releasing their latest economic forecasts.

Market Snapshot

  • S&P 500 futures down 0.3% to 4,134.50
  • STOXX Europe 600 up 0.29% to 437.87
  • MXAP down 1.0% to 202.43
  • MXAPJ down 0.8% to 679.22
  • Nikkei down 1.6% to 28,147.51
  • Topix down 1.5% to 1,877.95
  • Hang Seng Index up 0.8% to 28,231.04
  • Shanghai Composite up 0.6% to 3,462.75
  • Sensex down 0.7% to 48,837.18
  • Australia S&P/ASX 200 down 0.7% to 7,044.87
  • Kospi down 1.5% to 3,161.66
  • Brent Futures little changed at $68.50/bbl
  • Gold spot down 0.4% to $1,830.44
  • U.S. Dollar Index up 0.14% to 90.27
  • Euro down 0.1% to $1.2134
  • German 10Y yield fell 0.11 bps to -0.172%

Top Overnight News from Bloomberg

  • Trading in the U.S. Treasury bill market has been drying up, as more cash looks for a home and supply dwindles. Six-week average volumes have fallen to just $473 billion, near the lowest since the data series began in March 2020, according to figures from the Financial Industry Regulatory Authority’s Trace system. The slump comes despite volumes in the broader Treasury market remaining robust, comfortably above equivalent average activity levels seen last year
  • Heightened financial stability risks surrounding China Huarong Asset Management Co. could prompt the Chinese central bank to proceed more cautiously in tapering its monetary support this year
  • Israel unleashed a relentless attack on the Hamas-ruled Gaza Strip after a massive rocket barrage over the country’s commercial heartland, as the death toll climbed and the sides edged closer to all-out war
  • The International Energy Agency said the supply glut created by the global pandemic has cleared, even as demand suffers a blow from a resurgence of the virus in India
  • The European Commission upgraded the euro area’s growth for this year to 4.3% from 3.8% after taking account of the 800 billion-euro ($971 billion) joint recovery fund for the first time. Output in the European Union’s 27 member states is now expected to reach its pre- pandemic size by the end of this year, earlier than initially thought

A quick look at global markets courtesy of Newsquawk

Asian equity markets were subdued following the lacklustre performance in the US where the DJIA suffered its worst day in over two months and sentiment remained hampered by ongoing inflationary concerns ahead of the looming US CPI data, although losses in the Nasdaq were only marginal after the tech sector spent most the session nursing its recent underperformance. ASX 200 (-0.7%) traded negative with nearly all sectors on the backfoot aside from tech as it found some solace from the rebound in US counterparts, while a jump in CBA’s March quarter profits and the recent budget announcement including spending of AUD 589.3bln for next fiscal year did little to spur risk appetite. Nikkei 225 (-1.6%) failed to hold on to opening gains as focus centred on a deluge of earnings releases with Nissan among the biggest decliners with double-digit percentage losses after it reported another substantial FY net loss and guided it will remain in the red for its next FY results. Conversely, Sharp and SoftBank Corp were underpinned after posting improved results and Toyota clawed back initial losses and then some, following its earnings and a JPY 250bln share buyback announcement, while focus now turns to SoftBank Group which is reportedly set to post a record JPY 4.9tln fiscal year profit. Hang Seng (+0.7%) and Shanghai Comp. (+0.6) succeeded in shrugging off the losses in their regional peers with both indexes initially kept afloat following the recent PBoC Q1 Monetary Policy Implementation Report which stated the central bank will further guide real lending rates lower, while reports also noted that China’s Sinovac COVID-19 vaccine was found to be highly effective in a real-world study with 100% effectiveness against preventing deaths and the UN also upgraded its Chinese GDP growth forecast for this year to 8.2% from 7.2%. TAIEX (-4.3%) was today's biggest mover with intraday losses of 8% and selling exacerbated by reports that stricter COVID measures could be announced in the coming days and after the index slipped into correction territory. Finally, 10yr JGBs were subdued despite the mostly negative risk tone with prices constrained following the bear steepening stateside and amid the lack of BoJ presence in the market, while Australian government 10yr bond yields were also firmer after the recent budget announcement and with the RBA just purchasing semi-government bonds today.

Top Asian News

  • China Stocks End Higher After PBOC Downplays Inflation Concern
  • U.S. Agrees to Remove Xiaomi From Blacklist After Lawsuit
  • More Than 40% of Hong Kong Expats in AmCham Survey May Leave

Major European bourses trade flat/directionless (Euro Stoxx 50 +0.1%) following a somewhat lukewarm cash open and directionless APAC session as traders bide time heading into US CPI, with the 10yr Note Auction also eyed as an inflation expectation gauge. US equity futures in contrast post modest losses in early European trade with some underperformance portrayed in the RTY (-1.2%) vs NQ (-0.6%) and ES/YM (-0.4%). The tone across markets has been one of caution and positioning rather than risk appetite/aversion as macro newsflow also remains scarce head of the main events. Back to Europe, the UK's FTSE (+0.6%) outpaces peers as its heavyweight mining names lift the index in tandem with gains across base metals, whilst broad-based modest gains are seen across Euro Zone bourses, featuring the SMI faring slightly better amid a firm healthcare sector. Basic resources and Healthcare are the top-performing sectors at the time of writing whilst Tech and Autos reside on the other end of the spectrum, and with no clear overarching theme as a deluge of European earnings cloud that picture. Earning-related movers today include the likes of Commerzbank (+7.9%), Bayer (+4.3%), Allianz (Unch), Merck (-0.3%), RWE (+1.6%), Deutsche Telekom (+2%), EDF (2.2%), Carrefour (-1.4%), and ABN AMRO (8.9%), with the latter also noting that net interest income was impacted by continued pressure on deposit margins and lower corporate loan volumes as the CIB non-core portfolio was wound down further. Elsewhere, Prosus (+2.5%) is firmer as it announced a voluntary offer to acquire 45.4% of Naspers shares. On completion, it is expected to more than double the Prosus free float’s effective economic interest in the group’s underlying assets, improving the stock’s liquidity. Finally, Flutter Entertainment (-3.0%) is lower as the CEO of FanDuels, the unit up for a spinoff, left his position.

Top European News

  • U.K. Goods Trade Crawls Back Amid Brexit Slump, Pandemic Turmoil
  • ECB Compromise on Bond-Buying Might Be Brokered by Summer Lull
  • Top Private Markets Banker Toledano-Koutsouris to Leave UBS
  • Crypto’s Anonymity Has Regulators Circling After Colonial Hack

In FX, it’s becoming a recurring pattern as the Dollar continues to lick wounds in wake of last Friday’s big NFP miss, but encounters heavy offers into upticks within the overall bear trend. Indeed, having survived a more sustained bout of downward pressure yesterday, the Buck has clawed back losses, and particularly vs high beta currencies and the commodity bloc that have outperformed on strength in underlying prices of late. However, the index has faded yet again from a higher recovery peak just shy of 90.500 and is hovering around 90.300 between 90.415-176 parameters vs Tuesday’s 90.359-89.979 range and 90.342-032 intraday band. So, from a technical perspective the latest rebound could be deemed relatively constructive, but US CPI looms and in similar vein to the aforementioned jobs data, market expectations are elevated to leave ample room for disappointment. Also ahead, another slew of Fed officials are scheduled to orate and the second leg of this week’s Quarterly Refunding comprises Usd 41 bn 10 year notes that may have more bearing for Treasuries than the inflation update.

  • NZD/AUD - As noted above, the Aussie and Kiwi are bearing the brunt of the Greenback revival, with Nzd/Usd retreating below 0.7250 and Aud/Usd relinquishing 0.7800+ status following a fairly downbeat assessment of the Australian Budget from S&P and CBA contending that additional spending will culminate in the country losing its AAA rating.
  • CAD - In contrast to its non-US Dollar counterparts and other major peers, the Loonie is on a firmer footing and back over 1.2100 amidst rebounding crude prices and significantly less risk aversion after heavy tech-led global stock market declines. Usd/Cad is currently hovering around 1.2085 and within striking distance of Tuesday’s new multi-year nadir circa 1.2078.
  • GBP/EUR/CHF/JPY - The Pound has managed to retain hold of the 1.4100 handle, and is consolidating near 1.4150 following a deluge of forecast-beating UK data, but more so due to the broad Buck fade, though Sterling has regained momentum against the Euro towards 0.8575 after the Eur/Gbp cross tested support/resistance into the psychological 0.8600 level and Eur/Usd waned around 1.2150. Elsewhere, the Franc is unwinding more of its outperformance and has been under 0.9150 vs the Greenback and sub-1.0980 against the Euro, while the Yen has retreated from 108.50+ highs to meander between 108.56-91 extremes.

In commodities, WTI and Brent front month futures experience another choppy European morning amid a distinct lack of fresh macro catalysts in the run-up to US inflation figures and the DoEs. WTI Jun rose to a peak of USD 65.99/bbl from a base of USD 64.98/bbl before trimming those, whilst its Brent counterpart saw similar action between its 68.18-69.26/bbl current intraday band. Prices remain underpinned to an extent by the situation regarding the Colonial Pipeline - with an end-week timeline touted for a reopening - although the US East Coast is expected to receive cargoes in the interim to ease some of the tightness caused by the outage. Meanwhile, the crude complex could also be pricing in some geopolitical premium amid the intensifying shelling in Israel-Gaza, although the conflict remains contained to the region for now with no major oil infrastructure in the vicinity. Moving on, yesterday saw the release of both the OPEC MOMR and EIA STEO followed today by the IEA OMR. the IEA and EIA both cut their 2021 forecasts whilst OPEC maintained their metric - with the former two citing India's COVID situation as a factor. IEA also maintained their forecast of a strong ramp-up in refining activity in the next four months, with refinery runs expected to peak in August. "While the market looks oversupplied in May, stock draws are set to resume from June, even with global oil supply on the rise...Under the current OPEC+ production scenario, supplies won’t rise fast enough to keep pace with the expected demand recovery.", the agency said. Finally, yesterday saw the release of the weekly Private Inventories with the headline posting a smaller-than-expected draw whilst the internals were mixed. Today's EIA headline crude inventories are forecast to draw 2.8mln bbls. Turning to metals, spot gold and silver are biding time within recent ranges ahead of the US CPI and 10yr Auction. Base metals are back on the grind with LME copper holding its head above USD 10,500/t amid the mounting inflation bets and EV demand prospect and EV demand prospect. Eyes are also on BHP's Chilean copper operations as union leaders are reportedly advising workers against the final offer, which could see strikes. Overnight, Chinese iron ore and steel futures ended the session near record highs, although analysts have been warning about the momentum behind prices, with SinoSteel suggesting the front-month contracts are heavily influenced by the Aussie-Sino spat.

US Event Calendar

  • 8:30am: April CPI YoY, est. 3.6%, prior 2.6%; CPI Ex Food and Energy YoY, est. 2.3%, prior 1.6%
  • 8:30am: April CPI MoM, est. 0.2%, prior 0.6%; CPI Ex Food and Energy MoM, est. 0.3%, prior 0.3%
  • 2pm: April Monthly Budget Statement, est. -$207.8b, prior -$738b

Central Banks:

  • 9am: Fed’s Clarida Discusses U.S. Economic Outlook
  • 9:05am: Fed’s Rosengren Speaks on Crypto Currency
  • 1pm: Fed’s Bostic Speaks to Council on Foreign Relations
  • 1:30pm: Fed’s Harker Discusses Higher Education

DB's Jim Reid concludes the overnight wrap

Inflation fears led to yet another selloff in global markets yesterday and had extended into the Asian session as investors look forward to today’s much-anticipated CPI reading from the US. The jitters took hold across multiple asset classes, and by the close of trade, the S&P 500 had fallen another -0.87%, with the VIX index of volatility up +2.2pts at a 2-month high of 21.8pts. The equity slump was worse early in the US session though with the S&P being down as much as -1.8% in the first couple of hours of trading. However we are testing these lows again as we type in the Asian session. Before this the index had recovered as Fed speakers tried to talk down inflation fears again. It was still an incredibly broad-based decline, with 417 companies in the S&P moving lower on the day, alongside 22 of the 24 level 2 industry groups, including 14 seeing losses over -1.0%. Over in Europe, the catch-up to the US from the previous night meant that the STOXX 600 (-1.97%) had its worst day of the year so far, with a massive 562 of its companies losing ground by the close.

Tech stocks had underperformed dramatically at the start of the session in the US, with the NASDAQ down -2.2% and the FANG+ Index down -2.8% shortly after the open before outperforming by the close with the former closing down ‘only’ -0.09% and the more heavily concentrated FANG+ index gaining +0.45%. Much of the recovery occurred midway through the day as Fed speakers tempered worries by again indicating that they view inflation as “transitory.”

The initial turn higher for tech shares seemed to come as Governor Brainard said policy makers should be patient as the post-pandemic distortions sort themselves out. She added that the economic outlook “is bright, but risks remain, and we are far from our goals.” She also reiterated a point that President Biden made shortly after the jobs report last Friday, saying “with less than one in four individuals ages 18 to 64 fully vaccinated at the end of the survey period for the April jobs report, health and safety concerns remain important for in-person work and for people relying on public transport, and childcare remains a challenge for many parents.” Those numbers have improved markedly since that time and will be something to look at in this month’s report. Fed Governors Bostic and Harker both sung from a similar song sheet later in the New York afternoon, with the hawkish-leaning Governor Harker saying that April is likely an outlier but that it is “premature” to talk about tapering. Fed Governor Bullard later came out saying that the time to look at policy changes would be after the pandemic is over, adding yet another signpost for fed-watchers.

Sovereign bonds shared in the slump yesterday, with European yields reaching fresh highs across the continent. Those on 10yr bunds were up +5.1bps to -0.16%, a level not seen in over a year, whilst German 10yr breakevens rose to 1.44%, their highest since 2014. And in Italy, 10yr BTP yields were up +5.8bps as their own breakevens hit their highest since 2013. For the US however it was a much smaller move, with yields on 10yr Treasuries up just +2.0bps to 1.622%, with breakevens up yet another +0.9bps as real rates rose slightly as well (+1.1bps). It was the fourth straight session of higher yields, which is the longest such stretch since March 19.

Of course, attention today will be on that CPI reading from the US at 13:30, where the current consensus on Bloomberg is pointing to a rise in the year-on-year reading to +3.6%. That would be the highest annual CPI number since September 2011 if realised, and up from 2.6% in March. Since the underwhelming payrolls release on Friday, the market narrative has turned to the question of whether labour supply constraints are the issue, which could prove inflationary moving forward. This was backed up in our flash poll you’d have seen at the top of yesterday’s edition, where 61% of the respondents (700 in total) felt that the number represented labour supply constraints, against just 14% who thought it was due to weak demand for labour and another 18% who put it down to measurement errors that will likely be revised in due course. Further data in the US backed up this theory yesterday, where the number of job openings rose to a record 8.123m in March, while the “jobs hard to fill” index in the latest NFIB small business survey rose to another record once again.

Overnight in Asia, the main news has been Taiwan’s stock market trading down as much as -8.6% (-5.77% as we go to print) at one point due to the tightening of pandemic related restrictions (more below) and the tech rout with semiconductor companies leading the declines. The index seems to be facing the worst drop since stock-price limits were loosened in 2015. Other markets in the region are also trading lower with the Nikkei (-2.03%), Hang Seng (-0.37%), CSI (-0.28%), Shanghai Comp (-0.01%) and Kospi (-2.09%) all down. Meanwhile, Australia’s 10yr yields are up +5.4bps after the government unveiled a big-spending budget to spur the country’s rebounding economy. The Australian debt office said overnight that it now expects Treasury bond issuance to be about AUD 130bn for the fiscal year ending June 2022, defying some expectations that it would decline to as little as AUD 110bn. This is also weighing on the Australian dollar (-0.65%) this morning with the strength of the greenback (+0.28%) also a factor. Outside of Asia, futures on the S&P 500 (-0.83%) are notably lower as mentioned earlier.

On the pandemic, the news at the global level has continued to get marginally better, with the rise in cases continuing to fall from its peak two weeks ago, albeit remaining at very elevated levels still. In Taiwan, which has been very successful at keeping the virus contained, fresh restrictions were imposed as 7 new local cases were reported yesterday. This will see a ban on indoor gatherings of more than 100 people and outdoor gatherings of more than 500, with the restrictions in place until June 8. Overnight, the Liberty Times has reported that Taiwan may elevate its alert level further today with the government likely to ban indoor gatherings of over five people and outdoor gatherings of more than 10 people, and it may request non-essential businesses to close their doors. So a rapid escalation of restrictions potentially.

Meanwhile in the UK, Prime Minister Johnson said that a public inquiry would be set up to look at the pandemic in this session of parliament, and it was confirmed that restrictions in Scotland would be eased further from Monday. There is also going to be an easing of restrictions in the Netherlands with gyms, zoos and parks reopening on May 19 if infection numbers continue to improve. Germany announced good news as well with one-third of the country having received at least one shot and the lowest virus incidence rate in over a month at 115 cases per 100k people.

There wasn’t a great deal of other data out yesterday, though the German ZEW survey outperformed expectations, with the expectations measure up to 84.4 (vs. 72.0 expected), its highest level since 2000, while the current situation reading also rose to -40.1 (vs. -41.6 expected). Meanwhile in Italy, industrial production was down -0.1% in March (vs. +0.4% expected).

To the day ahead now, and the highlight will be the aforementioned April CPI reading from the US. Otherwise, data releases include the US monthly budget statement for April, the UK’s Q1 GDP, and the Euro Area’s March industrial production. Central bank speakers include BoE Governor Bailey, the Fed’s Clarida, Bostic and Harker, and the ECB’s Centeno. Otherwise, President Biden will be meeting with Congressional leaders from both parties, while the European Commission will be releasing their latest economic forecasts.

Tyler Durden Wed, 05/12/2021 - 07:59
Published:5/12/2021 7:06:23 AM
[Markets] Dow Hits $35,000, Crushing the Nasdaq. What Does That Mean for Retirees? On Monday, the Dow Jones Industrial Average (DJIA) hit an intraday high above the $35,000 mark for the first time in history. America's oldest stock index has produced a total return just shy of 17% for the year, handily outperforming both the S&P 500's 12% gain and the Nasdaq Composite's 4% gain. Here's why the Dow's outperformance is great news for dividend investors and retirees. Published:5/12/2021 6:05:56 AM
[Markets] Market Snapshot: Stock futures point lower ahead of inflation data Stock-index futures point to further losses for equities Wednesday as investors await a key reading on inflation a day after the Dow Jones Industrial Average suffered its biggest one-day fall since late February.
Published:5/12/2021 6:05:56 AM
[Markets] Dow ends down 1.4% in worst day since February; Nasdaq claws back to flat line Dow ends down 1.4% in worst day since February; Nasdaq claws back to flat line Published:5/11/2021 3:07:33 PM
[Markets] Big-Tech Bloodbath Continues After Biggest Sell-Program In History Big-Tech Bloodbath Continues After Biggest Sell-Program In History

After yesterday's ugliness in big-tech and small-caps, many hoped for a bounce today. But the combination of ARKK gamma and CTA deleveraging meant the pain was not over and both Nasdaq and Russell 2000 plunged into the cash market open (after getting hit as the Asia open and European open)...


But that puke into the cash open was one for the history books as NYSE companies trading on downticks exceeded those on upticks by 2,069 at one point. That was the most widespread bout of selling in the history of the indicator...

Source: Bloomberg

"Sell Mortimer, Sell!"

And that was just enough to spark the panic-bid rebound in markets today, sending Nasdaq and the Russell into the green. The Dow was the day's biggest loser followed by the S&P as Small Caps and Nasdaq battled to hold on to any gains all afternoon...

Worst day for The Dow since early Feb.

Nasdaq ended red...

Nasdaq rallied back up to its 100DMA, but couldn't break it...

"Most Shorted" stocks puked at the open and then the squeeze began to lift them back to unch...

Source: Bloomberg

AMZN was very active but couldn't break out from its tight band of critical technical levels...

Did ARKK buy its own dip again?

TSLA tumbled under $600 (after China expansion headlines) but was also bid back, but ended red...

VIX spiked to its highest in two months before fading back (but still up on the day)...

Despite all the chaos, the dollar trod water for the second day...

Source: Bloomberg

And bonds were offered (long-end yield up 2-3bps) despite the equity weakness. The S&P 500 is down 2% from Friday's close, and 30Y yields are up 7bps - smells like broad liquidation flows to us...

Source: Bloomberg

10Y Yields extended their rise above 1.60% (up dramatically from the yield puke on payrolls)...

Source: Bloomberg

Bitcoin was bid today, back above $56k...

Source: Bloomberg

And Ethereum rallied back above $4,000...

Source: Bloomberg

Gold was slammed lower around The London Fix into the US equity cash market close, then ripped back to unch...

WTI surged along with stocks off the US equity market open...

Finally, the commodity rally is back on after a brief interruption in service yesterday...

Source: Bloomberg

Tyler Durden Tue, 05/11/2021 - 16:02
Published:5/11/2021 3:07:33 PM
[Markets] Dow Jones Sinks 500 Points Amid Rising Inflation Fears, Sector Rotation The Dow Jones fell in today's market and led on the downside as stocks extend losses. The tech-heavy Nasdaq continued lower below its key 50-day line. Published:5/11/2021 1:05:21 PM
[Markets] Dow Jones Dives 450 Points As Stock Market Sells Off; Nasdaq Cuts Steep Losses Stocks moved well off session lows midday Tuesday, even though the Dow Jones Industrial Average was still down over 400 points. Published:5/11/2021 11:34:13 AM
[Markets] Stock market selloff is showing no signs of panic selling Despite the sharp selloff in the stock market, with the Dow Jones Industrial Average taking a 474-point, or 1.4% dive and the Nasdaq Composite shedding 0.4%, market internals are showing no signs of panic selling. In fact, some may interpret the readings as suggesting a buy-on-dip mentality is more prevalent. The NYSE Arms Index has fallen to 0.435, according to FactSet data, with levels below 0.500 viewed as suggesting panic-like buying, while the Nasdaq Arms Index declined to 0.653. The Arms Index is a volume-weighted breadth measure that tends to rise above 1.000 when the market is declining, as volume increases in declining stocks more than in advancing stocks, with rises above 2.000 viewed as depicting panic-like selling. With the Arms declining, it means the volume in advancing stocks is greater on a relative basis than volume in declining stocks. For example, the number of declining stocks is outnumbering advancers by a 5.37-to-1 margin on the NYSE and by a 2.83-to-1 margin on the Nasdaq, while volume in declining stocks is outnumber up volume by ratios of only 2.34 to 1 on the NYSE and 1.85 to 1 on the Nasdaq. Published:5/11/2021 10:33:57 AM
[Markets] Stocks sink at the open of trading Tuesday, with the Dow down 300 points Stocks sink at the open of trading Tuesday, with the Dow down 300 points Published:5/11/2021 9:01:10 AM
[Markets] Dow falls over 300 points early Tuesday as tech stocks get slammed amid renewed inflation fears U.S. stock benchmarks opened solidly lower Tuesday, with inflation worries seen keeping pressure on previously highflying tech stocks. The Dow Jones Industrial Average fell 0.9%, or over 300 points, to trade at around 34,423, the S&P 500 index was down 1.2% at 4,137, while the Nasdaq Composite Index declined 1.6% to 13,185. The market's recent selloff has been mostly concentrated in tech and growth stocks as investors shift out of highflying investments and buy assets that are viewed as performing better during the expected economic improvement from the COVID pandemic. In corporate news, Novavax Inc. late Monday said revenue climbed in the latest quarter as the company saw positive results from its COVID-19 vaccine trials in the U.K. and South Africa. Shares were down 20%. Published:5/11/2021 9:01:10 AM
[Markets] Reflation Panic Sparks Global Stock Rout Reflation Panic Sparks Global Stock Rout

Yesterday was bad, but not too bad, and we titled our morning market wrap "Futures Flat As Soaring Commodities Depress Tech Stocks." 24 hours later it's much worse, as the rout that hammered US tech stocks on surging inflation fears (see "This Is Not Transitory": Hyperinflation Fears Are Soaring Across America") has now gone global, with markets in Asia and Europe hammered and S&P futures sliding 0.8%, while Nasdaq futures tumbled by another 1.3% after Monday's 2.6% rout. Treasuries were steady ahead of today's 3Y auction while the dollar erased its gains and dropped to session lows.

Here are some of the notable bloodbath highlights: the Hang Seng Tech Index sank as much as 4.5%, extending its tumble from a February high to about 30%. In Europe, the Stoxx 600 Index fell the most since January as tech sector losses drove the gauge lower. One of the biggest winners over the past year, Cathie Wood’s Ark Innovation ETF, was down more than 3% in pre-market trading after plunging 5.2% yesterday.

“It seems to be a combination of inflation fears making a comeback and some market participants moving higher along the value spectrum, cutting their exposure to anything with a stretched valuation,” said Marios Hadjikyriacos, investment analyst at online broker XM in Cyprus.

In a late session reversal on Monday, inflation jitters drove investors away from growth stocks to cyclicals, which benefit the most as the economy reopens, resulting in the S&P 500 logging its worst day in nearly eight weeks. At 700 am ET, Dow e-minis were down 159 points, or 0.46%, S&P 500 e-minis were down 31.5 points, or 0.75%, and Nasdaq 100 e-minis were down 169.25 points, or 1.27%.

Some of the bigger pre-market movers:

  • Tesla dropped 7% in U.S. premarket trading after reports that the company halted a plan to buy land in Shanghai and sales in China fell.
  • Cathie Wood’s Ark Innovation ETF dropped down more than 3% in pre-market trading after plunging5.2% yesterday.
  • Shares of the FAAMG complex dropped between 1% and 2% in premarket trading, while Tesla Inc fell nearly 4%, one day after a rare downgrade of GOOGL and FB by Citi sparked a widespread selloff.
  • Simon Property Group Inc fell 3.6% after the U.S. mall operator said it does not expect a return to 2019 occupancy levels until next year or 2023, as it looks to play hardball in rent negotiations with tenants.

“The underlying driver is that there is still a rotation out of duration (higher interest rate) sensitive parts of the market and this is why tech stocks are coming under pressure now,” said Mizuho’s Head of multi-asset strategy Peter Chatwell. “Given the rise in the earnings power of these firms different governments will also seek to raise more tax revenue from them in the coming years.”

Debate rages over whether the expected jump in price pressures will be enduring enough to force the Federal Reserve into tightening policy sooner than current guidance suggests. US inflation expectations as measured by 5Y breakevens reached the highest level since 2006.

"There is a risk the discussion could trigger market volatility,” BlackRock Investment Institute strategist Jean Boivin said. “We believe investors should look through any such bouts of volatility. The Fed will likely be much slower than in the past to raise rates in the face of rising inflation."

Yet even after the declines, the Nasdaq trades at 26 times the 12-month projected profits, while the gauge of European technology shares enjoys a valuation of 29 times.

And speaking of Europe, its benchmark Stoxx 600 index tumbled 2.1% the most this year, one day after touching a record high on Monday, but its Tuesday restart was a sea of red as London’s FTSE, Frankfurt’s DAX and the CAC 40 in Paris all dropped roughly 2%. Just 18 index members were up while a whopping 582 were down. Europe travel and leisure stocks underperformed the broad market, with the benchmark tracking the sector dropping as much as 4.3%, most since Dec. The Stoxx 600 Travel & Leisure Index was down 4.2% as of 10:11 am CET, worst-performing sector in Europe. Here are some of the biggest European movers today:

  • THG shares jump as much as 19%, the most since September 2020, after the U.K. online retailer raised $1b for future M&A, adding Japan’s SoftBank as a cornerstone investor, and agreed to buy U.S. beauty company Bentley Laboratories for $255m.
  • Morrisons shares gain as much as 1.3% after the British supermarket chain released 1Q sales that topped analysts’ estimates. Morgan Stanley (equal-weight) says results were positive and it sees scope for potential upside and operating leverage.
  • Evolution Gaming shares slide as much as 12%, the most intraday since October 2018, after the company’s founders sold 4.2 million shares in an offering.
  • Ceconomy shares plunge as much as 16% after the German consumer-electronics retailer reported a 2Q adjusted Ebit loss of EU146m and named Karsten Wildberger as its new CEO. Consensus estimates look too high, according to Bryan Garnier.
  • Jenoptik shares fall as much as 13% in Frankfurt trading, the steepest intraday decline since March 2020, after posting 1Q earnings as Baader Helvea highlights a “mixed picture” for profitability.
  • ThyssenKrupp shares fall as much as 6.3% after reporting second-quarter results, with Morgan Stanley (underweight) noting that the guidance raise had “no surprises” and could still be too conservative.

Earlier in the session, Asia’s main regional equity gauges suffered their biggest slide in nearly two months overnight; the MSCI Asia Pacific Index dropped as much as 2.2% at one point as a slump in information-technology stocks weighed on the market with Japan’s Nikkei and Hong Kong’s Hang Seng both closing down 3%. Asian stocks were poised for their lowest finish in six weeks, dragged down by a selloff in the region’s chipmakers amid renewed concerns of rising global inflation. Taiwan Semiconductor Manufacturing, Samsung Electronics and SK Hynix were among the top contributers to the measure’s decline. The Philadelphia semiconductor index, or SOX, tumbled the most in two months on Monday on concerns inflation was likely to surge in coming months. The drop in the tech gauge came ahead of the release of the U.S. CPI report due Wednesday, which is expected to show prices continued to increase in April. Rising inflation could lead the Federal Reserve to reduce easy money policies. “If yields go higher, it’ll be difficult for current valuations to hold,” said Takahiro Kusakari, chief investment officer at Sawakami Asset Management Inc. “In case of higher yields, technology stocks trading with extra risk premiums won’t be able to help it but be sold.”

Taiwan, Japan and Hong Kong were among the biggest losers in the region, while China outperformed. China’s main equities benchmark ended higher Tuesday, after a rebound in consumer staples offset the earlier selloff in commodity firms. With talk of tighter regulation from Beijing, Chinese tech heavyweights Baidu, Alibaba Tencent, collectively dubbed the BATs, all dropped more than 3%. Food delivery major Meituan tumbled as much as 9.8% too, leaving its value $30 billion lower in a week.

“We have been here before with inflation scares and extended valuations in technology fraying investor nerves,” Jeffrey Halley, senior market analyst with Oanda Asia Pacific Pte wrote in a note. “Nevertheless, the technical break of support by the Nasdaq overnight is significant. If it does not recapture that tonight, equities could be in for a torrid week.” The Nasdaq composite lost 2.6% on Monday, closing a touch below its 100-day moving average.

Emerging-market equities fell to the lowest level in almost a month and currencies in Asia weakened as data from China added to inflation worries, while strong commodity prices fueled a rally in the South African and Russian currencies. The worldwide slump in technology stocks sent the MSCI benchmark index to its biggest drop since March 24. Data showing contractions in the Philippine and Malaysian economies added to skepticism about a robust recovery this year amid a resurgence in coronavirus cases. China’s factory-gate prices surged more than expected in April on the back of rapid gains in commodities due to rising global demand and supply shortages. That’s stoking concerns about price increases around the world, with a measure of U.S. inflation expectations reaching the highest level since 2006, though data today showed slowing inflation in Russia and Egypt.

“The turnaround in risk sentiment is largely isolated toward Asian FX this morning, where losses have been driven by inflation concerns and poor performance in domestic equity markets,” said Ima Sammani, an Amsterdam-based currency analyst at Monex Europe Ltd. Brazil and India will also report price figures this week after Citigroup Inc.’s inflation-surprise index for emerging markets spiked last month to the highest since 2008, a sign investors may be underestimating the scale of the resurgence. U.S. Treasury yields rose for a fourth day today and the extra premium demanded for EM debt was unchanged.  “It’s all about rates in the U.S. and how it contaminates risk markets,” said Francesc Balcells, chief investment officer for emerging-market debt at Fim Partners in London. “There’s a fair amount of nervousness on this but reflation is good for EM. The key is that real rates in the U.S. stay in check so as long as the Fed is not falling behind the curve, EM will be OK.”

U.S. breakeven rates, which factor in inflation, have scaled multi-year peaks. Most euro zone bond yields edged back up on Tuesday while a market gauge of long-term inflation expectations was nearing its highest in over two years. A host of Federal Reserve and European Central bank speakers this week will be closely watched by markets to assess how authorities are likely to respond.

A test case on U.S. inflation will come when the Labor Department releases consumer price index report on Wednesday. “Inflation’s shadow looms large and we do think that there is a limit to the Fed’s tolerance of inflation,” DBS Bank said in a note.

In FX markets, Dollar Spot Index traded near session lows amid tight ranges and 10-year Treasury yields rose for a fourth day. Scandinavian currencies lead gains followed by the euro, which pared yesterday’s losses. Bunds extended their slide and underperformance against Treasuries after Germany’s sale of its first 30-year green bond. The pound hovered near the highest level since February, holding onto Monday’s gains following the Scottish election results; sales of five- and 40-year gilts are in focus, as well speeches by the Queen’s and BOE Governor Andrew Bailey. The yen edged lower as concern over rising U.S. inflation puts an upward pressure on Treasury yields and the dollar. The Canadian dollar stabilised near a four-year high, while the New Zealand dollar perched comfortably at February highs.

In commodities, oil prices gave up earlier gains as concerns that rising COVID-19 cases in Asia will dampen demand outweighed expectations that a major U.S. fuel pipeline could restart swiftly. U.S. crude dipped 0.66% to $64.49 a barrel. Brent crude fell to $67.84 per barrel. Metal markets saw copper prices start to nudge higher again. They were last at $10,470 a tonne having hit a record high $10,747.50 the previous session. Iron ore had settled too after surging 7% on Monday.

Wednesday’s U.S. inflation report along with a series of U.S. government bond auctions this week are seen as the next factors to deepen or arrest the slide. The latest reading is expected to show an accelerated pace of consumer-price increases, with the year-on-year comparison made starker by the pandemic shock in 2020.

Looking at the day ahead now, and data releases from the US include April’s NFIB small business optimism index and the JOLTS job openings,. Central bank speakers include BoE Governor Bailey, the Fed’s Williams, Brainard, Daly, Bostic, Harker and Kashkari, and the ECB’s Knot and Hernandez de Cos. Otherwise, the Queen’s speech will be taking place in the UK, where the government outlines its legislative programme for the coming session of Parliament.

Market Snapshot

  • S&P 500 futures down 0.8% to 4,152.00
  • STOXX Europe 600 down 1.9% to 436.89
  • MXAP down 2.0% to 204.14
  • MXAPJ down 1.7% to 683.64
  • Nikkei down 3.1% to 28,608.59
  • Topix down 2.4% to 1,905.92
  • Hang Seng Index down 2.0% to 28,013.81
  • Shanghai Composite up 0.4% to 3,441.85
  • Sensex down 0.8% to 49,107.22
  • Australia S&P/ASX 200 down 1.1% to 7,096.97
  • Kospi down 1.2% to 3,209.43
  • Brent Futures down 1.1% to $67.55/bbl
  • Gold spot down 0.0% to $1,835.40
  • U.S. Dollar Index little changed at 90.27
  • German 10Y yield rose 0.43 bps to -0.169%
  • Euro up 0.1% to $1.2144

Top Overnight News from Bloomberg

  • Investor confidence in Germany’s economic recovery jumped to the highest level in more than 21 years after the country’s vaccine rollout gained speed. The ZEW institute’s gauge of expectations rose to 84.4 in May from 70.7 the previous month. A measure of current conditions improved, as did prospects for the euro zone
  • With the ECB widely seen slowing bond buying in July as the economic recovery gains traction -- which is already being reflected in higher yields -- this bet focuses on the next step being a greater chance of rate hikes. The largest wagers in Euribor options are targeting markets to price in higher rates in late 2024
  • England reported no deaths from Covid-19 in its latest daily update, a milestone that highlights the effectiveness of the U.K.’s vaccine program in stopping the spread of the disease
  • Palestinian militants in the Hamas-ruled Gaza Strip bombarded southern Israel with dozens of rockets overnight, and Israeli aircraft pounded their facilities in lethal raids, after a showdown over Jerusalem erupted into one of the most intense confrontations between the sides in years
  • German inflation could climb above 3% as the economy recovers from the pandemic, but it won’t last and the European Central Bank will look beyond such volatility, Executive Board member Isabel Schnabel said in an interview
  • China’s factory-gate prices surged more than expected in April, fueled by rapid gains in commodity prices, adding to global inflation concerns
  • Norway is relying on its $1.3 trillion sovereign wealth fund more than ever, as the country ratchets up spending without turning to bond markets to provide economic relief from the pandemic. The government is raising its so-called structural non-oil fiscal deficit for 2021 to 403 billion kroner, or almost $50 billion, compared with 369 billion kroner last year, it said on Tuesday. The withdrawals, as a share of the world’s biggest wealth fund, will reach 3.7%, compared with the central bank’s estimate of 3.3%

Quick look at global markets courtesy of Newsquawk

Asia-Pac bourses traded with firm losses on spillover selling from the tech-led declines on Wall St, where all major indices were dragged into the red amid higher yields and inflationary concerns, although the downside in the DJIA was contained after it briefly breached the 35k level for the first time ever. ASX 200 (-1.1%) was pressured amid underperformance in tech and with the commodity-related sectors subdued by a pullback in copper and iron ore futures from record levels which was not helped by reports of tougher supervision by China’s exchange. Nikkei 225 (-3.1%) was the biggest decliner after Japanese Governors warned that a nationwide state of emergency cannot be ruled out and as participants digested a slew of earnings updates, with better-than-expected Household Spending data doing little to stem the losses in Japan, while the KOSPI (-1.4%) succumbed to the broad risk aversion which overshadowed the strong early trade data for May which showed Exports jumped 81.2% Y/Y during the first 10 days of the month. Hang Seng (-2.0%) and Shanghai Comp. (+0.3%) weakened as the large Chinese tech stocks were impacted by the industry sell-off which resulted to losses of around 4% for the Hang Seng TECH Index, while a pullback for commodity prices and mixed inflation data in which Chinese CPI printed below forecast but PPI rose by its fastest pace since 2017, added to the uninspired mood; though sentiment did recover marginally from lows at the tail-end of the session. In addition, China released its latest Census which showed population growth in 2010-2020 slowed to 5.38% from 5.84% the decade before and the NBS chief noted that China’s population is declining, ageing is deepening and that steps must be taken to ensure a balanced population growth. Finally, 10yr JGBs were marginally higher amid the underperformance of Japanese stocks but with gains capped amid mixed results at the 10yr JGB auction and following the whipsawing in USTs where early gains were wiped out as yields recovered heading into this week's refunding auctions and heavy corporate supply including a USD 18.5bln offering from Amazon.

Top Asian News

  • New Outbreaks Threaten Status of Places That Had Virus Contained
  • TSMC Is Stuck in the Middle of a Global Panic Over Chip Supply
  • SK IE Technology Pares Gains After Doubling in Trading Debut
  • Japan’s Struggling Regional Banks Consider Overdue Mergers

Stocks in Europe see hefty losses across the board (Euro Stoxx -2.0%) as the region plays catch-up to the sell-off seen on Wall Street yesterday and across APAC overnight. Markets are wobbling on inflationary concerns - stoked by the elevated post-NFP yields alongside the recent bull run across some commodities including copper, iron, and lumber to name a handful - with inflation being a key theme across the Q1 earnings. These inflation woes are reflected across US equity futures with the tech-laden NQ (-2.6%) weighed on heavily whilst the YM (-0.1%) remains cushioned ahead of the US CPI figures tomorrow. Back to Europe, major bourses are for the most part experiencing broad-based losses with the AEX (-2.3%) narrowly underperforming amid notable downside in some large-cap names including Shell (-2.8%), ING (-2.6%), and ASML (-2.4%). European sectors are in a sea of red with defensives faring marginally better than cyclicals as a whole. Delving deeper, Telecoms, Food & Beverage, Household Goods, and Healthcare are the "better" performers with Banks also at the top of the table amid the higher yield environment; though still very much negative on the session. Moving to the other end of the spectrum, Tech lags in a continuation of global sectoral underperformance whilst yields are an additional headwind. Travel & Leisure however, is the notable underperformer as tourist hotspots France, Spain, Greece and Italy will not likely be added to the UK travel "green list" anytime soon, whilst Lufthansa (-3.2%) is reportedly preparing for a EUR 3bln rights issue and Evolution Gaming (-8.6%) further pressures the sector following a share offering. Basic Resources kicked the day off as one of the laggards, but the sector has since trimmed losses with base metals remain elevated. Out of the handful of companies in the green across Europe, THG (+12%) tops the chart amid reports that Softbank will take a stake in the Co., Deutsche Bank (-2.3%) meanwhile fails to shrug off reports that the US DoJ has closed their probe into the Co. regarding their role in the 1MDB scandal.

Top European News

  • Schaeffler, Timken Said to Weigh Bids for $1.5 Billion ABB Unit
  • Renishaw Said to Face Uphill Battle to Sell Over Steep Price
  • Life-Insurance Startup Ethos Valued at More Than $2 Billion
  • England Reports Zero Covid Deaths for First Time in 14 Months

In FX, global bond yields are rising on renewed inflation vibes and debt and equities show little sign of resuming any real inverse correlation in the traditional manner associated with relatively pronounced bouts of risk aversion, or appetite for that matter, but the Dollar has gleaned some support from safe-haven demand along with technical encouragement after evading deeper losses vs major and EM counterparts. On that note, the index is looking a bit more comfortable on the 90.000 handle within a 90.359-089 range having recovered from a 90.032 low on Monday, albeit with the Buck still mixed against its G10 protagonists awaiting NFIB, JOLTS and another heavy slate of Fed speakers.

  • EUR - The Euro has recoiled into a slightly tighter band vs the Greenback from 1.2132 to 1.2170 and could be more inclined towards chart levels while monitoring EGB/UST differentials and some decent option expiry interest either side (1.5 bn at 1.2095-1.2100 and 1.2125 before 1.6 bn between 1.2185-90). However, Eur/Usd may get a belated boost from a much better than expected German ZEW survey, and the headline economic sentiment reading especially.
  • AUD/NZD - Some retracement may have been in order anyway after yesterday’s extended gains against their US rival to circa 0.7891 and just over 0.7300 respectively, but consolidation off recent highs in base metals and other commodities allied to a downturn in risk sentiment has ensured that the Aussie and Kiwi have pulled back anyway. Note, very little reaction to the Australian Budget, thus far, as Aud/Usd continues to hover sub-0.7850 and the cross under 1.0800 on mixed revised deficits vs prior forecasts and Westpac expectations.
  • GBP/CAD/JPY/CHF - All narrowly divergent vs their US peer, as the Pound unwinds some of its all round appreciation, though keeps its head above 1.4100 and around 0.8600 against the Euro amidst robust UK consumption surveys and confirmation from PM Johnson that the 3rd phase of lifting lockdown restrictions will go ahead next Monday. Elsewhere, the Loonie has stalled into 1.2075 against the backdrop of waning oil prices pre-OPEC MOMR and API weekly inventories, the Yen is hovering just over 109.00 and Franc a similar distance below 0.9000 and under 1.0950 against the Euro.
  • SCANDI/EM - The Nok and Sek are both holding up quite well given the potentially bearish mix of retreating bonds and stocks as a mark of souring risk sentiment, with the latter possibly taking on board former 12 month Swedish money market inflation expectations on the eve of official CPI data. Meanwhile, strong Chinese PPI could be propping up the Cnh, but the Try is not getting much respite even though Turkish ip was considerably stronger than anticipated in March.

In commodities, WTI and Brent front month futures are choppy but off worse levels with the former re-eying USD 64.50/bbl (vs low 64.09/bbl) and the latter inches back towards USD 68/bbl (vs low 67.50/bbl). The losses today seem to be stemming from the soured mood across stock coupled with some unwind of the Colonial Pipeline premium as it is expected to be largely online by the end of the week. Desks note that supply tightness to the US East Coast will likely be eased with increased flows of seaborne cargos. That being said, the longer the situation takes to resolve, the greater the likelihood refineries will need to start cutting run rates. Elsewhere in terms of geopolitics, tensions remain high in the Strait of Hormuz chokepoint as the US Navy stated that it had to fire warning shots as IRGC boats - whilst Press TV reports suggested that JCPOA talks hit a deadlock by its the US refusal to moved 500 individuals from its sanctions list. Elsewhere, Saudi and Iran have been sounding more sanguine in their separate negotiations which could see the simmering down of an ongoing spat between the countries on either side of the Persian Gulf. In terms of COVID, eyes remain on India's escalating situation with reports today suggesting that the Indian Oil Corp has cut operating rates at refineries to 85-88% (late-April 95%) due to high product stock with COVID-19 impacting demand, whilst BPCL cuts crude imports by 5% in May and 10% in June; expects May fuel consumption to decrease by 5% vs April. Onto metals, spot gold, and silver remain within a tight range and are supported by the suppressed Dollar, with the former comfortable north of USD 1,800/oz (1831-38 range) whilst the latter holds its USD 27/oz handle (27.13-47 range). Meanwhile, the base metals complex is back on the rise with LME copper back above USD 10,500/t with traders citing the mounting speculative bets on inflation and EV production, whilst overnight, Chinese stainless steel and iron ore rose near-10% apiece as production curbs also spurred supply woes.

US Event Calendar

  • 10am: March JOLTs Job Openings, est. 7.5m, prior 7.37m
  • 10:30am: Fed’s Williams speaks at SOFR Symposium
  • 12pm: Fed’s Brainard Discusses U.S. Economic Outlook
  • 1pm: Fed’s Daly Speaks at Community Bankers Event
  • 1:15pm: Fed’s Bostic Speaks to Rotary Club of Alexandria, Louisiana
  • 2pm: Fed’s Harker Speaks on Economic Outlook
  • 2:30pm: Fed’s Kashkari Discusses Economic Outlook

DB's Jim Reid concludes the overnight wrap

In the U.K. yesterday we learned that as of next Monday we will be able to use our own judgement as to social distancing with close family and friends. I delightedly showed my wife this but she said that she would like to continue to observe the 2 metre rule that first started when the twins were born.

So as we attempt to get our lives back after the pandemic, the economic repercussions will reverberate for a while with Friday’s payrolls still creating fierce debate in markets. We are doing a 24hr flash payrolls poll as to whether you think the huge downside miss on Friday represented a) Labour supply constraints, b) Lower demand for labour, c) Measurement errors and likely later revised, d) Don’t know. You can click on the answer that you think is most representative. We will print the answers in today’s CoTD later.

So fascinating markets yet again with inflation worries higher now than they were before the horrendous payrolls miss. All this ahead of tomorrow’s all-important CPI release in the US, with various expectation measures rising to new highs as investors are anticipating a jump in the annual CPI to its highest level in years. The jitters sent tech stocks sharply lower, with the NASDAQ (-2.55%) and the FANG+ index (-3.61%) of megacap tech seeing big declines – with the best performing FANG+ index member being Google (-2.56%) while Tesla (-6.4%) was the worst. It was the worst days for the NASDAQ and the FANG+ index since March 3rd and 8th respectively. The S&P 500 fell back -1.04% as the recent cyclical winners such as energy (-0.05%), banks (-0.20%) and materials (-0.41%) were not able to keep the broader index afloat amidst the heavy tech losses. The best performing US industries yesterday were the defensives such as household products (+1.36%) and utilities (+1.02%). Earlier Europe’s STOXX 600 (+0.10%) gained slightly, having closed before the steepest US declines, whilst the Dow Jones (-0.10%) actually traded above the 35,000 mark for the first time intraday before falling back to just worse than unchanged.

Given the inflation concerns, it was no surprise that breakevens roes to fresh multi-year highs in numerous countries yesterday even if they were off their intraday highs at the close. In the US, 10yr breakevens were up +2.6bps to 2.53%, their highest level since 2013, while the 30yr rate was up +3.0bps to 2.35%, the highest since 2014. The 5y5y forward inflation swap (+2.7bps) also closed above 2.5% for the first time since 2018. Similar moves were seen in Europe too, with German 10yr breakevens up to 1.42%, their highest level since 2018, and their Italian counterparts at 1.38%, their highest since 2013. Yields on 10yr Treasuries were up +2.5bps at 1.602%, as inflation expectation overcame a small drop in real yields (-0.1bps), which fell for the 5th time in the last 6 sessions. Meanwhile in Europe, yields on 10yr bunds (+0.3bps) only saw a modest rise as those on OATs (-0.4bps) and BTPs (-3.7bps) fell back.

Asian markets have taken Wall Street’s lead this morning with the Nikkei (-2.98%), Hang Seng (-2.15%) and Kopsi (-1.34%) all trading deep in the red while the Shanghai Comp is down a more limited -0.27%. Futures on the S&P 500 (-0.55%) and the Nasdaq (-0.97%) are also pointing to a weaker open in the US later today. European futures are also pointing to a sharply lower open with Stoxx 50 futures down -1.37% and those on the Dax down -1.24%. Not helping sentiment China’s April PPI came in 0.3 percentage points higher than expectations at +6.8% yoy while, the CPI printed -0.1% weaker than expectations at +0.9% yoy. The rise in PPI was likely driven by the continued rise in commodities with Bloomberg commodity spot index up c. +65% yoy.

Speaking of inflation, my chart of the day yesterday (link here) discussed the debate over whether the big downside miss in payrolls on Friday would mean higher inflation moving forward. I lean towards the inflation side, and pointed out DB’s Francis Yared work highlighting that the quits rate (which reflects voluntary departures and workers’ true bargaining power) shows a much tighter labour market than the unemployment rate, and has seen a better correlation to wages since the pandemic started than the unemployment rate. The quits rate has bounced back to its pre-Covid levels, so adds to increasing signs that workers are recovering power quickly while firms are finding it hard to fill new roles.

Though the prospects of higher inflation was spoiling the market mood, the rally in commodity prices seemed to run out of steam by yesterday afternoon, with Bloomberg’s commodity spot index actually snapping a run of 6 successive gains to close -0.61% lower on the day – only the 2nd daily loss for the index since April 16. Copper prices (-0.68%) had hit an all-time high earlier in the day, while oil prices also pared back their gains into the afternoon as both Brent crude (+0.06%) and WTI (+0.03%) finished just above unchanged. Even corn futures (-3.20%) shifted lower, in spite of having risen for the last six weeks in a row.

In the UK, Prime Minister Johnson announced that restrictions in England would be eased further from May 17, with indoor mixing in groups of up to six people or two households being allowed once again, while indoor venues including pubs, restaurants, museums and cinemas would also be able to reopen. Separately, the UK Covid-19 alert level was moved from level 4 to level 3. No covid deaths were reported yesterday in England for the first time in 14 months. There was additional good news from elsewhere in Europe as Austria announced that their planned reopening would go forward with small groups being allowed to gather and hospitality establishments will reopen. Spanish Prime Minister Sanchez announced that the country is on track to reach herd immunity in about 100 days when 70% of the population will be vaccinated – if current trends continue. In the US, weekly cases rose by the slowest rate (+0.88%) since the pandemic started and the lowest total (+286k) since mid-September. On the flipside, the pandemic is seen to be firming its grip over Asia with the Asahi Newspaper reporting that Japan’s regional governors have called on the central government to consider declaring a national emergency while Malaysia moved to close schools and banned social gatherings. The Apple Daily also reported that Taiwan’s Premier Su Tseng-chang may announce tighter Covid-19 restrictions. Lastly, Bloomberg reported that the WHO will classify a fast-spreading strain of Covid-19 first identified in India as a variant of concern.

Back to the UK, sterling was the strongest performing G10 currency yesterday (+0.96% vs USD) following the results of various local and regional elections over the weekend, hitting its highest level against the dollar since February. The move seemed to be driven in part by relief among some investors that the SNP had fallen just short of a majority in the Scottish Parliament, though given the pro-independence Greens can get them there, the reality is that the lack of majority for the SNP on their own has limited implications for independence. Instead the bigger question for the coming months and years will be what the UK government’s approach is, since they’re the ones with the power to authorise a legal Scottish referendum, as happened in 2014. That said, speculation has in turn been rising that the question of whether the Scottish government could hold a referendum without the UK government’s consent could end up in the courts, so one to watch moving forward potentially.

To the day ahead now, and data releases from the US include April’s NFIB small business optimism index and the JOLTS job openings, while Europe’s include Italian industrial production for March and the German ZEW survey for May. Central bank speakers include BoE Governor Bailey, the Fed’s Williams, Brainard, Daly, Bostic, Harker and Kashkari, and the ECB’s Knot and Hernandez de Cos. Otherwise, the Queen’s speech will be taking place in the UK, where the government outlines its legislative programme for the coming session of Parliament.

Tyler Durden Tue, 05/11/2021 - 07:48
Published:5/11/2021 6:59:47 AM
[Markets] Dow Jones Futures Fall, Tech Futures Dive As Split Market Rally Continues; Virgin Galactic Plunges On Earnings Dow Jones futures were lower late Monday, as the split stock market rally continues. The Dow Jones industrials hit a new high, while tech stocks dived. Published:5/10/2021 8:32:48 PM
[Markets] Dow Jones Futures Rise: Split Stock Market Rally Continues As Tech Stocks Dive; Virgin Galactic Plunges On Earnings Dow Jones futures were little changed Monday, as the split stock market rally continues. The Dow Jones industrials hit a new high, while tech stocks dived. Published:5/10/2021 5:55:41 PM
[Markets] Dow Jones Futures: Split Stock Market Rally Continues As Tech Stocks Dive; Virgin Galactic Slides On Earnings Dow Jones futures were little changed Monday, as the split stock market rally continues. The Dow Jones industrials hit a new high, while tech stocks dived. Published:5/10/2021 4:25:31 PM
[Markets] In One Chart: While Dow flirts with 35,000, the S&P 500 is on pace for second-highest number of records in a year 2021 is shaping up as a year of milestones for stocks, with the Dow Jones Industrial Average on Monday briefly pushing above 35,000 and the S&P 500 on pace to log the second-highest number of all-time highs on record.
Published:5/10/2021 4:00:23 PM
[Markets] Dow Jones Reverses Lower; Apple Falls As Tech Stocks Dive; These Gas Stocks Rise Amid Hack The Dow Jones closed lower. Apple stock fell amid a broad pullback in tech stocks. Some gas stocks passed buy points amid the Colonial Pipeline cyberattack. Published:5/10/2021 3:27:13 PM
[Markets] Dow Jones Rallies, Tech Stocks Dive As Covid Vaccine Maker Surges On Earnings; Apple, Tesla Sell Off The Dow Jones Industrial Average rallied 200 points as coronavirus vaccine maker BioNTech surged on earnings. Tesla stock skidded Monday. Published:5/10/2021 9:23:11 AM
[Markets] Stocks open higher Monday, with the Dow and S&P 500 seeking new records Stocks open higher Monday, with the Dow and S&P 500 seeking new records Published:5/10/2021 9:00:22 AM
[Markets] Stock futures are trading mostly higher Monday after Dow, S&P 500 set records Stock futures are trading mostly higher Monday after Dow, S&P 500 set records Published:5/10/2021 8:24:33 AM
[Markets] Dow Jones Futures Rise, Major Gasoline Pipeline Still Shut; These Stocks Are 'Out Of Bounds' It's a broad market rally, but highly valued growth is "out of bounds," including Tesla and Coinbase. Dow futures edged higher. Crude oil and gasoline futures rose. Published:5/10/2021 6:22:25 AM
[Markets] Market Snapshot: Stock futures struggle for direction after Dow, S&P 500 set records Stock-index futures trade mixed Monday, after the Dow Jones Industrial Average and the S&P 500 ended last week at records following a disappointing jobs report that was seen keeping the Federal Reserve from tightening policy.
Published:5/10/2021 6:22:25 AM
[Markets] Dow Jones Futures, Gasoline Prices Rise Amid Pipeline Shutdown; Broad Market Rally, But These Stocks Are 'Out Of Bounds' It's a broad market rally, but highly valued growth is "out of bounds," including Tesla and Coinbase. Dow futures edged higher. Crude oil and gasoline futures rose. Published:5/9/2021 5:49:59 PM
[Markets] Investors Beware: The "Can't Lose" Stock Market Won't Last Forever The stock market continued to move higher Friday, with the Dow Jones Industrial Average (DJINDICES: ^DJI) and S&P 500 (SNPINDEX: ^GSPC) rising to record closes. Stocks tracked by the S&P Midcap 400 Index are up 74% over the past year. Published:5/7/2021 7:34:05 PM
[Markets] Market Recap: Friday, May 7 Stocks rose to reach record highs on Friday as investors digested a disappointing April jobs report, which showed the U.S. economy added back far fewer jobs than expected last month despite easing stay-in-place restrictions. The S&P 500 and Dow each reached highs. The Nasdaq advanced, after the disappointing economic data appeared to make a case for monetary policy to stay on hold and interest rates to stay low, supporting tech and growth stocks. Treasury yields steadied after sinking immediately following the jobs report, with the 10-year yield hovering below 1.58%. Belpointe Chief Strategist David Nelson and Senior Economic Analyst Mark Hamrick joined Yahoo Finance Live to discuss. Published:5/7/2021 4:02:37 PM
[Markets] Dow Jones Hits Record As Market Shrugs Off Jobs Report; Growth Stocks Surge On This The Dow Jones powered higher as the stock market shrugged off a dismal jobs report. Nike stock led the blue chips, while Square stock rose on earnings. Published:5/7/2021 3:33:52 PM
[Markets] Gold Surges To Best Week In 6 Months, Crypto Soars As Dollar Crashes Gold Surges To Best Week In 6 Months, Crypto Soars As Dollar Crashes

This was not the shitty jobs data you were looking for...

Or put another way...

The instant reaction at the payrolls data was Small Caps puked and Big-Tech buying-panic...

But by the end that difference has converged...

The Dow led the way this week, charging to its best week in two months amid terrible jobs data. Nasdaq, on the other hand, is down for the 3rd straight week. Small Caps managed to cling to the flatline...

Today's bounce back in Small Caps pushed them to close back above the 50DMA...

"Most Shorted" stocks suffered their biggest weekly loss since Oct 2020...

Source: Bloomberg

Energy stocks were the week's biggest winners while Tech, Utes, and Consumer Discretionary all ended lower...

Source: Bloomberg

Cathie Wood's ARKK was clubbed like a baby seal again (worst week since Feb)...

IPOs saw the biggest weekly drop since March 2020...

Source: Bloomberg

VIX was monkeyhammered back below 17 to end the week...

Treasury yields plunged today on the terrible jobs data... then ripped higher. 30Y ended up around 3bps on the day, 5Y down around 3bps...

Source: Bloomberg

For some context (and an idea of the lack of liquidity), 10Y Yields crashed 10bps-plus and ripped back 10bps-plus. Jim Vogel at FHN explains:

"Measured by intensity of price changes and volume in a 30-minute period, we cannot find any event as volatile as this morning’s reaction to April payrolls in the last five years.  We actually quit looking after we got to the beginning of 2016."

But all yields were lower on the week with the belly outperforming (7Y -7bps)...

Source: Bloomberg

10Y Breakevens rose once again, topping 2.50% for the first time since 2013...

Source: Bloomberg

The crappy jobs data took an early rate-hike largely off the table...

Source: Bloomberg

The dollar plunged today on the dismal jobs data, to its weakest since February. This was the 4th down week of the last 5 for the dollar and the biggest weekly drop since early November...

Source: Bloomberg

Ethereum surged to a new record high...

Source: Bloomberg

Dramatically outperforming bitcoin over the same period...

Source: Bloomberg

And of course, all eyes will be on DOGE this weekend as Elon Musk hosts SNL...

Source: Bloomberg

Commodities continued their (transitory) charge higher (5th straight week). Spot Commodity Index is up a stunning 65% YoY - a record spike.

Source: Bloomberg

Copper and Silver soared over 6% this week...

Source: Bloomberg

WTI rallied on the week but was unable to hold gains above $66 (in fact closing with a $64 handle)...

Gold rallied to its best week since Nov 2020, ending at $1840, its highest in 3 months. NOTE the double-bottom test below $1700 has set solid support...

Silver pushed back above $27.50, having found support at $25...

Copper hit a new record high this week (along with Iron Ore and Steel) and is now up over 90% YoY...

Source: Bloomberg

Despite gold's big week, the surge in copper has taken the ratio to its highest since Nov 2014. That suggests 10Y yields should be at least 100bps higher... if not 200bps!

Source: Bloomberg

Finally, we note that stocks are still significantly ahead of global central bank balance sheets...

Source: Bloomberg

Tyler Durden Fri, 05/07/2021 - 16:00
Published:5/7/2021 3:04:16 PM
[Markets] Dow, Tech Stocks Rally As Yields Dive On Weak Jobs Report; Tesla Races Higher, While Square Surges On Earnings The Dow Jones Industrial Average rallied 100 points Friday, as Treasury yields dived on a weak jobs report. Square stock surged on earnings. Published:5/7/2021 10:01:29 AM
[Markets] Dow Jones Futures Rise As Market Rally Awaits Jobs Report; Roku Leads Earnings Movers As Fed Warns Asset Prices 'Vulnerable' Dow Jones futures rose ahead of the April jobs report. Roku and Cloudflare led late earnings as the Fed warned asset prices risk "significant declines." Published:5/7/2021 7:29:43 AM
[Markets] Futures Rise Ahead Of Blockbuster Payrolls As Commodities Soar Futures Rise Ahead Of Blockbuster Payrolls As Commodities Soar

S&P futures rose overnight alongside European and Asian market in another quiet session, as commodities smashed higher ahead of a blockbuster jobs report (whispers of a 2MM+ print) which will cap a series of strong economic reports this week. Global stocks headed for their first weekly gain in three with MSCI's world index rising about 0.1% and on course for a 0.4% gain this week amid a surge in commodity prices. Copper joined iron ore and steel by hitting a new all-time record as expectations that rebounding economies will spur a boom in global demand, while the Bloomberg Commodity Spot Index jumped to its highest level since 2011.

At 730 am ET, Dow e-minis were up 80 points, or 0.22%, S&P 500 e-minis were up 9.00 points, or 0.22%, and Nasdaq 100 e-minis were up 31.50 points, or 0.23%.

Sentiment was bolstered by China's latest trade data which showed exports rose well ahead of expectations and imports saw the fastest growth since 2011 on the back of soaring commodity prices.

In premarket trading, most stocks traded in a tight range with mega-cap growth stocks such as Microsoft, Apple, and Facebook rising between 0.2% and 0.6%. Economically sensitive cyclical stocks also firmed, with Boeing up 0.4%, Goldman Sachs Group rising 0.5% and Chevron gaining 0.1%.

Traders now turn to Friday’s payrolls numbers, which are expected to show a million jobs added in April after rising by 916,000 in March. The data, due at 8:30 a.m. ET, is also expected to show that the unemployment rate fell to 5.8% from 6.0% and average hourly earnings dropped by 0.4% - the first annual decline in history - after a 4.2% increase in March.

“The U.S. employment report is bound to be the center of attention today,” said UBS chief economist Paul Donovan. “It’s not just going to be the overall employment data that will be of interest, but the patterns of employment by state and by industry that will be useful in assessing the direction of the U.S. economy.”

"The dilemma investors are facing right now is that while strong U.S. economic data is positive news, the accelerating growth is increasing the risk of an overheating economy and the Federal Reserve being forced to hike rates early," said Milan Cutkovic, market analyst at Axi. It's also why some have warned that a jobs number above 2 million could lead to a waterfall in risk.

European stocks traded near session highs after dripping earlier following comments from ECB Governing Council member Martins Kazaks became the latest to hint at an imminent taper when he said the European Central Bank could decide to scale back its emergency bond-buying program as early as next month if the euro-area economy doesn’t deteriorate. Kazaks, who also heads Latvia’s central bank, said the ECB’s pledge to keep financing conditions favorable remains key to determining how much support the 19-nation bloc needs to recover.  “If financial conditions remain favorable, in June we can decide to buy less,” Kazaks said in an interview on Thursday. “Flexibility is at the very core of PEPP.

The Stoxx Europe 600 Index rose 0.5% to 443.2 with miners, industrials and financial services the best performing sectors. Miners lead gains after copper hit an all time high. Miners with copper exposure like Rio Tinto, Glencore, BHP, Anglo American already advanced. Other copper miners that may also gain includes, TECK, FM CN, SCCO, CS CN, CMMC CN, ERO CN, LUN CN. Here are some of the biggest European movers today:

  • Adidas shares jump as much as 8.8%, the most intraday since November, after the German sportswear maker reported 1Q results and increased its sales forecast for the year, impressing analysts.
  • Meggitt shares jump as much as 16%, the most since Nov. 9. A report that aerospace company Woodward is working with advisers on a possible deal for the U.K. firm appears to make sense strategically, Jefferies writes in a note.
  • KGHM shares soar as much as 6.2%, to the Polish copper producer’s highest since its 1997 debut, as the metal price jumps to a record. And Warsaw’s benchmark WIG20 index rises as much as 2%, fueled by KGHM’s gains.
  • Siemens shares rise as much as 3.3% after the German industrial group’s results topped expectations, with analysts noting strength across the board.
  • Rubis shares fall as much as 7.2% after Oddo BHF cuts the energy storage and distribution company to neutral from outperform, citing “limited” upside after recent gains.
  • Klepierre shares fall as much as 5.4% after the French real-estate company lowered its FY net current cash-flow guidance due to longer-than-expected Covid-19 lockdowns.

Asian stocks also rose, heading for their first weekly gain since mid-April, as a rally in semiconductor-related shares helped offset a late sell-off in China. The MSCI Asia Pacific Index advanced for a second day. Chip-related stocks including TSMC and Tokyo Electron contributed heavily to the day’s gains, while game console developer Nintendo and Sony Group were among the biggest drags after the Kyoto-based studio warned of component shortages and announced a conservative profit outlook. China stocks slumped in the afternoon and notched their worst week since mid-March, as worries that the U.S. is maintaining investment limits in some Chinese companies outweighed better-than-expected growth in export data. Concerns the Biden administration will keep the investment bans imposed under former U.S. President Donald Trump add to investors’ worries of rising geopolitical tensions faced by China as Beijing halts its high-level economic dialogues with Australia. In addition, India’s Covid-19 outbreak remains a key risk investors should watch, as cases there have kept growing and could prompt a national lockdown, Yeap Jun Rong, a market strategist at IG Asia Pte wrote in a note. India reported a record 412,262 new infections and 3,980 deaths on Thursday, with experts saying that the reported figures likely underplay the real toll. That said, a mathematical model prepared by advisers to Prime Minister Narendra Modi suggests the country’s outbreak could peak in coming days

Chinese stocks notched their worst week since mid March, pushed lower by a slump in tech shares after news that the U.S. will likely maintain limits on investments in certain Chinese firms. The benchmark CSI 300 index fell 1.3% to close at 4,996.05 points on Friday, extending the week’s decline to 2.5%. Information technology firms were the worst performers, with Will Semiconductor falling 9.9% in Shanghai while Advanced Micro-Fabrication dropped 6.6%. A subgauge of that sector fell by the most in nearly two months. Consumer staples also extended recent declines this week, with former investor darlings like Kweichow Moutai and Anhui Gujing leading the retreat on concerns that were few catalysts ahead that could lift the sector. “There is still lots of profit-taking pressure in the sector and valuations are still very expensive,” Li Liangxu, a fund manager at Guangdong Ronghao Asset Management, said by phone. “Sell offs in heavyweight stocks like Moutai are far from over.” Friday’s selloff comes after a similar decline a day earlier after news that the U.S. will back a proposal to waive intellectual-property protections for Covid-19 jabs sent shares of Chinese vaccine makers tumbling. In Hong Kong, tech stocks also fell, with the Hang Seng Tech Index nearing the lowest this year. Meituan was set to fall for an eighth straight day, on track for its longest losing streak since the company went public in 2018. Alibaba was down as much as 1.2% while Tencent slid 1.7%.

In rates, yields were within a basis point of Thursday’s closing levels as trading activity simmered ahead of April jobs report. U.S. stock futures are higher with commodities, weighing slightly on bonds. Treasury 10-year yields around 1.575% outperform bunds by ~1bp with gilts keeping pace; dunds dipped after the abovementioned taper comments from ECB’s Kazaks who said a June decision to slow bond buying is possible. German curve bear flattens slightly, USTs and gilts bear steepen; ranges are tight ahead of today’s payrolls release. Peripheral and semi-core spreads widen with long-end Italy underperforming.

In FX, the safe-haven dollar sank to its lowest level this week against a basket of major peers on Friday ahead of the jobs report, as firmness in global stock markets boosted risk appetite.the Bloomberg Dollar Spot Index was on the back foot and the dollar traded mixed versus its Group-of-10 peers. European currencies were the top performers, while commodity currencies underperformed despite higher metal prices. The euro rose to a one-week high of 1.2089 after ECB Governing Council member Martins Kazaks said the central bank could decide to scale back its emergency bond-buying program as early as next month if the euro-area economy doesn’t deteriorate. The pound gained as the Bank of England’s upgraded forecasts filtered through and as investors awaited results from Scottish parliamentary elections. Australia’s April 2024 sovereign bond, the target maturity for the central bank’s yield control, surged on short- covering, sending yields to a record low of 0.06%. The yen was little changed against the dollar, with traders staying on the sidelines ahead of U.S. non-farm payrolls data. Japanese bonds were narrowly mixed.

In commodities, it was all about metals again as copper soared to an all-time high as optimism about a global rebound from the pandemic spurs a surge across commodities markets. "Get ready for payrolls, they could be huge," Chris Weston, head of research at broker Pepperstone in Melbourne, wrote in a note for clients. "The commodity space is the talk," and financials are the "bull play" going into the payrolls report, he said. Gold headed for a 2.5% weekly gain, the most since December, as the weaker dollar and easing Treasury yields propelled the precious metal, an inflation hedge, above the key $1,800 an ounce psychological level to last trade at $1,813.54.

Looking at the day ahead, and the aforementioned US jobs report for April will be the main highlight for markets. Central bank speakers include ECB President Lagarde, the BoE’s Broadbent and Haldane, and the Fed’s Barkin.

Market Snapshot

  • S&P 500 futures up 0.12% at 4,199.25
  • STOXX Europe 600 up 0.43% to 442.91
  • MXAP up 0.3% to 207.00
  • MXAPJ up 0.4% to 693.62
  • Nikkei little changed at 29,357.82
  • Topix up 0.3% to 1,933.05
  • Hang Seng Index little changed at 28,610.65
  • Shanghai Composite down 0.7% to 3,418.87
  • Sensex up 0.5% to 49,204.20
  • Australia S&P/ASX 200 up 0.3% to 7,080.83
  • Kospi up 0.6% to 3,197.20
  • German 10Y yield rose 0.6 bps to -0.219%
  • Euro up 0.18% to $1.2087
  • Brent Futures little changed at $68.07/bbl
  • Gold spot up 0.3% to $1,820.71
  • U.S. Dollar Index down 0.18% to 90.79

Top Overnight News from Bloomberg

  • survey of economists. Imports climbed 43.1%, a sign of strong domestic demand and soaring commodity prices, resulting in a bigger-than-expected trade surplus of $42.85 billion for the month
  • One of the biggest Brexit battlegrounds between the European Union and the U.K. now has a price tag: at least $2.4 million a day. That’s how much any move by the European Union to cut off access to London’s dominant clearinghouses for derivatives could cost traders in euro interest rate swaps, net of buying, according to an estimate from Albert Menkveld, professor of finance at Vrije Universiteit Amsterdam, who has sat on advisory panels to European regulatory authorities
  • A large option bet on quicker rate-hikes by the Federal Reserve got bigger this week, even as officials pushed back against hawkish expectations. The wager -- now carrying a notional value of $40 billion -- is focused on a possible surprise at the annual August symposium in Jackson Hole, which has been used in the past by central bankers to signal changes in monetary policy
  • One of the constants in the currency space is for euro-yen options to trade at a premium for downside protection. As the pair’s volatility skew flattens, it remains to be seen whether we are looking at a game changer or a move that will be seen as another opportunity to fade lifetime range extremes.
  • A rising appetite for risk across a variety of asset markets is stretching valuations and creating vulnerabilities in the U.S. financial system, the Federal Reserve said in its semi-annual financial stability report
  • The Reserve Bank of Australia released an upbeat outlook for the economy showing trajectories for growth and unemployment that suggest it’s on track to drive faster pay gains and inflation back toward its 2-3% target
  • China’s exports rose more than expected in April and imports climbed, reflecting strong domestic and international demand and surging commodity prices
  • Voting has finished in crucial British elections set to shape the future of the U.K., in the first electoral test for Prime Minister Boris Johnson’s government since the coronavirus pandemic struck. Counting of ballot papers will take place over the coming days in contests for the parliaments of Scotland and Wales, the Mayor of London and English local councils
  • Copper soared to an all-time high, topping the previous record set in 2011, on expectations that rebounding economies will spur a boom in global demand. Oil headed for a second straight weekly advance as investors bet on rising energy demand amid a broad rally in commodities
  • Japan is set to extend a virus state of emergency that includes Tokyo to the end of May, public broadcaster NHK reported. A mathematical model prepared by advisers to Prime Minister Narendra Modi suggests India’s coronavirus outbreak, which saw record cases and deaths Thursday, could peak in the coming days

Asian equity markets traded mostly higher following the late ramp up on Wall St. and encouraging trade data from China, but with gains capped ahead of the key risk US NFP jobs data and as increased US-China hawkish rhetoric contributed to the tentativeness. ASX 200 (+0.3%) was lifted by strength in mining names after gold prices reclaimed the USD 1800/oz level and with Dalian iron ore prices at record highs, while the latest RBA Statement on Monetary Policy saw upgrades to the central bank’s economic growth forecasts with GDP seen at 9.25% in June and 4.75% in December this year. Nikkei 225 (+0.1%) was kept afloat after yesterday’s outperformance although upside was limited as Japan braces for an extension of the state of emergency for four key areas including Tokyo and with the government seeking to add Aichi and Fukuoka to the emergency declaration. Hang Seng (-0.1%) and Shanghai Comp. (-0.6%) benefitted from firm Chinese Caixin Services and Composite PMI data in which the former printed a 4-month high, while the latest Chinese trade data mostly topped expectations. However, risk appetite in the mainland was affected by the hawkish US-China rhetoric in which sources noted that top US and Chinese trade negotiators may hold talks soon to review the Phase 1 trade deal and that the Biden administration is likely to go ahead with former President Trump's China investment ban, while there were also comments from President Biden that the Chinese are "eating our lunch" economically and officials noted that Secretary of State Blinken is to keep pressure on China in his UN speech today. Finally, 10yr JGBs were flat amid the mild positive mood across stocks and after the choppy lead in T-notes, while firmer demand at the enhanced liquidity auction for 2yr, 5yr, 10yr and 20yr JGBs was also largely ignored by prices.

Top Asian News

  • Buyers Remorse Afflicts China’s Stock Traders Seeing Losses
  • Taiwan Central Banker Says Currency Policy Faces ‘Turning Point’
  • Huarong Wired Funds for Offshore Bond Coupons Due Friday
  • Billionaire Li Ka-shing Bets on Southeast Asia’s Tech Startups
  • Asia Is Exception as Emerging Markets Start to Look Fragile

Major European bourses trade mostly positive but off best levels at the time of writing (Euro Stoxx 50 +0.3%) as the initial optimism seen at the cash open turned more into a cautious tone as the US labour market report looms. The initial downside across the European equity complex coincided with comments from ECB’s Kazak who suggested that a decision on slowing down bond purchases is possible in June, although the comments do not make it clear as to whether a slow-down equates to a return to the pre-March pace, or a more pronounced decrease. US equity futures meanwhile remain caged heading into the US labour market report with the main contracts largely unchanged. Back to Europe, the DAX (+1.0%) remains the outperformer as Adidas (+8%) and Siemens (+3%) remain elevated post-earnings - with the former upgrading its guidance - whilst the FTSE MIB (-0.1%) is the laggard after outperforming yesterday. Sectors in Europe are mostly firmer with Basic Resources outperforming as base metal prices remain firm, closely followed by Oil & Gas whilst the Personal and Household Goods sector is propped up by Adidas. Autos meanwhile gave up some gains as the continued chip shortage remains a grey cloud over automakers, with Volkswagen (-1%), Renault (-0.7%), Stellantis (-0.1%) all subdued but BMW (+0.9%) bucks the trend after stellar earnings – with deliveries of electrified vehicles more than doubling – although the Co. warned that the rising cost of raw materials could dampen earnings ahead. The Construction/Manufacturing sector remains the laggard with rising costs of materials eating into margins. In terms of individual movers, Meggitt (+11%) rose around 15% at the open amid a report suggesting that Woodward is working with banks on a potential deal with Meggitt named as a potential target.

Top European News

  • ECB’s Kazaks Says June Decision to Slow Bond-Buying Possible
  • Siemens Lifts Guidance as China-Led Recovery Gains Momentum
  • British Airways Owner Subdued on Impact of U.K. Travel Restart
  • BMW Expects to Hit High End of Margin Goal Despite Rising Costs
  • U.K.’s Johnson Wins Historic By-Election on Brexit, Vaccine Bump

In FX, not the best performing major or even the biggest mover, but certainly volatile in the run up to monthly US jobs data that often keeps currency moves relatively contained. However, reports of a big buy order in Eur/Usd on a break of 1.2070 saw the headline pair extend above the 100 DMA to post a new w-t-d peak circa 1.2090, and given the timing of the spike could well have been linked to or sparked by comments from ECB’s Kazaks on the prospect of scaling down the pace of QE from June – see 8.15BST post on the Headline Feed for more details, analysis and some context. 1.2100 may cap further Euro gains for psychological reasons and the fact that 1.4 bn option expiry interest resides at the strike, but by the same token 1.4 bn between 1.2050-40 and 1.8 bn from 1.2035-25 should provide support over NFP and into the NY cut.

  • GBP - The Pound is actually topping the G10 ranks, and in truth has been relatively resilient around 1.3900 vs the Dollar for a while, albeit unable to breach 1.3950 and revisit highs around 1.4000 or maintain momentum against the Euro to breach resistance ahead of 0.8600 in the form of the 50 DMA. In terms of Sterling fundamentals, not much independent impetus from the BoE or somewhat mixed UK PMIs, so Cable and the Eur/Gbp cross have been moving on external and seasonal factors in the main, with some attention to latest Brexit developments as the NI protocol stand-off and fishing dispute rumble on.
  • USD - Although the Greenback remains mixed overall, losses vs key DXY components are accumulating to nudge the index further below 91.000 and away from recent recovery highs as the countdown to NFP continues and expectations build for a consensus beating headline number. Hence, the Buck may be prone towards a deeper setback as the bar has risen and the Fed, bar more hawkish factions stick to an accommodative stance awaiting substantial progress towards inflation and full employment policy goals. Returning to the DXY, 90.963-742 covers trade so far.
  • CHF/NZD/JPY/AUD - The Franc is consolidating off fresh peaks vs the US Dollar and Euro near 0.9058 and 1.0936 respectively in wake of a better than forecast Swiss sa jobless rate, while the Kiwi has faded ahead of 0.7250 against its US rival following firmer Q2 NZ inflation expectations overnight and the Yen has not been able to keep its head above 109.00 against the backdrop of moderately higher US Treasury yields and 1.2 bn option expiries from the round number up to 109.10. Similarly, the Aussie has waned into 0.7800 where 1.2 bn expiry interest resides even though robust Chinese trade data and Caixin PMIs may offer some incentive to resolve differences on tariffs and subsidies that have resulted in suspension of dialogue between the 2 sides.

In commodities, WTI and Brent front month futures remain choppy within a contained range yet again amid a lack of fresh catalysts heading into the US labour market report alongside further central bank commentary. The geopolitical landscape also remains little changed thus far, although a US official did note that the pace of talks would need to speed up in order to reach a deal in the coming weeks re. Iran, adding that the sides are not in the final stages of discussions yet. Meanwhile, eyes remain on the COVID situation in India, although concerns are seemingly under control as far as the crude markets go, whilst reports yesterday suggested that Indian state refiners placed orders for regular supplies from Saudi Aramco for June following a dip in May. WTI Jun reside around USD 64.50/bbl (vs a 64.44-65.24 range) whilst Brent Jul meanders USD 68/bbl (vs a 67.86-68.65 range). Moving on, spot gold and silver are on stand-by for the Tier-1 US data but hold onto a lion’s share of its recent gains with the former above USD 1,800/oz (1813-23 range) and the latter retaining its USD 27/oz handle. Turning to base metals, LME copper continues to gain ground above USD 10,000/t with similar upside price action seen in Shanghai copper and Dalian iron ore, with traders citing Chinese demand upon their return to the markets alongside Dollar weakness. There was also some commentary from the mining giant Glencore’s CEO who suggested that copper prices will need to increase to USD 15,000/t in order to encourage sufficient new supply to meet projected demand, specifically the mining industry would need to generate an additional 1mln tonnes of the metal each year.

US Event Calendar

  • 8:30am: April Change in Nonfarm Payrolls, est. 1m, prior 916,000
    • 8:30am: April Change in Private Payrolls, est. 938,000, prior 780,000
    • 8:30am: April Change in Manufact. Payrolls, est. 57,000, prior 53,000
    • 8:30am: April Unemployment Rate, est. 5.8%, prior 6.0%; Underemployment Rate, prior 10.7%
    • 8:30am: April Labor Force Participation Rate, est. 61.6%, prior 61.5%
    • 8:30am: April Average Hourly Earnings YoY, est. -0.4%, prior 4.2%; Average Hourly Earnings MoM, est. 0%, prior -0.1%
    • 8:30am: April Average Weekly Hours est. 34.9, prior 34.9
  • 10am: March Wholesale Trade Sales MoM, est. 1.0%, prior -0.8%; Wholesale Inventories MoM, est. 1.4%, prior 1.4%
  • 3pm: March Consumer Credit, est. $20b, prior $27.6b

DB's Jim Reid concludes the overnight wrap

For most of yesterday it was fairly quiet as markets seemed to be in a holding pattern as we all awaited today’s all-important US jobs report. However just as we thought we could go on auto pilot until the big number, some late dovish Fed comments sent US equities higher. The S&P 500 moved from flat 90 minutes before the close to finish +0.82% and only just shy of a new record close. Banks (+1.52%) remain among the leading industries in the S&P, however there was a recovery in some growth sectors as well with tech hardware (+1.29%) media (+1.02%) and software (+0.98%) all bouncing back. The gain in tech saw the NASDAQ rise (+0.37%) for the first time in five sessions after the first four day decline index since mid-October. European indices earlier held steady for the most part, with the STOXX 600 only seeing a modest -0.12% decline, while the DAX was +0.17% higher.

The market seemed to turn higher on comments from Fed Governor Bostic, who indicated that even a very strong jobs number is not going to cause the committee to formally discuss changing the pace of bond purchases. Governor Bostic earlier this year had been more open to talk about the committee thinking about tapering and so his comments seem to highlight a certain cohesiveness from the recent Fed speakers to remain on message. Was this co-ordinated after Secretary Yellen’s comments earlier this week?

Talking of the Fed, they released their semi-annual financial stability report late last night. It’s certainly an interesting one to read as they warn about stretched asset prices and high debts. The paradox is that their actions have been a big part of why we have such conditions. I can’t help think that life becomes a lot harder for the Fed once the economy reopens in earnest and inflation numbers start shooting up - transitory or not.

Looking forward now and that jobs report at 13:30 London time will be the focal point today as markets seek to gauge the strength of the economic recovery. In terms of what to expect, our US economists are looking for strong nonfarm payrolls growth of +1.275m, and a decline in the unemployment rate to a post-pandemic low of 5.7%. Fed Chair Powell has said that they “want to see a string of months” like the March report in order to reach the Fed’s goals, so all eyes will be on whether this report fits that definition. Though of course, even job growth at that level would still leave the total number of nonfarm payrolls more than 7m beneath the pre-Covid peak, and the Fed have been consistent in their message they want to see actual rather than simply forecasted progress. On this point, the weekly initial jobless claims data released yesterday fell to a post-pandemic low of 498k (vs 538k expected) in the week through May 1, but that still leaves it at more than double its pre-Covid levels.

With all that to look forward to, Treasury yields were fairly steady yesterday, with the 10yr yield up just +0.4bps to 1.570%. Real yields were up +2.0bps, though that was mostly offset by a -1.6bps decline in inflation expectations – just the second daily drop in 10yr breakevens in the last 10 trading sessions. And in Europe there was a similar pattern of modest upward rises in yields, with those on 10yr bunds up +0.3bps, though Italian sovereign bonds underperformed once again with the spread of their 10yr yields over bunds widening to a fresh 3-month high of 114bps.

On another theme, the upward march of commodities showed no sign of abating yesterday, with copper prices up another +1.76% to reach a fresh high for the decade, and spot iron ore prices rose above $200/ton for the first time ever. My summer building project at my house looks like it is getting more expensive by the day. Even precious metals surged, with gold (+1.59%) seeing its best day in nearly 2 months, and silver up +3.10%. The main exception to this were oil prices, which pared back their morning gains as both WTI (-1.40%) and Brent crude (-0.97%) ended the session lower. This all came as the US dollar index fell -0.46%, taking the weekly move negative, which would be the 4th in the last 5 if the dollar does not rally today.

Overnight, Asian markets have followed Wall Street’s lead with the Nikkei (+0.08%), Hang Seng (+0.52%), Shanghai Comp (+0.42%), Kospi (+0.72%) and India’s Nifty (+0.85%) all making advances. Besides the positive US equity moves, sentiment is also being helped by decent Chinese economic data with exports in April printing at 32.3% yoy (vs. 24.1% yoy expected) while imports stood at 43.1% yoy (vs. 44% yoy expected). China’s Caixin April Services PMI also printed strong at 56.3 (vs. 54.2 expected). Japan’s final services PMI also increased and was +1.2pts from flash at 49.5. Away from Asia, futures on the S&P 500 are also up +0.10% while Stoxx 50 futures are up as much as +0.68% as they try to catch up with the late rally in US equities yesterday. Meanwhile the rally in commodities is continuing unabated with Copper up another +1.4% this morning to $10,206.

Here in the UK, we are yet to get results of the by election in Hartlepool but the Press Association has reported that Labour has all but conceded defeat after shadow transport secretary Jim McMahon, who led the Opposition party's campaign to hold the North East town, said it looked clear that Labour had not "got over the line”. If final results indeed confirm a win for Conservatives then this would be first defeat for the Labour party in Hartlepool in almost 50 years. Lots more local election results and the crucial Scottish vote will come through in the hours ahead.

Staying on the UK, the Bank of England kept their policy settings unchanged, in line with expectations, and revised up their growth forecasts from February, now seeing 2021 GDP growth at +7.25% (vs. +5% before). We did get one dissenting vote on QE from chief economist Haldane, who preferred to reduce the target for the stock of UK government bond purchases to £825bn, down from the current £875bn amount. However, there aren’t really implications for markets since Haldane is due to leave the committee after next month’s meeting anyway. Overall, the BoE struck a more optimistic note relative to their forecasts back in February, raising their 2021 growth forecast for the UK to +7.25% (vs. +5% before). Meanwhile on inflation, their forecasts based on market interest rate expectations showed CPI at 1.96% in Q2 2023, and 1.93% in Q2 2024, so slightly beneath their 2% target and suggesting that the market pricing of future hikes is a little too rapid for keeping inflation at target. Finally on tapering, there was a reduction in the pace of purchases, but the size of the total envelope for government bond purchases remains unchanged at £875bn. See DB’s piece on the meeting here.

On the pandemic, the data at a global level continues to show that the latest wave seems to have peaked for now, with the week-on-week growth in cases having peaked on April 28 according to John Hopkins University’s numbers. In terms of the latest on the patent waiver plan, German Chancellor Merkel cast doubts that the idea would garner enough international support to be viable. A German government spokeswoman said, “The limiting factor for the production of vaccines are manufacturing capacities and high quality standards, not the patents”, before going on to say that “protection of intellectual property is a source of innovation.” There was some good news on the production front with Pfizer and BioNtech announcing that they will now be able to make as much as 3 billion doses of its Covid-19 vaccine this year, double their initial estimates, with their international partners expecting to make another 3 billion next year. Moderna announced that the companies vaccine trial amongst teens showed a 96% efficacy rate as the US looks to expand its vaccination program to the younger population. The need for that expansion was emphasised by Colorado’s state epidemiologist announcing yesterday that junior high and high school aged populations (11-17) have the highest transmission rates in the state.

In terms of yesterday’s other data, Euro Area retail sales rose by a stronger-than-expected +2.7% in March (vs. +1.6% expected), and February’s growth was also revised up 1.2 percentage points. German factory orders also surprised to the upside in March, with growth of +3.0% (vs. +1.5% expected), while the UK’s composite PMI for April was revised up to 60.7 (vs. flash 60).

To the day ahead now, and the aforementioned US jobs report for April will be the main highlight for markets. Over in Europe, the data releases include March figures on German and French industrial production, along with Italian retail sales, as well as the UK’s construction PMI for April. Central bank speakers include ECB President Lagarde, the BoE’s Broadbent and Haldane, and the Fed’s Barkin.

Tyler Durden Fri, 05/07/2021 - 07:59
Published:5/7/2021 7:01:08 AM
[Markets] Asia Stocks Edge Up After Robust Data Boost U.S.: Markets Wrap (Bloomberg) -- Asian stocks opened slightly higher after U.S. indexes gained on positive economic data. The dollar held losses.Shares edged up in Japan, South Korea and Australia. U.S. contracts were in the green after rallies in U.S. benchmarks overnight, which included a fresh record for the Dow Jones Industrial Average. Treasuries held steady, with the 10-year yield hovering at 1.57%, well below recent highs.Investors will be watching for weakness at China’s open, after Bloomberg News reported the Biden administration is likely to preserve limits on U.S. investments in certain Chinese companies.U.S. economic reports helped sentiment, as applications for state unemployment insurance fell to a fresh pandemic low, and separate data showed a rebound in productivity. Traders now turn to Friday’s payrolls numbers.“With jobless claims hitting a pandemic-era low, anticipation for the full jobs picture tomorrow mounts,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial. “Today’s read is another proof point that we’re one step closer to full economic recovery. As we see some serious momentum building on the jobs front, all eyes will be on how this plays into action taken by the Fed.”While strengthening growth in the world’s largest economy is supporting markets, investors are concerned that a faster-than-expected rebound on unprecedented government and central bank stimulus could drive excessive inflation. The Federal Reserve remains committed to near-zero interest rates to bring about a full recovery, though an announcement of a pullback in its heavy monthly bond purchases seems increasingly likely in the second half of this year.Concerns about excessive risk taking could spur more talk of the Fed adjusting policy. The central bank’s semi-annual financial stability report noted rising appetite for risk across a variety of asset markets is stretching valuations and creating vulnerabilities in the U.S. financial system. Elsewhere, spot iron ore broke $200 a ton for the first time, while copper approached a record high. Oil climbed.These are some of the main moves in markets:StocksS&P 500 futures were little changed at 9:35 a.m. in Tokyo, after the index rose 0.8%Nasdaq 100 contracts rose 0.3%. The index gained 0.8%.Japan’s Topix Index climbed 0.3%South Korea’s Kospi was up 0.2%Australia’s S&P/ASX 200 Index rose 0.2%Hong Kong’s Hang Seng Index futures slipped 0.4% earlierCurrenciesThe Bloomberg Dollar Spot Index was steadyThe euro traded at $1.2067The British pound was $1.3895The Japanese yen was 109.02 per dollarBondsThe yield on 10-year Treasuries was little changed at 1.57%Australia’s 10-year yield rose one basis point to 1.69%CommoditiesWest Texas Intermediate crude traded just below $65 a barrelGold futures traded at $1,815 an ounceFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P. Published:5/6/2021 7:57:12 PM
[Markets] US STOCKS-Dow ends at record high after upbeat jobless claims report The Dow Jones Industrial Average closed at a record high on Thursday, bolstered by an upbeat weekly jobless claims report, while vaccine makers dipped after U.S. President Joe Biden backed plans to waive patents on COVID-19 shots. Lifted by Apple Inc, the S&P 500 rose after a Labor Department report showed initial claims for state unemployment benefits totaled a seasonally adjusted 498,000 for the week ended May 1, compared with 590,000 in the prior week. Published:5/6/2021 3:33:57 PM
[Markets] Dow hits record high as cyclicals rise on jobless claims data The Dow Jones Industrials hit a record high on Thursday, as economically sensitive stocks rose after an upbeat weekly jobless claims report, while vaccine makers fell as President Joe Biden backed plans to waive patents on COVID-19 shots. Cyclical sectors including the S&P 500 financials and industrials rose after a Labor Department report showed initial claims for state unemployment benefits totaled a seasonally adjusted 498,000 for the week ended May 1 compared to 590,000 in the prior week. Shares in Pfizer Inc, Moderna Inc, Johnson & Johnson and Novavax Inc, all involved in the making of COVID-19 vaccines, fell between 0.2% and 1.7%. Published:5/6/2021 11:55:33 AM
[Markets] Cisco and IBM set pace as Dow industrials run up 170-point gain Cisco and IBM set pace as Dow industrials run up 170-point gain Published:5/6/2021 10:54:21 AM
[Markets] Dow Jones Rallies, Tech Stocks Reverse As Jobless Claims Fall; Apple At Key Level, While PayPal Jumps On Earnings The Dow Jones Industrial Average rallied 100 points, as jobless claims dropped below 500,000. Apple stock is trying to find support at critical level. Published:5/6/2021 10:54:21 AM
[Markets] Dow Jones Erases Gains, Tech Stocks Slide As Jobless Claims Fall; Apple At Key Level, While PayPal Jumps On Earnings The Dow Jones Industrial Average rallied 100 points, as jobless claims dropped below 500,000. Apple stock is trying to find support at critical level. Published:5/6/2021 9:57:23 AM
[Markets] Dow industrials edging higher Thursday in wake of jobless-claims data Dow industrials edging higher Thursday in wake of jobless-claims data Published:5/6/2021 8:52:20 AM
[World] Market Snapshot: Dow aims to extend record climb as investors watch for jobless-claims data U.S. stocks are poised to post slight gains but enough to help the Dow extend its rise to new all-time highs as investors continue to pore over quarterly results from American corporations that have thus far beaten expectations at a strong clip.
Published:5/6/2021 6:53:25 AM
[Markets] Why Peloton and Zillow Plunged Despite the Dow's Record Close The stock market had another topsy-turvy day on Wednesday, with major market benchmarks getting pushed and pulled in both directions at various points. A couple of Nasdaq stocks, Peloton Interactive (NASDAQ: PTON) and Zillow Group (NASDAQ: Z) (NASDAQ: ZG), had a role to play in the index's decline. The Dow Jones Industrial Average (DJINDICES: ^DJI) climbed to all-time record highs, while the S&P 500 (SNPINDEX: ^GSPC) treaded water amid downward pressure from the tech stocks that make up such a large portion of the Nasdaq's constituency. Published:5/6/2021 4:21:06 AM
[Markets] Asia Stocks Look Steady as Tech Drops; Yields Fall: Markets Wrap (Bloomberg) -- Asia stocks are set for a muted open after technology shares weighed on U.S. markets, offsetting optimism over solid corporate earnings and economic reports. Treasuries climbed.Futures were little changed in Australia and Hong Kong. Trading resumes in Japan and China after holidays. U.S. futures edged lower after the S&P 500 notched a small gain while the Nasdaq 100 ended in the red. The Dow Jones Industrial Average rose to a fresh record. Moderna Inc. and Johnson & Johnson retreated on news the U.S. will support a proposal to waive intellectual-property protections for Covid-19 shots, joining an effort to increase global supplies.The Bloomberg Commodity Spot Index returned to its highest level since 2011 as growth bets boost demand, while poor weather and transportation bottlenecks threaten supply. Oil slipped toward $65 a barrel. The dollar was little changed.The U.S. Treasury said it will sell $126 billion of long-term debt next week in its quarterly refunding auctions. It’s the first time in more than a year that the total hasn’t increased, suggesting that the government’s financing needs may have peaked. Treasuries rallied over the session, with the benchmark 10-year yield slipping to 1.57%.As the world’s largest economy rebounds, an intense debate has emerged over whether inflation could get out of control. The five-year breakeven rate -- a proxy for inflation expectations -- has jumped to the highest since 2008, buoyed in part by commodity prices. Despite massive government spending and central bank stimulus, several Federal Reserve officials said Wednesday that price pressures can be contained.“I do think we are set up for a more difficult summer,” Andrew Sheets, Morgan Stanley chief cross asset strategist, said on Bloomberg TV. “The higher inflation numbers are going to come through -- they might be temporary but we are definitely going to get them -- and we are at much higher levels” in the stock market, he said.Here are some key events to watch this week:Bank of England rate decision ThursdayThe April U.S. employment report is released on FridayThese are some of the main moves in markets:StocksS&P 500 futures dipped as of 7:16 a.m. in Tokyo. The S&P 500 was little changedNasdaq 100 futures slipped 0.1%. The Nasdaq 100 fell 0.3%Australia’s S&P/ASX 200 Index futures were little changedHong Kong’s Hang Seng Index futures rose 0.3% earlierCurrenciesThe Japanese yen was at 109.20 per dollarThe offshore yuan was at 6.4876 per dollarThe Bloomberg Dollar Spot Index was little changedThe euro was little changed at $1.2005BondsThe yield on 10-year Treasuries declined two basis points to 1.57%CommoditiesWest Texas Intermediate crude fell 0.5% to $65.28 a barrelGold was at $1,787.33 an ounceFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P. Published:5/5/2021 5:48:24 PM
[Markets] Commodity Chaos Continues, Stocks Refuse To Bounce After Janet's Jolt Commodity Chaos Continues, Stocks Refuse To Bounce After Janet's Jolt

While bonds, crypto, and the dollar largely trod water today, Commodities rose for a record 16th straight day today...

Source: Bloomberg

That is the highest for that index since July 2015...

Source: Bloomberg

After Janet Yellen shit the bed yesterday, today's bounce was barely noticeable (and non-existent in most cases)...

The Dow outperformed on the day with Big-Tech and Small Caps the laggards...

At 1400ET a major sell program slammed stocks - around the same time as the Biden admin supported the waiver on COVID vaccine-patents at the WTO.

Source: Bloomberg

Get back to work Mrs.Yellen...

Peloton puked as it recalled its child-eating Treadmill...


Treasuries were modestly bid today, improving late on as stocks slumped. The belly is outperforming this week with 7Y down 6bps...

Source: Bloomberg

The 10Y tested above 1.60% once again but could not hold it...

Source: Bloomberg

The dollar oscillated around in a tight range today ending unchanged...

Source: Bloomberg

Loonie at 4 year highs...

Source: Bloomberg

Crypto was modestly higher today, but ETH traded in a narrow range, unable to make a new record high... for a change...

Source: Bloomberg

Oil prices hit a new cycle high before WTI tumbled back below $65 (despite a big surprise crude draw) as perhaps weaker than expected product demand raises red flags. Also on a technical note, today saw the stops run from OPEC's spike...

Lumber surged above $1600 today - a new record high - and is rapidly heading towards surpassing gold (for the first time since 2004)...

Source: Bloomberg

And while Commodities continue to charge higher (Spot Ag at its highest since Oct 2012), Cocoa is bucking the trend amid a period of oversupply at a time when the pandemic is hurting global chocolate demand...

Source: Bloomberg

Gold managed to hold on to gains today with futures hovering around $1780 (unable to break $1800 once again)...

And while LME Copper nears $10,000 (and its record highs from 2011), Zambia - which relies on the metal for 70% of its export earnings - is not seeing the benefits as the Kwacha collapses to a new record low (against the USD)...

Source: Bloomberg

Finally, we note that 5Y Breakevens pushed to their highest since 2006 today...

Source: Bloomberg

But, of course, this is all just transitory.

Tyler Durden Wed, 05/05/2021 - 16:00
Published:5/5/2021 3:18:10 PM
[Markets] Dow finishes at record high as tech stocks weigh on Nasdaq Dow finishes at record high as tech stocks weigh on Nasdaq Published:5/5/2021 3:18:10 PM
[Markets] Dow Jones Rises On Yellen Comments; Apple Stock Rebounds, Peloton Dives The Dow Jones rose after Treasury Secretary Janet Yellen clarified her hawkish comments on interest rates. Apple stock gained. Peloton stock dove. Published:5/5/2021 2:17:10 PM
[Markets] US STOCKS-Wall Street rises as megacap stocks bounce; Dow hits record high The Dow Jones Industrial Average hit a record high on Wednesday, as the market recovered from a steep tech sell-off, after investors were encouraged by U.S. Treasury Secretary Janet Yellen's new comments on interest rates and a positive private jobs report. Energy and materials continued this week's momentum, leading gains among S&P 500 sectors, with a jump of 2.4% and 1.1%, respectively. The S&P 500 technology sector gained 0.43%, while the Philadelphia SE Semiconductor index added 1.3%, recovering from a sell-off on Tuesday after Yellen suggested that interest rates might need to rise in an overheating economy. Published:5/5/2021 1:46:58 PM
[Markets] Dow Jones Rallies As Janet Yellen Backs Off Rate Hike Comments; Apple, Tesla Look To Rebound, GM Jumps On Earnings The Dow Jones Industrial Average briefly rallied 75 points Wednesday, as Treasury Secretary Janet Yellen backed off from rate-hike comments. Published:5/5/2021 10:47:19 AM
[Markets] US STOCKS-S&P 500, Nasdaq rise as megacap stocks bounce; Boeing weighs on Dow The S&P 500 and the Nasdaq rose on Wednesday as megacap stocks bounced from a steep selloff in the previous session and private jobs rose in April, but a decline in Boeing shares weighed on the Dow. Technology-related companies including Apple Inc, Microsoft Corp, Inc, Facebook Inc and Alphabet Inc rose between 0.2% and 1.3%. Published:5/5/2021 10:18:24 AM
[Markets] Dow Jones Falls As Janet Yellen Backs Off Rate Hike Comments; Apple, Tesla Look To Rebound, GM Jumps On Earnings The Dow Jones Industrial Average briefly rallied 75 points Wednesday, as Treasury Secretary Janet Yellen backed off from rate-hike comments. Published:5/5/2021 9:49:56 AM
[Markets] Dow Jones Today Eyes Record, Tech Stocks Bounce As Yellen Clarifies; Big 5, Under Armour Lead Retail Rally Facebook shares rose after upholding the site's blackout against former President Donald Trump. The Dow Jones Industrial Average crept up 0.1%. The Nasdaq Composite rebounded 0.5% on the stock market today, as video game developer Activision Blizzard jumped more than 5% on earnings news to lead the Nasdaq 100. Published:5/5/2021 8:47:35 AM
[Markets] Dow Jones Today, Futures Rise, Tech Stocks Bounce As Yellen Clarifies; Big 5, Under Armour Lead Retail Rally Big 5 and Under Armour jumped, Chevron led the Dow Jones today, and Nasdaq futures led the premarket advance as stock futures gained. Published:5/5/2021 8:16:35 AM
[Markets] May The Fourth Be Not With The Doves May The Fourth Be Not With The Doves

As many celebrate Star Wars Day, Janet Yellen stepped up to the plate to deliver, warning that "interest rates will have to rise to ensure the economy does not overheat."

"I felt a great disturbance in the farce, as if millions of dovish voices suddenly cried out in terror and were suddenly silenced."

Bear in mind that money-markets have been discounting a rate-hike far sooner than The Fed's dot-plot forecast would suggest for months...

Source: Bloomberg

“Every client call I’m on including the one I just finished ... is talking about overheating,” CNBC cited BackRock's CIO Rick Rieder as saying.

So this move today is more of a wake-up call for stocks than anything else. The Dow scrambled back to unchanged (King Kong Yellen ain't got shit on me...). Nasdaq suffered its worst day since mid-March and is down 5 of the last 6 days...

European stocks also puked...

Source: Bloomberg

"Dammit, Janet!"

We do note that we suspect a "just kidding" clarification is coming as The White House confirmed that Yellen will join the press briefing on Friday. Press Secretary Psaki says the Biden administration takes "inflationary risk incredibly seriously."

Fed's Kaplan continued his 'cover your ass' warnings:


Year-to-date, Nasdaq 100 is the laggard now, up 4.7%... while Dow Transports are up a stunning 24.7%...

Source: Bloomberg

Seems like Biden's Tax malarkey took the shine off the Growth trade...

Source: Bloomberg

Trannies have regained all their relative underperformance versus Nasdaq 100 since March 2020...

Source: Bloomberg

The Nasdaq found support at its 50DMA...

Russell 2000 broke below its 50DMA (and didn't recover)...

"Most Shorted" stocks are down 6 straight days and today was the biggest drop since March...

Source: Bloomberg

FAAMG stocks were hammered...

Source: Bloomberg

Semis are down 5 of the last 6 days and broke below key technical levels today...

Source: Bloomberg

Ether continued its recent rampage to new record highs (above $3500) before falling after Yellen's comments...

Source: Bloomberg

Bitcoin was clubbed like a baby seal...

Source: Bloomberg

BTC's weakness relative to ETH sent the ratio soaring once again...

Source: Bloomberg

Meanwhile, Dogecoin ripped to become the 4th largest cryptocurrency...

Source: Bloomberg

And bullion was battered on Janet's jawboning...

The dollar spiked on Yellen's comments but gave it all back after running stops from yesterday's highs...

Source: Bloomberg

Treasury yields were all lower today, led by the long-end (30Y -3bps). NOTE, very similar pattern to yesterday in terms of buying and selling..

Source: Bloomberg

10Y Yield dropped back below 1.60%(though chopped around a little on Yellen's comments)...

Source: Bloomberg



Source: Bloomberg

WTI managed gains today, unfazed by Yellen, holding above $65 ahead of tonight's API inventory data...

Silver lost $27 today...

Bloomberg's Commodity Spot Index continued its surge to the highest since 2011...

Source: Bloomberg

Finally, we wonder how investors would cope if the S&P 500 were to fall back to its global liquidity support level (only around 3900)?

Source: Bloomberg

Tyler Durden Tue, 05/04/2021 - 16:00
Published:5/4/2021 3:17:15 PM
[Markets] Nasdaq closes down nearly 2% as tech shares decline; Dow ekes out gain Nasdaq closes down nearly 2% as tech shares decline; Dow ekes out gain Published:5/4/2021 3:17:15 PM
[Markets] NewsWatch: Dow down 280 points, with tech shares under heavy pressure U.S. stocks are off to a weak start Tuesday, a day after the S&P 500 index and the Dow Jones Industrial Average put in a strong start to May, pushing the equity benchmarks near records.
Published:5/4/2021 11:09:51 AM
[Markets] Dow Jones Slides, Tech Stocks Dive As Apple Sells Off; Tesla Falls Below Key Level The Dow Jones Industrial Average declined over 250 points Tuesday, as Dow Jones leader Apple sold off sharply. Tesla stock fell through a key support level. Published:5/4/2021 10:09:44 AM
[Markets] Dow down 280 points, with tech shares under heavy pressure U.S. stocks are off to a weak start Tuesday, a day after the S&P 500 index and the Dow Jones Industrial Average put in a strong start to May, pushing the equity benchmarks near records. Published:5/4/2021 9:40:38 AM
[Markets] Dow slips to start Tuesday trade as investors weigh corporate quarterly results, economic reports, await Yellen remarks U.S. stock indexes opened lower Tuesday, a day after the S&P 500 index and the Dow Jones Industrial Average put in a strong start to May, pushing the equity benchmarks near records. Investors are awaiting comments from Treasury Secretary Janet Yellen at 11 a.m. ET and again at 4 p.m. at an event hosted by The Wall Street Journal, as they assess earnings from the likes of Pfizer and CVS Health Corp. and economic data that has recently helped to power a rotation into energy and banking assets. The Dow Jones Industrial Average [: DJIA] was off 0.1% at 34,066, the S&P 500 index declined 0.5% at 4,172, while the Nasdaq Composite Index was trading 1.1% lower at 13,743. Published:5/4/2021 8:40:36 AM
[Markets] Dow Jones Futures Slide As Apple Nears New Buy Point; Tesla Tests Key Level Dow Jones futures were lower early Tuesday, as Apple approaches a new buy point. Tesla stock is testing a key support level. Published:5/4/2021 7:10:53 AM
[Markets] Dow Jones Futures Rise, Tech Futures Slide Amid Stock Market Rotation As Apple Nears New Buy Point; Tesla Tests Key Level Dow Jones futures were higher early Tuesday, as Apple approaches a new buy point. Tesla stock is testing a key support level. Published:5/4/2021 6:10:43 AM
[Markets] Dow Jones Futures Signal Modest Gains Amid Stock Market Rotation As Apple Nears New Buy Point; Tesla Tests Key Level Dow Jones futures were higher early Tuesday, as Apple approaches a new buy point. Tesla stock is testing a key support level. Published:5/4/2021 5:39:10 AM
[Markets] Dow Jones Futures Fall: Stock Market Rotation? Apple Nears New Buy Point; Tesla Tests Key Level Dow Jones futures were lower early Tuesday, as Apple approaches a new buy point. Tesla stock is testing a key support level. Published:5/3/2021 11:06:32 PM
[Markets] Dow Jones Futures: Stock Market Rotation? Apple Nears New Buy Point; Tesla Tests Key Level Dow Jones futures were lower late Monday, as Apple approaches a new buy point. Tesla stock is testing a key support level. Published:5/3/2021 8:06:30 PM
[Markets] Dow Jones Futures: Tech Stocks Stumble As Apple Nears New Buy Point; Tesla Tests Key Level Dow Jones futures were lower late Monday, as Apple approaches a new buy point. Tesla stock is testing a key support level. Published:5/3/2021 6:05:17 PM
[Markets] US STOCKS-'Reopening' stocks give S&P 500, Dow strong footing, tech names lag The S&P 500 and the Dow indexes ended higher on Monday amid a largely upbeat earnings season, while the Nasdaq came under pressure from declines in some high-flying growth stocks, as the rotation into cyclical and "economy reopening" stocks continued. Economy-sensitive cyclical S&P 500 sectors such as consumer staples, energy, and materials outperformed sectors housing growth stocks, including technology and communication services,. Published:5/3/2021 4:04:40 PM
[Markets] Dow finishes up over 200 points as investors bet on economic reopening Dow finishes up over 200 points as investors bet on economic reopening Published:5/3/2021 3:34:38 PM
[Markets] Crypto & Gold Jump As Dollar Dumps, Stocks & Bonds Rise Crypto & Gold Jump As Dollar Dumps, Stocks & Bonds Rise

Aside from a disappointing stagflationary miss on ISM Manufacturing (and Buffett and Munger musings on inflation), the big headlines of today are in crypto where altcoins are screaming higher...

It's really escalating...

Ethereum has literally exploded to record-er and record-er highs in the last few days, surpassing $3,000 yesterday for the first time and above $3,300 today...

Source: Bloomberg

Bitcoin is also on the rise but less so, hovering around $56k...

Source: Bloomberg

This relative outperformance has sent ETH to its strongest versus BTC since Aug 2018 (the ETH/BTC ratio is at a key historical level here)...

Source: Bloomberg

And as crypto rallies, the dollar resumes its decline...

Source: Bloomberg

Which has helped send gold prices back near $1800 as the double-bottom below $1700 seems to have held...

Source: Bloomberg

And silver surging up to $27..

Source: Bloomberg

Small Caps and Big Cap Dow stocks were the day's biggest winners (but well off their highs by the close), S&P managed to hold some gains as Nasdaq lagged notably. The last hour or so saw notable selling pressure...

Energy stocks outperformed, Tech and Cons Disc ended red...

Source: Bloomberg

Interestingly, given the Small Cap gains, "Most Shorted" stocks continued their recent slide

Source: Bloomberg

Bonds were bid on the day (after some overnight weakness amid May Day holidays)...

Source: Bloomberg

10Y Yield dropped back below 1.60%...

Source: Bloomberg

Real yields pushed down to their lowest (most negative) since February, helping support gold...

Source: Bloomberg

Commodities continued their charge higher...

Source: Bloomberg

WTI pushed back above $64...


Finally, we're gonna need a bigger global central bank balance sheet...

Source: Bloomberg

Tyler Durden Mon, 05/03/2021 - 16:01
Published:5/3/2021 3:04:21 PM
[Markets] Dow Jones Rises, Nasdaq Sells Off; Logistics Stocks Show Strength Amid Economic Recovery The Dow Jones Industrial Average traded higher in today's stock market while the Nasdaq composite led on the downside and was the only index trading lower. Published:5/3/2021 2:34:17 PM
[Markets] US STOCKS-S&P 500, Dow start month on strong footing, growth stocks lag The S&P 500 and the Dow indexes rose on Monday as a largely upbeat earnings season strengthened expectations of sustained profit growth, while the Nasdaq came under pressure from declines in some high-flying growth stocks. With more than half of S&P 500 companies having reported so far, profits are now seen rising 46% in the first quarter, compared with forecasts of 24% growth at the start of April, according to IBES data from Refinitiv. Economy-sensitive cyclical S&P 500 sectors such as financials, energy, industrials and materials outperformed sectors housing growth stocks, including technology and communication services, by early afternoon. Published:5/3/2021 12:33:40 PM
[Markets] Dow Jones Rallies 300 Points To Lead Stock Market; Is a New Closing High Next? Stocks were mixed near midday Monday as the Dow Jones Industrial Average rallied 300 points, on track for a new closing high, but the Nasdaq slipped. Published:5/3/2021 11:33:22 AM
[Markets] Dow Rallies 300 Points As Apple Nears Buy Point; Tesla Slashes Losses, While Nio Reports Surging Sales The Dow Jones Industrial Average rallied 300 points Monday, as Apple neared a new buy point. Tesla stock skidded in morning trade, while Nio reported sales. Published:5/3/2021 9:32:48 AM
[Markets] Stocks open higher Monday with the Dow up nearly 200 points Stocks open higher Monday with the Dow up nearly 200 points Published:5/3/2021 8:32:33 AM
[Markets] Dow stock futures are up about 200 points as the first trades of May kick off Dow stock futures are up about 200 points as the first trades of May kick off Published:5/3/2021 7:32:14 AM
[Markets] Futures Jump On First Day Of May In Quiet Session Futures Jump On First Day Of May In Quiet Session

S&P and Nasdaq futures, and European bourses were volatile but ultimately rose on Monday to kick off a new month in a quiet session which saw several major markets closed, following a week of record earnings beat which however resulted in big stock drops with investors also keeping an eye on India covid cases and economic data to gauge the pace of recovery.

Trading was subdued with several including Japan, China and the U.K. closed for public holidays. S&P 500 futures added 0.6%, Dow e-minis were up 216 points, or 0.64%, and Nasdaq 100 e-minis were up 40.25 points, or 0.30%. Europe’s Stoxx 600 Index gained 0.4%. The yen weakened, while gold advanced.

With more than 60% of companies already having reported mostly stellar results so far, profits are now expected to have risen 46% in the first quarter, compared with forecasts of 24% growth at the start of April, which however has failed to propel stocks to new highs.

Monday's mood reversed from last Friday's surprise selloff as the biggest nasdaq companies reported blowout earnings only to be punished by the market. Some notable premarket movers:

  • Megacap FAAMG stocks rose in premarket trading, with Apple,, Alphabet and Microsoft adding between 0.2% and 0.4% after posting largely upbeat results in the prior week.
  • Tesla Inc fell 0.9%. Industry sources told Reuters the electric vehicle maker, under scrutiny in China over safety and customer service complaints, is boosting its engagement with mainland regulators and beefing up its government relations team.
  • Moderna Inc gained 2.4% after the drugmaker said it would supply 34 million doses of its COVID-19 vaccine this year to the global COVAX program

Europe's Stoxx 600 dipped then reversed after euro zone factory activity growth surged to a record high in April, boosted by burgeoning demand and driving a rise in hiring, although supply constraints led to an unprecedented rise in unfulfilled orders, the latest PMI survey showed. IHS Markit’s final Manufacturing Purchasing Managers’ Index (PMI) rose to 62.9 in April from March’s 62.5, albeit below the initial 63.3 “flash” estimate but the highest reading since the survey began in June 1997.

“The euro zone was late out of the gates in terms of its economic rebound but it does seem to be starting. Looking at where we are now the numbers are encouraging,” said Bert Colijn at ING. “It is a foregone conclusion that Q2 will be much stronger than Q1 was.”

Here are some of the biggest European movers today:

  • Mediaset rises as much as 3.2% before paring some of the gains. The Italian broadcaster could be near a deal to resolve a legal dispute with Vivendi, Italian media reported over the weekend. Bestinver says that a solution with Vivendi could be a positive catalyst for the stock.
  • Straumann shares climb as much as 2.6% to a record after Vontobel (buy) raises PT to CHF1,570 from CHF1,280 following the Swiss dental-implant maker’s “convincing” 1Q sales and given its longer-term prospects.
  • KPN shares drop as much as 4.4% after the Dutch telecom carrier, long considered a potential takeover target, said it rejected two separate, unsolicited approaches. A report saying KPN got a EU3/share offer disappointed some investors, while analysts stressed the difficulties for would-be buyers.
  • Siemens Gamesa shares fall as much as 6% after full-year sales forecast missed estimates. While the company topped Ebit expectations in 2Q, its 2021 guidance cut was unexpected given good onshore order volumes in first half, Citi says in note.

Earlier in the session, Asian stocks declined for a second day with the MSCI Asia Pacific Index slid 0.6%, heading to a one-month low as a resurgence in Covid-19 infections continued to weigh on sentiment. Stock markets in Japan, China, Thailand and Vietnam were shut for the holidays. The region’s surging coronavirus pandemic cases remains a concern, with the daily death toll in India hitting a record 3,689 on Sunday. Meanwhile, Singapore had its first fatality due to complications from Covid-19 in nearly two months over the weekend. Taiwan semiconductor stocks and Chinese internet companies were the biggest drags on the market. “A worsening pandemic situation in India cast a shadow over the Asia-Pacific markets, as investors assess the risk of reopening delays and stricter border controls,” Margaret Yang, a strategist at DailyFX, wrote in a note. South Korea’s benchmark erased gains and closed 0.7% lower as short selling resumed after a 13-month ban. Taiwan was the worst-hit market on Monday, with its benchmark falling almost 2%. Asian stocks have underperformed global peers for the past six weeks amid a surge in coronavirus cases

“Interest rates going forward will be led more by expectations on the tapering from the Fed rather than by inflation,” Raffaele Bertoni, head of debt capital markets at Gulf Investment Corp., said on Bloomberg Television.

As we reported overnight, billionaire Warren Buffett warned of rising price pressures and a “buying frenzy” spurred by low interest rates in his latest marathon Berkshire annual meeting. On Friday, stocks were spooked after Dallas Fed President Robert Kaplan (who’s not currently a voter on the rate-setting committee) said signs of excessive risk-taking suggest it’s time to consider fewer bond purchases. His remarks contrast with those of Fed Chairman Jerome Powell. These warnings come as all top U.S. financial officials and Powell are downplaying inflation risks.

A busy week for U.S. economic data is expected to show resounding strength, particularly for the ISM manufacturing survey and April payrolls. Forecasts are that 978,000 jobs were created in the month - with whisper numbers as high as 1.5 million - as consumers spent their stimulus money and the economy opened up more.  Such gains could stir speculation of a tapering in asset purchases by the Federal Reserve, though Chair Jerome Powell has shown every sign of staying patient on policy.

"Payrolls should show another near 1 million jobs gain, but that would still leave them 7.5 million below pre-COVID levels," said Tapas Strickland, a director of economics at NAB.

"Chair Powell recently noted that it would take a string of months of job creation of about a million a month to achieve the substantial progress required to justify tapering QE."

In FX, the Bloomberg Dollar Spot Index inched lower as most Group-of-10 peers advanced after Friday’s rally in the greenback; the dollar index stood at 91.253 and off a two-month trough of 90.422, though it still ended April with a loss of 2%. The euro was steady at $1.2026 , having backtracked form a nine-week peak of $1.2149 on Friday. It now has solid support around $1.1990 as it shrugs off weaker- than-forecast PMI numbers and 10-year French, Belgian and Austrian yields all rose above last week’s highs as traders unwind haven buying amid thin liquidity; Eurozone April manufacturing PMI 62.9 vs flash reading 63.3. Australia’s dollar oounced from a one-week low a day before an interest rate decision from the central bank and ahead of its quarterly Statement on Monetary Policy later in the week. The front-end of Aussie swaps are fully discounting a rate hike of 15bps by mid-2022, which looks extreme relative to the bank’s latest cash rate guidance, according to Goldman Sachs strategists. The yen slipped to a three-week low against the dollar amid speculation that the Federal Reserve will tighten monetary policy over time while the Bank of Japan retains an easing bias.

In rates, Treasuries opened cheaper at 7am ET amid declines for futures on low volume as overseas cash bond markets were closed. Those losses were pared led by bund futures, leaving U.S. 10-year yields cheaper by ~2bp vs Friday’s close. Treasury yields cheaper by less than 2bp across the curve with front-end outperforming, steepening 2s10s by ~1.5bp; German 10- year yields are cheaper by around 1.5bp vs Friday as month-end demand bid fades. Focus this week is on Wednesday’s Treasury refunding announcement -- where most dealers expect auction sizes to be unchanged from February -- followed by Friday’s April employment report. On the supply side the dollar issuance slate empty; potential $150b of supply is expected for this month as financing remains cheap with spreads near the lowest in three years.

In commodity markets, gold held to a narrow range around $1,768 an ounce sidelined in part by investor interest in crypto currencies as an alternative hedge against inflation. Oil prices ran into profit-taking on Friday but still ended the month with gains of 6% to 8%. Brent was last up 16 cents at $66.92 a barrel, while U.S. crude firmed 18 cents to $63.76 per barrel.

Ethereum hit a record high on Monday trade above $3,000 for the first time, extending last week's rally in the wake of a report that the European Investment Bank (EIB) could launch a digital bond sale on the ethereum blockchain network.

Powell is due to speak later on Monday and will be followed by a raft of Fed officials this week. Dallas Fed President Robert Kaplan caused a stir on Friday by calling for beginning the conversation about tapering

Market Snapshot

  • S&P 500 futures up 0.5% to 4,193.50
  • SXXP Index up 0.3% to 438.73
  • MXAP down 0.6% to 205.19
  • MXAPJ down 0.7% to 691.51
  • Nikkei down 0.8% to 28,812.63
  • Topix down 0.6% to 1,898.24
  • Hang Seng Index down 1.3% to 28,357.54
  • Shanghai Composite down 0.8% to 3,446.86
  • Sensex down 0.6% to 48,490.19
  • Australia S&P/ASX 200 little changed at 7,028.80
  • Kospi down 0.7% to 3,127.20
  • Brent futures little changed at $66.82/bbl
  • Gold spot up 0.4% to $1,776.60
  • U.S. Dollar Index little changed at 91.20
  • German 10Y yield up 3 bps to -0.17%
  • Euro up 0.2% to $1.2042

Top Overnight News from Bloomberg

  • President Joe Biden’s $4 trillion vision of remaking the federal government’s role in the U.S. economy is now in the hands of Congress, where both parties see a higher chance of at least some compromise than for the administration’s pandemic-relief bill
  • The European Commission proposed easing restrictions on tourism and leisure travel for those who have been fully inoculated, adding to signs of a gradual return to normalcy as vaccinations gather pace
  • Container shipping rates are heading higher again, driven to new heights by unrelenting consumer demand and company restocking from Europe to the U.S. that are exhausting the world economy’s capacity to move goods across oceans
  • The booming ETF industry may be set to lure even more cash in the coming years as rich Americans facing higher capital gains taxes look to limit what they owe Uncle Sam
  • Pressure mounted on Boris Johnson as the ruling Conservative Party’s polling lead shrank ahead of local elections, and the leader of the Scottish Tories said the U.K. Prime Minister should quit if he’s found to have broken rules over the funding of refurbishments to his apartment

A quick look at global markets courtesy of Newsquawk

Asian equity markets began the week subdued amid key market closures, lack of fresh macro-drivers over the weekend and ahead of this week's risk events including earnings, central bank updates and US NFP data. ASX 200 (Unch.) traded indecisively although was just about kept afloat by the top-weighted financials sector after big four bank Westpac posted a 256% jump in H1 net and with sentiment initially helped by strong data after AiG Performance of Manufacturing Index rose to its third highest on record. KOSPI (-0.6%) lacked firm direction as the partial lifting of the short-selling ban was counterbalanced by trade data released late last week which showed exports rose by the most in over a decade. The Hang Seng (-1.3%) was heavily pressured amid an ongoing crackdown by China which ordered tech giants to unbundle their financial services as Beijing calls for a stop to companies turning their mobile payment apps into financial supermarkets through the offering of loans and insurance policies. US-China tensions also lingered after the USTR announced it will keep China on its watchlist for IP violations and suggested the new China IP protection law was insufficient, while the absence of Stock Connect trade added to the headwinds due to market closures in mainland China, which alongside Japan, will remain shut through to Wednesday.

Top Asian News

  • More Than 40 Hong Kong Stocks Stay Halted for Delaying Earnings
  • Singapore Air Raises $1.5 Billion From Sale-Leaseback Deals
  • UBS Expects Record IPO Year for India Despite Covid-19 Crisis
  • Schlumberger-Backed Arabian Drilling Said to Plan Saudi IPO

European majors kicked the first session of May off with respectable gains across the board before fading earlier upside (Euro Stoxx 50 -0.2%) following on from a more cautious APAC session – with Japanese and Chinese players away until Wednesday. US equity futures meanwhile see varying gains with the cyclically-led RTY (+0.6%) outpacing whilst the tech-heavy NQ (Unch). From a more macro lens, eyes continue to remain on vaccination efforts/COVID developments and their corresponding effects on economic data and subsequently on monetary and fiscal policy. In early hours this morning, the ECB’s VP floated the idea of thinking about tapering emergency measures when 70% of Europe’s adult population (currently under 30%) is vaccinated – with experts suggesting the end of August as a more realistic deadline for this to be achieved. Turning to earnings, overall around 60% of the S&P 500 have reported actual results for Q1 thus far, according to FactSet, who suggest that of these companies, 86% have reported beats on EPS and 78% on revenue. During this week, 133 S&P 500 companies are due to report including three Dow components. Back to Europe, UK’s FTSE is closed on account of the early May Bank Holiday, whilst broad-based gains are seen across the Euro Zone bourses. Sectors are mostly in the green with the exception of Oil & Gas with a modest downside in prices keeping gains in the sector capped – also do note that sector heavyweights Shell and BP are not trading. Overall it is difficult to discern a particular theme or tone via the sectors. In terms of induvial movers, Lufthansa (+2.3%) is firmer after its CEO said the Co. and its Eurowings are aiming to fly to a minimum of 100 locations this summer. Siemens Healthineers (+1.9%) and Siemens Gamesa (-3.8%) see varying performances post-earnings. Finally, KPN (-3.0%) is pressured after rejecting two separate takeover offers, one from EQT/Stonepeak and the other from KKR.

Top European News

  • Europe’s Powerful Earnings Fail to Move The Needle for Investors
  • The U.K.’s Future May Be in the Hands of Scotland’s Rebel Youth
  • Europe Is Casting Aside Double-Dip Slump as Growth Restarts
  • Euro-Area Factories Face Unprecedented Supply-Chain Delays

In FX, the Dollar index looks quite comfortable above the 91.000 handle after Friday’s rebound to register a late peak for the week, but is off best levels between 91.190-390 parameters as several components claw back some losses and other majors derive a degree of traction via supportive fundamental and technical impulses. However, trading conditions are relatively thin at the start of the new month due to market closures in various countries, such as Japan (Constitution Day), China (Labour Day) and the UK (early May Bank holiday) awaiting the final US Markit manufacturing PMI, ISM and construction spending before speeches from Fed’s Williams and Chair Powell.

  • NZD/AUD/EUR/GBP - All firmer against the Greenback, with the Kiwi holding within a 0.7156-83 range ahead of NZ jobs data on Tuesday and the Aussie hovering around 0.7725 following a bounce from the low 0.7700 area in wake of solid manufacturing PMIs (AIG survey especially) and ahead of trade in the run up to the RBA tomorrow. Similarly, the Euro has drawn encouragement from resilience into 1.2000 rather than somewhat mixed Eurozone manufacturing PMIs or significantly stronger than expected German retail sales, and Sterling seems content after staving off offers within a pip of 1.3800.
  • JPY/CAD/CHF - The Yen is retesting support close to a key Fib retracement level that appears to be the only real prop protecting a more pronounced reversal from recent highs and return to 110.00 vs the Buck. Specifically, 109.64 represents a 61.8% bounce in Usd/Jpy from 107.48 low on April 23 to 110.97 apex from March 31 and the headline pair has been up to 109.69, but not convincingly through may Japanese participants are out of action and will not be back until Thursday due to Golden Week. Elsewhere, the Loonie has lost some steam alongside oil prices and is back around 1.2300 in advance of Canada’s manufacturing PMI, while the Franc is fairly flat circa 0.9130 and 1.0985 against the Euro following a strong Swiss manufacturing PMI and weekly sight deposit balances suggesting no intervention even though Eur/Chf has fallen to lows last seen on April 19.
  • SCANDI/EM/PM - The tables have turned to an extent for the Nok and Sek, as the former is back beneath 10.0000 vs the Eur amidst the aforementioned downturn in crude and a dip in Norway’s manufacturing PMI before Thursday’s Norges Bank policy meeting, but the latter pares some declines from almost 10.1900 on the back of a marked acceleration in the Swedish manufacturing PMI. Meanwhile, EM currencies are on the back foot vs the Usd and the Try has not benefited from softer then forecast Turkish CPI as it pivots 8.3000, but Gold is outperforming around Usd 1775/oz and flanked by DMAs as the 50 sits at Usd 1744.15 and 100 resides at Usd 1798.34.

In commodities, WTI and Brent front month futures again experience a choppy session with conditions also thin as China, Japan, and the UK are away on domestic holidays. The front-month contracts have thus far printed a USD 1/bbl range apiece with WTI now just under USD 64/bbl and Brent around USD 67/bbl. Prices found a floor in recent trade with news about the EU permitting vaccinated travellers from abroad also supporting sentiment in the complex. However, COVID continues to take its toll on India with the recent string of case increases continuing to mark records. Reports have also suggested that LNG cargoes are said to have been diverted away from India amid its situation. It will be interesting to see whether the developing situation prompts any response from OPEC+ after the group, in essence, opted to maintain its plan to gradually bring back oil to the market. Turning to geopolitics, there was some confusion surrounding the progress in Iranian nuclear talks, but it seems a deal remains in the balance after the US and UK refuted Iranian media reports regarding a prisoner swap and the unfreezing of funds. That being said, talks seem to have made some headway with the Iranian foreign ministry suggesting two deals have been drafted but there is a dispute over some figures and entities on the US list. Elsewhere, the Iranian spokesman also said Tehran is ready to have talks with Saudi Arabia at any level and in any form – one to watch given the two countries reside on either side of the Persian Gulf. Also to keep on the radar, Petrobras could see action from labour unions could impact production in Brazil’s 750k BPD Campos basin. Turning to metals, spot gold and silver benefit from the softer Buck but remain around recent ranges with the former around UDS 1,775/oz and the latter around USD 26/oz at the time of writing. LME and Shanghai copper both see domestic holidays. Finally, Citi expects benchmark iron ore to hit USD 200/t in the upcoming weeks but notes the average price in Q2/Q3 could be around USD 183/t before waning to USD 160/t in Q4.

US Event Calendar

  • April Wards Total Vehicle Sales, est. 17.6m, prior 17.8m
  • 9:45am: April Markit US Manufacturing PMI, est. 60.7, prior 60.6
  • 10am: April ISM Manufacturing, est. 65.0, prior 64.7
  • 10am: March Construction Spending MoM, est. 1.7%, prior -0.8%
  • 2:20pm: Fed Chair Powell Speaks on Community Development

DB's Jim Reid concludes the overnight wrap

After what is probably more than 6 months I’m actually going to a restaurant tomorrow night. Reservations are like gold dust here in the U.K. at the moment so my wife and I are very lucky to join a couple who have one. Only a few problems. We have to eat outside, it’s going to be cold, it might rain, and my old school friend who booked it hasn’t replied to me confirming it. The good news is that he reads the EMR so I’m hoping he’ll confirm once this hits inboxes. Unless of course we’ve been replaced by a more exciting couple. In that case I’m keen to shame him. I hope not as my wife and I are like caged tigers waiting for social interaction that isn’t each other at the moment.

After a little bit of consolidation over the last month, bond yields have acted a little like a caged tiger this week with yesterday seeing another big climb higher. 10yr US Treasuries were up as much as +7.8bps intra-day yesterday to 1.686% after being as low as 1.53% intra-day last Friday. It was the highest yields had traded since April 13. However the benchmark rate finished a more moderate +2.5bps higher on the day at 1.634%. This still left the week-to-date rise at +7.7bps, which would be the first weekly increase in yields since the week ending April 2 unless there is a massive rally in bonds today. Real rates (+2.5bps) drove much of the final move as inflation expectations (+0.1bps) were more muted. However, inflation expectations did rise for the 5th straight session (+9.4bps in all over this period), with the 10yr breakeven measure closing at 2.426% - its highest level in just over 8 years. In Europe there was a similarly large selloff, with yields on 10yr bunds up +3.8bps to -0.19%, marking the first time in over a year that they’ve closed above the -0.20% mark, while 10yr French yields (+4.4bps) likewise closed at a 1-year high.

Although rising bond yields seemed to clip their wings a little as the move higher accelerated, US equities still moved to fresh all-time highs yesterday as the combination of strong economic data and better-than-expected earnings releases helped to buoy investor sentiment and fuel fresh life into the reflation trade. By the close, the S&P 500 had gained another +0.68% to end the session above the 4,200 mark for the first time, and the MSCI World index was up +0.39% at its own record high. This positive mood music could be seen across a range of indicators, and Bloomberg’s index of US financial conditions actually eased to its most accommodative level since 2007 yesterday, which just shows the extent to which markets are primed for a strong recovery over the coming months.

A late selloff in Europe meant that indices there ended the session lower with the STOXX 600 closing down -0.26%. Banks outperformed however thanks to the moves higher for yields, and the STOXX Banks index was up +1.16% in its 6th successive daily advance, taking the index to its highest level since the pandemic began. Over in the US, the gains were fairly broad-based with over 78% of the S&P moving higher on the day, though the NASDAQ (+0.22%) underperformed slightly, while the small-cap Russell 2000 (-0.38%) lost ground. US banks (+2.10%) joined their European counterparts in reacting strongly to global yields. Otherwise nearly every industry group outside of the pandemic winners of Software (-0.59%) and Biotech (-1.02%) gained in the S&P. The biggest industry laggard was autos (-3.03%), where Ford (-9.41%) reduced its forecast significantly due to a semiconductor shortage that has caused vehicle production across the industry to stall. They forecasted a -$2.5bn hit to earnings because of the lack of chips, in what they considered the “worst-case”. This is becoming a recurring theme across different sectors.

Elsewhere in earnings, Amazon saw their shares rise +3.2% in after-market trading on strong beats across business segments. Q1 revenue rose +44% and the company offered guidance on sales for the upcoming quarter ahead of analysts’ estimates, with indications that aspects of the pandemic bump in online-sales may endure. Elsewhere in big tech, Twitter saw shares slide over -7% with EPS at $0.16 (vs. $0.12 exp.) on lower revenue guidance even as user growth was in-line with prior estimates. One issue for the company may be the stronger ad revenues seen by competitors Google and Facebook earlier this week.

Overnight in Asia we have seen China’s official April PMIs come in softer than expectations for both manufacturing (51.1 vs. 51.8 expected) and services (54.9 vs. 56.1 expected). Zhao Qinghe, an economist at the statistics bureau said that “some surveyed companies said problems such as chip shortages, poor international logistics, shortages of containers, and rising freight rates are still serious.” He also added that a slowdown in manufacturing supply and demand and rising cost pressures are also issues. These comments on rising cost pressures and chip shortages are likely to get more attention from markets and particularly inflation enthusiasts. In the details of the manufacturing PMI, a sub-index of new export orders for factories eased to 50.4 in April from 51.2 previously, while new orders were at 52. In contrast to the official manufacturing PMI, China’s Caixin manufacturing PMI came in at 51.9 as against 50.9 expected. The statement accompanying the release said that the increase was supported by significant expansion in both manufacturing demand and supply, as “manufacturers stayed confident about the economic recovery and keeping Covid-19 under control.” So a little different to the official release.

Elsewhere, Chinese regulators have imposed wide-ranging restrictions on the financial divisions of 13 companies, including Tencent and ByteDance in an antitrust crackdown.

Asian markets are mostly trading lower this morning with the backdrop of conflicting signals from China’s April PMIs and the continued antitrust crackdowns on tech giants in the country. The Nikkei (-0.52%), Hang Seng (-1.53%), Shanghai Comp (-0.51%) and Kospi (-0.74%) are all losing ground. Futures on the S&P 500 are also down -0.28% and European ones are also pointing to a weaker open. In terms of other overnight data, Japan’s final April manufacturing PMI printed 0.3pt stronger than the flash at 53.6.

There were also a number of important data releases for markets to digest yesterday, even if the overall impact was muted as they came in basically as expected. The main highlight was the news that the US economy had grown at an annualised pace of +6.4% in Q1 (vs. +6.7% expected), leaving US GDP less than 1% beneath its pre-Covid peak in Q4 2019. Meanwhile, the upward revision of +19k to last week’s initial jobless claims data from the US meant that this week’s number of 553k was the lowest since the pandemic began last year, albeit above the 540k reading expected.

Another story yesterday was the continued strength in commodity markets, which has been one of the major themes of the month as pretty much the entire range from metals to agriculture to energy prices have shown sizeable gains in recent weeks. Oil prices rose for a 3rd day running, with both Brent crude (+1.92%) and WTI (+1.80%) prices seeing decent advances, which were in part attributed to data showing road-fuel demand in the UK is nearing the levels seen last-summer and also as large cities in the US announce reopening plans. Meanwhile copper rose above $10,000/tonne in trading at one point for the first time in a decade yesterday, as it closes in on an all-time high set in February 2011 of $10,190 on an intraday basis. The industrial metal finished the day marginally lower (-0.11%), but is up nearly +28% YTD.

Positive headlines regarding the pandemic were another factor supporting sentiment yesterday. Firstly, French President Macron said that the restrictions would be eased from May 3 when restrictions on domestic travel would be lifted, while the nightly curfew would be gradually eased before it’s completely lifted on June 30. Meanwhile in Germany, health minister Spahn said that 1.1m vaccine doses had been administered yesterday, which is a record for the country. And in the UK, the 7-day case average fell to 2,259 yesterday, which is its lowest level since early September when the level of testing was a fraction of its current levels. In the US, NYC Mayor de Blasio said that they planned to fully reopen the city on July 1, though Governor Cuomo pushed back that he would like it to happen even sooner. Chicago’s mayor also announced they would be easing restrictions to allow for more seating capacity at restaurants, bars and other indoor venues. There was some bad news in the US, where Oregon announced a surge in cases, driven primarily by the younger, partially-vaccinated populations. The Governor has responded by increasing the risk-level on many counties to their extremes, shuttering indoor dining among other restrictions.

Elsewhere, emerging markets like Brazil and India are continuing to reel under the severe current wave with total fatalities in Brazil now topping 400k with the country reporting more covid deaths so far in 2021 than in whole of 2020. India has reported a record 386,452 daily infections while daily fatalities came in at 3,498. On the more positive side, BioNTech CEO Ugur Sahin said that he is “confident” the company’s Covid-19 vaccine with Pfizer will be effective against the Indian variant of the COVID-19 virus. He added that the company is evaluating the strain and the data will be available in the coming weeks.

Looking at yesterday’s other economic data, and the European Commission’s economic sentiment indicator for the Euro Area advanced to 110.3 in April (vs. 102.2 expected), which is the highest it’s been since September 2018. Over in Germany, data showed that unemployment unexpectedly rose by +9k in April (vs. -10k expected), while the preliminary inflation reading for April rose to a 2-year high of +2.1% (vs. +2.0% expected). Finally, pending home sales in the US rose by a lower-than-expected +1.9% in March (vs. +4.4% expected).

To the day ahead now, and there are an array of data highlights including the first look at Q1 GDP for the Euro Area, Germany, France and Italy. On top of that, we’ll also get the flash Euro Area CPI reading for April, and the unemployment rate for March. Over in the US, there’s the personal income and personal spending data for March, the MNI Chicago PMI for April and the final University of Michigan consumer sentiment index for April. From central banks, the Fed’s Kaplan will be speaking, while earnings releases include Exxon Mobil, Chevron, AbbVie and Charter Communications.

Tyler Durden Mon, 05/03/2021 - 07:57
Published:5/3/2021 7:02:04 AM
[Markets] Exchange Fund posts US$1.5 billion first-quarter gain, giving Hong Kong more financial fire power to defend currency Hong Kong's Exchange Fund, the war chest used to defend the local currency from attacks by short-sellers, earned HK$11.6 billion (US$1.5 billion) from its investments in the first quarter as it benefited from a global rally in stock markets, according to the Hong Kong Monetary Authority (HKMA). The gain was a turnaround from a record quarterly loss of HK$112 billion in the prior-year period, as equity markets around the world slumped last year against the backdrop of the coronavirus pandemic. The fund's first-quarter returns this year, however, significantly trailed its gains throughout the remainder of 2020 as it suffered a HK$16 billion loss on its bond investments in the first three months of 2021. In particular, the fund's results were sharply lower than the HK$145 billion earned in last year's fourth quarter, the best quarterly performance on record. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. The preliminary results, revealed at a quarterly meeting with lawmakers at Hong Kong's Legislative Council, were not audited and did not include financial results for the fund's long-term "other investments". Those figures are expected to be available later. Equities markets advanced broadly in the first quarter, supported by the roll-out of Covid-19 vaccines globally and a US$1.9 trillion fiscal stimulus package signed into law by US President Joe Biden in March. The Biden administration also proposed an additional package of US$2 trillion in infrastructure spending to help stimulate the US economy. In the first quarter, Hong Kong's benchmark Hang Seng Index rose 4.2 per cent, compared with a drop of 16 per cent in the first three months of 2020. The Dow Jones Industrial Average rose 7.8 per cent in the first quarter, a sharp contrast to the 23 per cent drop a year earlier and its worst quarterly loss since 1987. On Monday, Eddie Yue Wai-man, the HKMA's CEO, warned the sharp rebound in the US economy could spark inflation concerns and lead to a change in monetary policy, which could create "significant volatility in the financial markets and lead to an outflow of funds from Asia". "Having said that, we have a strong financial system that is ... resilient," Yue said. "We are confident that the linked-exchange rate system will continue to operate efficiently." Yue also expressed concern about the uptake of vaccinations in Hong Kong and how that could affect the city's position as an international financial hub. Only about 10 per cent of the city's 7.5 million people have been vaccinated, well below financial hubs in the US, the United Kingdom and Singapore, he said. The Hong Kong Monetary Authority invests the Exchange Fund's assets in stocks, bonds and overseas property. Photo: Shutterstock alt=The Hong Kong Monetary Authority invests the Exchange Fund's assets in stocks, bonds and overseas property. Photo: Shutterstock "I'm worried if we don't push up our vaccination rate our competitiveness will be affected," Yue said. The Exchange Fund recorded a gain of HK$7.6 billion on its investments in Hong Kong stocks in the first quarter, compared with a loss of HK$28.4 billion a year earlier. The fund reported investment gains of HK$20.8 billion on Hong Kong equities in the first quarter of 2019. It earned HK$18.8 billion from its overseas stock investments in the first three months of this year, compared with a loss of HK$83.1 billion a year earlier and a gain of HK$49.9 billion during the corresponding quarter in 2019. The fund also reported a gain from foreign-exchange valuation changes on its assets of HK$12 billion in the first quarter, compared with a loss of HK$29 billion in the first three months of 2020 and a gain of HK$13.5 billion during the same quarter in 2019. The fund reported a loss of HK$16 billion on its bond investments in the first quarter, compared with gains on its bond investments of HK$54.4 billion in the year-ago period and a HK$36.7 billion increase in the first quarter of 2019. Yue said the fund emphasises liquidity, so it mostly holds one-year bonds. He said the fund's portfolio has some flexibility in what kinds of bonds it holds, so it would make some adjustments based on "prevailing market conditions". On Monday, HKMA officials did not report results on its long-term "other investments". It suffered a loss of HK$25.9 billion in that category of investments in the first quarter of 2020, compared with a gain of HK$12.5 billion in the same period in 2019. Hong Kong's government set up the Exchange Fund in 1935 to back the issuance of banknotes. Since the HKMA was established in 1993, it has invested the fund's money in stocks, bonds and overseas property. The Exchange Fund, which stood at HK$4.54 trillion as of the end of March, protects the Hong Kong dollar, which is pegged to the US dollar. The HKMA intervened in the market 85 times in 2020, selling HK$383.5 billion to keep the local currency within its trading band of HK$7.75 to HK$7.85 per US dollar. The city's treasury places its fiscal reserves with the Exchange Fund and earns a share of any profit from its investments. The government received HK$9.2 billion from the Exchange Fund in the first quarter, after receiving HK$32.6 billion for all of 2020. ?A strong return on both stocks and bonds last year helped the Exchange Fund report a gain of HK$235.8 billion last year as a whole, compared with a record full-year high of HK$262.2 billion in 2019. This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved. Published:5/3/2021 5:01:34 AM
[Markets] Richest Americans Add $195 Billion To Net Worth During Biden's First 100 Days Richest Americans Add $195 Billion To Net Worth During Biden's First 100 Days

As the Biden Administration and Congressional Democrats continue to spend money like Pretty Woman with Richard Gere's credit card, the top beneficiaries of this 'froth-inducing' stimulus have been America's wealthiest 100 individuals - who've tacked on a combined $195 billion to their fortunes during President Biden's first 100 days in office, according to Bloomberg.

The most recent gains have been fueled by the continued rise of the stock market since Biden was sworn in Jan. 20, along with the vaccination program’s fast rollout and a $1.9 trillion government stimulus package. The S&P 500 and Dow Jones indexes have both climbed more than 10% during that time.

Attempts such as Biden’s to refloat the economy can boost incomes and wealth at the very top, said Mike Savage, a sociology professor at the London School of Economics.

We’ve seen that paradox since the 2008 financial crash with quantitative easing, which has mostly benefited people with assets, inflating their value significantly,’’ Savage said. -Bloomberg

What's more, the richest 100 Americans saw their wealth grow by $267 billion before Biden's inauguration if one counts gains since the 2020 election, for a total gain of $461 billion since Nov. 4. For comparison's sake, between Donald Trump's 2017 inauguration and last fall's election, the same group of billionaires grew around $860 billion richer.

Biden's coming for it though...

In addition to raising capital gains taxes and taxing inherited wealth, the Big Guy's proposals will 'recover' trillions of dollars in wealth into government coffers after the wealthiest pay their 'fair share.'

"Sometimes I have arguments with my friends in the Democratic Party," said Biden during his first address to Congress on Wednesday. "I think you should be able to become a billionaire or a millionaire. But pay your fair share."

Under his “American Families Plan” announced Wednesday, the top rate of personal income tax would increase to 39.6% for the highest 1% of earners from the current 37%, while the capital gains rate would be raised to the same level for those earning above $1 million, wiping out the discrepancy between income and capital gains tax rates that has benefitted many of the ultra-rich.

The wealthiest 1% currently pay 40% of all federal income taxes, according to Internal Revenue Service data, an amount that doesn’t include payroll taxes. -Bloomberg

"When you ask the American people what they want, they want corporations and millionaires and billionaires to pay higher taxes," according to Erica Payne, founder of the Patriotic Millionaires, a group of progressive high-net-worth individuals. "It is politically a winner, it is economically the right thing to do and it is morally a no-brainer."

Meanwhile, the Biden administration has also floated a proposal which would raise corporate taxes to fund infrastructure spending - a move which Amazon founder Jeff Bezos, the richest (known) person in the world - supported.

"We look forward to Congress and the administration coming together to find the right, balanced solution that maintains or enhances U.S. competitiveness," said Bezos.

Conservatives, meanwhile, say the money grab is likely to backfire.

"Government investments are often sold to the public with the promise that they will improve lives and improve the economy," said Tax Foundation president, Scott Hodge, in Congressional testimony this week. "In every case, the economic harm caused by the taxes would swamp any of the benefits from the new spending, leaving taxpayers and the economy worse off."

Congressional Democrats are also gunning for tax loopholes in order to claw back gains made by America's wealthy during the pandemic, with Sen. Elizabeth Warren (D-MA) proposing an Ultra Millionaire tax - which would hit those with fortunes above $50 million with a 2% annual tax on their wealth, and 3% for those with more than $1 billion.

That said, higher taxes aren't "going to have very much effect in the long term on redistributing wealth," according to Carnegie Mellon econ and statistics professor Robert Miller. "This focus on how we’re going to get the money is a bit misplaced – we should be thinking more about how we want to help the people that need help."

Tyler Durden Sun, 05/02/2021 - 09:55
Published:5/2/2021 8:58:10 AM
[Markets] Dollar Dumps In April As S&P Does Something It's Never Done Before Dollar Dumps In April As S&P Does Something It's Never Done Before

April saw gold, bonds, and stocks (The Dow) all rise around 2% while the dollar fell around 2% against its fiat peers...

Source: Bloomberg

All major US equity indices ended April higher with Nasdaq 100 leading the way and Small Caps lagging...

Source: Bloomberg

And while the 5%-ish gain for the month in S&P is notable, during 18 sessions this month through trading on Thursday, 95% or more of the index’s members traded above their 200-day moving average.

Source: Bloomberg

That’s the most days ever observed in a single calendar month and double the previous high of nine days in September 2009.

Source: Bloomberg

“The fact that 95% of the S&P 500 is now above its 200-day moving average is NOT a bullish sign,” Matt Maley, chief market strategist for Miller Tabak + Co., wrote in an April 26 note.

“Yes, a high number of stocks above their 200 DMA’s is usually positive, BUT it is NOT bullish when the number becomes extreme (like it is now…at 95%). In other words, this data point is much like sentiment. When it is strong, it is positive…but when it becomes extreme, it becomes a contrarian indicator!”

Remember, if stocks are up...

Trannies continue their all-time record streak of weekly gains (now 13 weeks in a row) while the other US majors struggled on the week (with Nasdaq 100 the biggest laggard)...

Source: Bloomberg

Financials managed to lead the S&P sectors on the month (despite lower yields) and the Energy sector was laggard (despite surging oil prices)...

Source: Bloomberg

Despite crushing earnings this week, FAAMG stocks went nowhere (though were up large on the month)...

Source: Bloomberg

Treasury yields were lower on the month with the long-end down 11bps, 2Y unch. This was the first monthly drop in yields since November (and biggest 10Y Yield drop since July)

Source: Bloomberg

Treasury yields were higher on the week with the long-end up around 7bps

Source: Bloomberg

April saw Real Yields tumble (and drag gold higher with them)...

Source: Bloomberg

April saw the dollar on a one-way dump all months, ending down almost 2% - the first monthly loss since Dec 2020. The last three days saw the dollar whipsawed as Fed losses were reversed and stops run...

Source: Bloomberg

Bitcoin surged today, reversing some of April's Ethereum outperformance...

Source: Bloomberg

Ripple was up 177% in April, Ethereum was up 43%... and Bitcoin slipped 3%...

Source: Bloomberg

After reaching record highs at $65,000, Bitcoin saw its first monthly loss since September...

Source: Bloomberg

Ethereum ended the month at its record highs, despite a couple nasty drawdowns...

Source: Bloomberg

Commodities soared in April - the best monthly return since Feb 2014...

Source: Bloomberg

Copper was among the best performers in April - back near record highs - and crude also performed well. Gold saw its first positive month of the year..

Source: Bloomberg

Copper and Crude rallied this week as PMs modestly lagged.

Source: Bloomberg

Commodities are the top-performing asset for the first time since 2002...

Finally, after 8 straight months of yields rising with soaring commodity prices, April saw that correlation regime collapse with bonds bid (yields dropping) despite spike commodity prices.

Source: Bloomberg

We wonder who's right? Bonds or Commodities?

Depends if you trust 'real' economic data or 'emotion'-based surveys?

Source: Bloomberg

"Hope" is still not a strategy.

Tyler Durden Fri, 04/30/2021 - 16:00
Published:4/30/2021 3:15:14 PM
[Markets] Dow ends more than 180 points lower, but stocks book monthly gains Stocks ended lower Friday as investors shrugged off largely strong earnings reports and economic data, dragging the Dow Jones Industrial Average and the Nasdaq Composite to weekly losses but leaving solid monthly gains intact. The Dow fell around 186 points, or 0.5%, to close near 33,875, according to preliminary figures, while the S&P 500 fell around 30 points, or 0.7%, to end near 4,181 and the Nasdaq Composite gave up around 120 points, or 0.9%, finishing near 13,963. Friday's losses left the Dow down 0.5% for the week, while the S&P 500 clung to a gain of less than 0.1% and the Nasdaq Composite declined 0.4%. That left the Dow with a monthly gain of 2.7%, while the S&P 500 rose 5.2% for the month and the Nasdaq advanced 5.4%. Published:4/30/2021 3:15:14 PM
[Markets] Falling Chevron Stock Hurts Dow Jones, Which Slumps 200 Points; Twitter Crashes 13% The Dow Jones Industrial Average was under selling pressure Friday along with the other major stock indexes as the focus remained on earnings. Published:4/30/2021 12:45:15 PM
[Markets] Dow lower by 240 points as hectic week in earnings, data and politics winds down Dow lower by 240 points as hectic week in earnings, data and politics winds down Published:4/30/2021 10:45:14 AM
[Markets] Dow down more than 200 points as hectic week of earnings comes to a close U.S. stocks fell Friday on the last trading day of the month as one of the busiest weeks of the first quarter earnings reporting season comes to a close with investors weighing blockbuster results from most large technology companies and good economic data, while keeping an eye on weaker data out of China and Europe. The Dow Jones Industrial Average (DJIA) fell 220.27 points, or 0.7%, to 33,840.09, pulling the index into negative territory for the week, on track for a fall of 0.6%. The S&P 500 (SPX) was off 24.50 points, or 0.6%, at 4,186.97, leaving it clinging to a 0.2% weekly rise. Published:4/30/2021 10:14:26 AM
[Markets] Dow Jones Drops 200 Points As Chevron Stock Slips; Apple Falls But Amazon Soars Key market indexes were lower early Friday with the Dow Jones Industrial Average down nearly 200 points as Chevron and Apple weighed. Published:4/30/2021 9:49:33 AM
[Markets] U.S. stocks slide at open after lackluster China and Europe data U.S. equities fell on Friday's open, following the cue of global stock markets as investors responded to signs of weakening economic activity in China and the eurozone. The Dow Jones Industrial Average fell 171 points, or 0.5%, to 33,889. The S&P 500 slid 24 points, or 0.6%, to 4,188, after closing at a record on Thursday. The Nasdaq Composite was down 0.7% to 13,991. The eurozone economy shrank at the beginning of 2021 for the second consecutive quarter, entering its second technical recession in a year. Shares of Inc. were up after the e-commerce giant reported a second consecutive quarter of more than $100 billion in sales and predicted a third on the way. Published:4/30/2021 8:42:53 AM
[Markets] Deep Dive: These 20 stocks performed the best over the first 100 days of Biden’s presidency The Dow Jones Industrial Average and S&P 500 have had their biggest gains during a president's first 100 days in office since Franklin D. Roosevelt in 1933.
Published:4/30/2021 7:42:24 AM
[Markets] Exposed: The Myth Of "Efficient Markets" Exposed: The Myth Of "Efficient Markets"

Authored by James Rickards via The Daily Reckoning,

What took Wall Street so long to figure out something I’ve been saying for months?

Six months ago, even before the presidential election in November, I began warning my readers that Joe Biden was going to double the capital gains tax.

It wasn’t a difficult prediction. Biden said so himself in his campaign website as one of a long list of policy proposals.

Of course, the mainstream media didn’t report this because they were all-in for Biden and were determined to beat Donald Trump (remember how they covered up the Hunter Biden laptop report?).

The media were careful to cover-up any Biden policies that might prove unpopular with voters. Still, Democratic Party progressives knew about the plan and were all for it.

One Simple Rule

My rule for making policy forecasts is simple. If a politician tells you he’s going to do something, believe him.

Policies don’t drop out of the sky. They’re the result of intense internal debate and compromise by competing factions. Once a policy makes it to a candidate’s website, you can bet they will try to deliver.

This doesn’t mean that every proposal becomes law because there can be opposition in Congress and the courts. However, it does mean the politician will work to achieve his stated goals.

With the White House and both houses of Congress in the Democrat’s hands, the odds of this doubling of the capital gains tax becoming law look very good.

Despite my forecasts (which fortunately left my readers well-prepared), Wall Street didn’t seem to pay attention until last Thursday, when the Dow Jones index plunged 210 points in a matter of hours after the Biden tax plan was formally announced.

That’s a good example of how so-called “efficient markets” are not efficient at all.

Not so Efficient After All

Mainstream economists have insisted for decades that markets are highly efficient, and they do a nearly perfect job of digesting available information and correctly pricing assets today to take account of future events based on that information.

In fact, nothing could be further from the truth. Markets do offer valuable information to analysts, but they are far from efficient.

Markets can be rational or irrational. Markets can be volatile, irrationally exuberant, or in a complete state of panic depending upon the emotions of investors, herd behavior, and the specific array of preferences when a new shock emerges.

If markets were so efficient, why was Wall Street surprised when it was obvious to anyone paying attention that Biden was going to raise the capital gains tax?

The capital gains tax increase information had been there for all to see for six months, but it took a press release to get Wall Street to sit up and take notice.

It should have been priced in long before, and the announcement just would have confirmed market expectations.

So the next time you hear about efficient markets, take it with a large grain of salt.

But my forecast from six months ago was wrong in one respect.

Even Worse Than I Thought

I said the tax rate on capital gains would almost double from 20% to 39.6%. It turns out the rate will actually be 43.4% once a 3.8% investment income surtax is added on top. That surtax is a holdover from Obamacare.

If one were to add state and local income taxes, the combined rate on capital gains could exceed 50%, depending on the jurisdiction.

Of course, capital gains taxes are imposed on investments you make from after-tax dollars, so even the initial investment has already been taxed. And the corporations whose stock you buy pay corporate income tax too.

When those burdens are included, you’re lucky to get even 25% of your gains back net of taxes. This will be a headwind to stock markets for the foreseeable future.

The big question is, is the stock market in a bubble?

A $100 Million Deli?

When I first saw a recent story about a deli in New Jersey that was worth $100 million, I couldn’t believe it.

I assumed the deli must have a big-ticket franchising deal with McDonald’s or Subway to expand to 1,000 locations under the original name brand. That type of deal might justify a sky-high valuation for a one-store operation.

But, no, there was no franchise deal or other licensing deal that might explain the price. It’s just a deli with about $35,000 in annual sales.

As one analyst said, “The pastrami must be amazing.” Does anyone in their right mind think a deli with $35,000 in annual sales could be worth $100 million?

Well, it turns out that the owner of the deli created a company called Hometown International, and its shares trade over-the-counter. Recently, investors have bid up the stock price from $9.25 per share to $14.00 per share, giving the deli company a market capitalization of $113 million.

Hoping For a Greater Fool

But this story is not really about delis or pastrami. It’s about market bubbles and ridiculous valuations that can result when retail investors bid up stocks in the hope that a greater fool will pay them even more when they cash out.

In these situations, the market capitalization becomes completely detached from fundamental value, projected earnings or any other tool used in securities analysis.

It’s just a bubble with inevitable losses for the last buyers. But does that mean you should sell all your stocks now because the bubble will pop any day now?

No, not really. Bubbles can last longer than many believe because there is a continual flood of new buyers who hope that they won’t be the last ones to run for the exits.

The bigger issue is whether this kind of bubble in one stock indicates a broader market indices trend.  The Dow Jones Industrial Average, the S&P 500 and the NASDAQ Composite are all at or near all-time highs.

But this does not automatically mean the stock market indices are in bubble territory, although, many objective metrics, including the ratio of market cap to GDP and the Shiller CAPE price-earnings ratio, indicate that is the case.

No One Rings a Bell at the Top

Saying that markets are overvalued is not the same as saying they’re ready to crash.

It will take some external shock such as higher interest rates, a geopolitical crisis, or an unexpected bankruptcy of a major company to bring markets back to earth.

We know that such events do occur with some frequency. But, it’s probably not a good idea to short the market, because it could go even higher. That’s the way bubbles work. No one rings a bell at the top. There’s no precise formula to tell you the day they’ll pop.

So, I’m not suggesting that you sell everything and head for the hills. Having said that, it’s a good idea to reduce your exposure to stocks, diversify with cash and gold and just bide your time.

When the crash comes, you’ll be greatly outperforming those who are all-in with stocks – including delis.

Then we’ll see how efficient markets really are.

Tyler Durden Fri, 04/30/2021 - 08:02
Published:4/30/2021 7:12:17 AM
[Markets] Dow Jones Gains 240 Points After President Joe Biden's Speech; These Stocks Score Breakouts The Dow Jones Industrial Average rose as the S&P 500 closed near session highs. Stocks reversed higher in afternoon trading. Published:4/29/2021 4:09:29 PM
[Markets] Dow Jones Leads Stock Market But Nasdaq Lags; Biden Speech, Earnings In Focus Stocks were mixed after a strong start, following President Joe Biden's Wednesday address to Congress, as the Dow Jones index led but the Nasdaq lagged. Published:4/29/2021 1:08:09 PM
[Markets] Dow, Tech Stocks Slide As Apple Breakout Fades; Tesla Skids Again, While Nio, Twitter Set To Report The Dow Jones Industrial Average rallied 200 points Thursday as Apple stock jumped on blowout earnings. Nio and Twitter are set to report late. Published:4/29/2021 11:13:56 AM
[Markets] Dow Reverses Lower As Apple Breakout Fades; Tesla Skids Again, While Nio, Twitter Set To Report The Dow Jones Industrial Average rallied 200 points Thursday as Apple stock jumped on blowout earnings. Nio and Twitter are set to report late. Published:4/29/2021 10:42:42 AM
[Markets] Dow Rallies As Apple Breaks Out On Blowout Earnings; Facebook Surges, While Nio, Twitter Set To Report The Dow Jones Industrial Average rallied 200 points Thursday as Apple stock jumped on blowout earnings. Nio and Twitter are set to report late. Published:4/29/2021 9:42:26 AM
[Markets] Futures Jump To Record Above 4,200 On Blockbuster Earning, Bubble-Blowing Fed Futures Jump To Record Above 4,200 On Blockbuster Earning, Bubble-Blowing Fed

S&P Futures roared to new record highs above 4,200 and Nasdaq futures jumped 1% on Thursday as Powell's dovish assurances and blow-out earnings from Apple and Facebook powered a rally in tech stocks and cemented conviction the world’s largest economy is resurgent ahead of GDP numbers and jobless claims data which are expected to show further improvements.  At 7:30 a.m. ET, Dow e-minis were up 130 points, or 0.38%, S&P 500 e-minis were up 28.00 points, or 0.67%, and Nasdaq 100 e-minis were up 144  points, or 1.03%.

Some notable premarket movers:

  • Apple gained 2.7% in premarket trading after posting sales and profits ahead of Wall Street estimates, led by much stronger-than-expected iPhone and Mac sales.
  • Facebook jumped 7.3% on beating analysts’ expectations for both quarterly revenue and profit, helped by a surge in digital ad spending during the pandemic, along with higher ad prices coupled with a 10% growth in active users.
  • Other megacap companies, including Microsoft Corp, Alphabet Inc and Netflix Inc, rose between 0.2% and 1.1%.
  • EV companies, including Tesla and Nikola rose 1.1% and 2.6%, respectively, as sales picked up speed in the first quarter, according to the International Energy Agency.
  • Caterpillar rose 2.8% after the heavy equipment maker reported a rise in adjusted first-quarter profit.
  • Merck slid 3.2% on posting a 1.2% fall in quarterly profit.

With almost half of the S&P 500 companies having reported results so far, about 88% have either met or beaten expectations.

Global shares extended gains after the Federal Reserve said it was too early to consider rolling back emergency support for the economy, and U.S. President Joe Biden proposed a $1.8 trillion stimulus package. On Wednesday, Powell acknowledged the economy’s growth but dismissed worries about price surges or anecdotes of labor shortage, implying the central bank is prepared to run the economy hot for a while; he said there was not yet enough evidence of “substantial further progress” - whatever that means - toward recovery to warrant a change in policy. He also glossed over soaring prices as "transitory."

“Equities should continue to power higher but there will be bouts of volatility along the way,” Mehvish Ayub, State Street Global Advisors senior investment manager, said on Bloomberg TV. “Yields should continue to trend higher, and this is very much a reflection of better economic prospects so it’s not really a negative for equity markets.”

But while Powell may not be concerned about inflation, the bond market is and the 10-Year TSY yield headed for the biggest weekly increase since March 19, and a key gauge of commodities was on course for the longest daily rally in more than three years.

Reflation trades got a boost after Joe Biden unveiled a $1.8 trillion spending plan targeted at American families, adding to the economic optimism.

Europe's benchmark Stoxx 600 index rose 0.4%, moving closer to a record reached earlier in April. Personal-care shares climbed after Unilever delivered a sales beat and announced a share buyback. Oil giants Total SE and Royal Dutch Shell Plc boosted their sector after reporting better-than-forecast profits. Here are some of the biggest European movers today:

  • Unilever shares jump as much as 4%, most since Nov. 25, after the consumer-goods company reported 1Q sales that beat market expectations and announced plans for a share buyback that impressed most analysts.
  • Nokia’s shares surged as much as 15% to their best day since getting caught up in a Reddit trader frenzy in January, after results surpassed analyst expectations. Analysts were particularly positive on Nokia’s adjusted gross margin, and were also reassured by the telecom equipment maker maintaining its guidance for 2021 and management pointing toward the higher end of the range.
  • Straumann shares jump as much as 10.3% to a record high after the Swiss dental-implant maker reported 1Q sales that Mirabaud says were “super strong,” especially in APAC.
  • Airbus shares gain as much as 3.5% in Paris trading and is the day’s best performer on the CAC 40; Bernstein says the company had a strong start to the year, with 1Q results better than expected on all key metrics.
  • WH Smith shares fall as much as 5.8% after the U.K. retailer issued convertible bonds. Separately, its 1H results are better than expected, driven by a good performance in its high street business, RBC (outperform) writes in a note.

Earlier in the session, Asian stocks rose and were set for a second day of gains, with the MSCI Asia Pacific Index rising 0.3% led by material and energy shares, as investors cheered Joe Biden’s ambitious spending plans and buoyant earnings from U.S. tech giants like Apple. China stocks rose for a third session in their longest streak of gains this month, on the back of solid first-quarter earnings growth by financial and consumer staples companies. The CSI 300 Index gained 0.9%, while Hong Kong’s Hang Seng rose 0.8%. India’s S&P BSE Sensex Index pared an advance of as much as 1.3% and traded little changed as the South Asian country continued to report record daily coronavirus cases. The nation’s biggest conglomerates and global giants such as Inc. stepped in to help ease the country’s pandemic-induced crisis. Overall, the MSCI Asia Pacific Index rose 0.3% led by material and energy shares, getting a boost from Biden’s promise of tax increases on the wealthy to pay for plans to spend trillions of dollars on infrastructure, education and other Democratic priorities. Biden’s address to a joint session of Congress on Wednesday came after the Fed upgraded its assessment of the U.S. economy but said it was not ready to consider scaling back pandemic support. “I didn’t expect the degree to which Biden will embark on this incredible spending program,” Mark Mobius, co-founder of Mobius Capital Partners told Bloomberg Television. The spending plan will benefit global markets, he added, because it means the U.S. will be importing more and there are “opportunities for more exports” from China and India. Asian markets got a lift earlier this morning on a slew of tech earnings. Apple Inc. crushed revenue estimates and Facebook Inc. reported increases in sales and users. However, shares of Samsung Electronics and its suppliers fell even though South Korea’s largest company reported a better-than-forecast first quarter profit. Markets in Japan and Malaysia were closed on account of local holidays

In rates, Treasury futures traded near lows of the day heading into early U.S. session as post-FOMC gains are unwound. Yields were higher by nearly 4bps across intermediates, steepening 2s10s by 3.5bp, 2s5s by 2.5bp; 10-year around 1.65% underperforms bunds by ~2bp, gilts by ~1bp. Most of the move occurred when cash trading -- closed in Asia as Japan’s Golden Week holiday begins -- resumed in London. Volume light in both futures and cash. S&P 500 futures’ advance to record above 4200 and USD/JPY strength also weigh on Treasuries. Treasuries bull steepened on Wednesday, with markets showing a modest dovish repricing after Fed Chair Powell reiterated the central bank’s commitment to asset purchases while the economy is recovering.

In FX, the Bloomberg Dollar Spot Index edged up and the greenback advanced versus most of its Group-of-10 peers; the euro retreated after rising to a fresh one-month high of $1.2150. The pound advanced to the highest in over a week before paring gains; sterling was still among the top G-10 performers. Sweden’s krona largely ignored better-than-forecast economic tendency survey and GDP data out of the Nordic nation while Norway’s krone fell for the first day in five; the Scandinavian currencies are still set to be the best G-10 performers this month. The Australian dollar swung to a loss after rising as much as 0.4% earlier as U.S. President Joe Biden’s speech disappointed some traders betting on an additional stimulus announcement; bonds firmed into the central bank’s purchases in the 7-10 year sector.

In commodities, crude oil extended gains on a confident outlook on demand from OPEC and its allies, despite the threat from India’s Covid-19 crisis. The Bloomberg Commodity Index increased for a ninth day, nearing a three-year high on a closing basis.

Looking at today's calendar, we’ll get a fresh round of earnings releases with the highlights including Amazon, Mastercard, Comcast, Merck, Thermo Fisher Scientific, McDonald’s, Bristol Myers Squibb, Caterpillar, American Tower and Twitter. On the data front, we’ll get the advance estimate of Q1 GDP in the US, as well as the weekly initial jobless claims and March’s pending home sales. In Europe, we’ll get the change in German unemployment for April and the country’s preliminary CPI reading for that month, on top of the final Euro Area consumer confidence reading for April. Central bank speakers include Fed Vice Chair Quarles, ECB Vice President de Guindos, and the ECB’s Elderson and Holzmann.

Market Snapshot

  • S&P 500 futures up 0.6% to 4,202.00
  • STOXX Europe 600 rose 0.3% to 441.25
  • MXAP up 0.3% to 209.16
  • MXAPJ up 0.4% to 706.99
  • Nikkei up 0.2% to 29,053.97
  • Topix up 0.3% to 1,909.06
  • Hang Seng Index up 0.8% to 29,303.26
  • Shanghai Composite up 0.5% to 3,474.90
  • Sensex little changed at 49,765.82
  • Australia S&P/ASX 200 up 0.2% to 7,082.28
  • Kospi down 0.2% to 3,174.07
  • Brent Futures up 0.89% to $67.87/bbl
  • Gold spot down 0.25% to $1,777.20
  • U.S. Dollar Index up 0.06% to 90.663
  • German 10Y yield rose 1.2 bps to -0.219%
  • Euro down 0.03% to $1.2122

Top Overnight News from Bloomberg

  • Forty years ago, President Ronald Reagan and Federal Reserve Chairman Paul Volcker oversaw a root-and-branch restructuring of the U.S. economy. Today, Joe Biden and Jerome Powell are trying to do the same thing -- only in reverse. In the Reagan-Volcker regime change, power in the economy shifted from the government to the market and from labor to the owners of capital. The emphasis was on efficiency, not equality, and on promoting supply, not demand
  • China said its population increased in 2020, countering concerns that its upcoming census will show a possible decline as the nation ages rapidly
  • German unemployment unexpectedly rose in April, signaling that the labor market is experiencing strains from lockdown restrictions that have been tightened
  • The retreat in Treasury yields this month has revived demand for emerging-market carry trades with China and South Korea bonds looking among the most attractive targets in Asia

Quick look at global markets courtesy of Newsquawk

Asian equity markets traded positively in reaction to the continued dovish tone from the FOMC and beat on earnings amongst the tech giants including Apple, Facebook and Qualcomm. In addition, focus was also on President Biden’s first address to a joint session of Congress where he stated America is on the move again and that the American Jobs Plan is a blue-collar blueprint to build America, while he called on Congress to pass the USD 15/hour minimum wage and extend child tax credit through at least end-2025, as well as outlined the American Families Plan. This facilitated a continued upside in US equity futures to push the Emini S&P to a record high and briefly above the 4,200 level although gains for Asia bourses were tempered amid a heavy slate of earnings and with Japanese participants absent due to a holiday closure. ASX 200 (+0.3%) was positive with outperformance in gold miners amid a rebound in the precious metal in the aftermath of the dovish FOMC, but with gains in the index capped by losses in consumer stocks after weaker quarterly sales from Woolworths and with Treasury Wine Estates dampened by a 4% decline of Australian wine exports in the year to end-March. KOSPI (-0.2%) benefitted initially as its top constituent Samsung Electronics remained afloat following its final Q1 earnings results which topped forecasts for net profit and posted a slight increase in revenue from the preliminary. Hang Seng (+0.8%) and Shanghai Comp. (+0.5%) also gained with sentiment encouraged by earnings releases including China’s largest oil company Sinopec and big 4 bank China Construction Bank.

Top Asian News

  • China Says Population Grew in 2020, Rebutting Report of Drop
  • Singapore Finds 16 New Coronavirus Cases in Wider Community
  • China Huarong Leaves Rating Firms Guessing on State Support (1)
  • India’s RBI May be Augmenting its T-Bill Holdings, Traders Say

Major bourses in Europe, for the most part, see gains (Euro Stoxx 50 +0.3%) although to varying degrees as earnings take the driving seat with the FOMC meeting and Biden’s speech are out of the way and heading into month-end. US equity futures meanwhile remain elevated with the NQ (+1.0%) leading the gains whilst its peers see broad-based upside. Heading into month-end, JPM forecasts balanced mutual funds to sell some USD 30bln of equity, although, by historical portfolio rebalancing standards, this is quite modest. Back in Europe, the AEX (+0.9%) narrowly outperforms among the majors as the index is propped up by heavyweights Unilever (+3.0%) and Shell (+2.0%) post-earnings, with the latter beating on the top and bottom lines whilst increasing its dividend. Conversely, the DAX (-0.1%) underperforms as losses in German autos keep gains capped, whilst post-earnings BASF (-1.6%) provides further pressure. Sectors are mostly higher but again it is hard to discern a particular risk tone or theme as idiosyncratic factors are at play. Autos sit at the bottom of the pile amid the ongoing chip shortage coupled with Ford (-2.7% pre-mkt) earnings that were not well received. Telecoms outperform as Nokia (+14%) and Swisscom (+5%) were bolstered following their metrics, whilst further tailwinds are felt from BT (+2.1%) amid reports the Co. is in talks with Amazon, Disney, and others regarding a potential sale of its sports arm. Oil & Gas also see a firm performance amid the numbers from Shell, Total (+1.4%), and Equinor (+3.3%), and against the backdrop of firmer oil prices. Individual movers are largely earning-oriented and include the likes of Lufthansa (-2.5%), Airbus (+2.2%), Standard Chartered (+5.7%), Natwest (-3%), Logitech (+1.3%) and Clariant (-3%).

Top European News

  • NatWest Starts to Reverse Covid Provisions as Earnings Beat
  • Cboe Opens Derivatives Venue in Amsterdam in Latest Brexit Shift
  • Bankinter Bolsters Spanish Insurers With Spinoff
  • Total Profit Surges to Pre-Pandemic Levels on Oil Recovery

In FX, the Dollar remains in a clear bear trend following another dovish message from the Fed and Chair Powell in the post-meeting press conference/Q&A, but perhaps there was enough in the latest official statement and assessment to indicate more confidence or less caution about the economic outlook. Indeed, the FOMC no longer deems downside risks to be considerable, upgraded activity levels to strengthening from turning up and acknowledged rising inflation, albeit still mainly due to transitory factors. Meanwhile, US President Biden’s first address to a joint Congress was largely as expected in terms of content and details of the America Families Plan, so no real surprises or reason for the Greenback and markets in general to dwell for too long. Hence, Treasuries have reverted to bear-steepening mode and are providing the Buck with some impetus to pare deeper losses after the DXY slipped to fresh April and cycle lows under 90.500 at 90.422 in the run up to a raft of data before Fed’s Williams appears at the NY Economic Club. The index is currently hovering just shy of a 90.721 recovery high amidst with the Dollar firmer vs most components and major counterparts.

  • JPY - Holiday-thinned volumes may well be compounding price action, but the Yen is bearing the brunt of the aforementioned Greenback rebound and yield/curve retracement, as Usd/Jpy retests the 109.00 level vs sub-108.50. However, while Japan observes Showa Day, decent option expiries could keep the headline pair contained before Tokyo CPI, jobs and ip tomorrow given 1.9 bn and 1.3 bn rolling off at 108.50 and 109.00 respectively.
  • AUD/NZD/CHF/EUR - Also handing back gains vs their US rival, with the Aussie back under 0.7800 irrespective of an acceleration in Q1 export prices and perhaps more conscious of comments by Treasurer Frydenberg putting a 4% handle on the jobless rate to generate stronger wages and inflation, while predicting that it will take 2 years before returning to full employment. Similarly, no sustained impetus for the Kiwi to reach 0.7300 via improvements in NBNZ business sentiment or the activity outlook after trade data showing an almost flat balance, as Nzd/Usd hovers below 0.7250. Elsewhere, the Franc is now straddling 0.9100 and the Euro has breached key chart resistance in the form of a descending trendline, but hit another obstacle at 1.2150 before waning amidst a barrage of mostly firmer than expected Eurozone data/surveys that should keep Eur/Usd afloat along with 1.1 bn option expiry interest either side of 1.2100 (1.2095-1.2105 specifically).
  • GBP/CAD - Relative G10 outperformers, as the Pound rebounds firmly from midweek session lows to straddle 1.3950 vs the Buck and probe 0.8675 against the Euro, though again on little fundamental bar firmer oil prices that are boosting the Loonie around 1.2300 and even loftier multi-year peaks circa 1.2287.

WTI and Brent front month futures continue edging higher in conjunction with the broader sentiment across markets following Powell and Biden’s appearances since the European close yesterday. The upside could also be supported by the overall bullish inventory data seen during the week, whilst eyes remain on India’s situations amid its rampant “double variant”, although the nation is receiving international support. On this note, analysts at ING suggest that Indian refiners are erring towards increased refined product exports in a bid to tackle a domestic glut. “Increased export flows from India are a risk to regional product cracks, with additional supply potentially weighing on them. This is particularly the case, given that refiners in the country so far appear to have made only marginal cuts to run rates.”, the Dutch bank states. WTI resides just around USD 64.75/bbl (vs low USD 63.35/bbl) and Brent hovers sub-USD 67.75/bbl (vs low USD 66.64/bbl). Elsewhere, spot gold and silver are mixed but price action during European trade has been pegged to the Buck, with the former still around the USD 1,775/oz and spot silver just north of USD 26/oz. Turning to base metals, LME copper remains firm after testing but failing to breach USD 10,000/t to the upside, with overnight prices again experiencing upside as Chinese players entered the market. LME nickel meanwhile topped the USD 17,000/t mark yesterday with some citing restocking ahead of the Chinese labour day holiday between May 1st and 5th.

US Event Calendar

  • 8:30am: 1Q GDP Annualized QoQ, est. 6.6%, prior 4.3%;
    • Personal Consumption, est. 10.5%, prior 2.3%
    • PCE Core QoQ, est. 2.4%, prior 1.3%
  • 8:30am: April Initial Jobless Claims, est. 540,000, prior 547,000; Continuing Claims, est. 3.59m, prior 3.67m
  • 9:45am: April Langer Consumer Comfort, prior 54.2
  • 10am: March Pending Home Sales YoY, est. 27.5%, prior -2.7%; Pending Home Sales (MoM), est. 4.4%, prior -10.6%

DB's Jim Reid concludes the overnight wrap

The main event yesterday was the Federal Reserve meeting in the US, where expectations were low for there being much new information. The FOMC did announce upgraded forecasts for the US economy though, and Chair Powell noted in the ensuing press conference that “amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened.” However the FOMC kept both the pace of asset purchases and its key interest rate unchanged, with no change to the forward guidance. Powell softened some language and acknowledged that the recovery has been faster than previously expected but that “it remains uneven and far from complete” and that he viewed the economy as “a long way from our goals.” He once again noted that inflation metrics would be higher in coming months but that it remains a “largely” a transitory phenomenon. For more see our US economists report here.

The market was very steady going into the Fed announcement. The S&P was trading within a 13.3pt (0.3%) range before finishing slightly lower on the day (-0.08%) after gaining as much as +0.35% at the intraday highs which were reached at the beginning of the Powell presser. That marginal loss left the S&P just off its record levels, though cyclicals such as energy (+3.35%), retailing (+0.56%) and banks (+0.47%) continued to lead the index. Yields on US treasuries retreated to the lows of the day after being as much as +2.9bps higher just prior to the FOMC release. Afterward the FOMC announcement, they rallied through the rest of the US afternoon with 10yr yields finishing the day down -1.2bps at 1.609%. The fall in yields was driven by real yields (-2.9bps) falling back, even as inflation expectations rose even further (+1.6bps) with 10yr breakevens at fresh 8 year highs. The dollar index ending the day down -0.33%. Commodities were largely higher with copper (+0.22%), gold (+0.29%), and WTI (+1.46%) all gaining.

Tech shares largely traded lower yesterday with the NASDAQ down -0.28%, but this reversed after the US close, when we saw earnings from Apple and Facebook. Facebook was up +6.2% in after-market trading on a large revenue beat, with reported sales up 47% at $26.17bn (est 23.7bn). Investors seemed to respond well to a strong Q2 guidance and steady user growth. Apple rose +2.3% after the largest public company in the US announced strong revenues, up +54% to $89.6bn (est. $77.3bn). Sales were strong across their suite of products with the company reporting “revenue records in each of our geographic segments and strong double-digit growth in each of our product categories,” in the earning release. Nasdaq futures are now up +0.93%.

Biden delivered his first speech to a joint session of Congress yesterday outlining his plans on infrastructure, education and other party priorities. We actually got the contents of the American Families Plan from the White House ahead of the speech, which is a $1.8tn package that has $1tn in spending and $800bn in tax cuts. Among the measures are free universal pre-school for 3 and 4-year olds, two years of free community college, measures on paid leave and affordable childcare, and an extension of various tax credits. In terms of how they propose to pay for this, it would see the top tax rate go back up to 39.6%, and households earning over $1m would also face the same 39.6% rate on capital gains tax. The president tried to keep much of the focus on the job-making possibilities, especially for those without college degrees. “Nearly 90% of the infrastructure jobs created in the American Jobs Plan don’t require a college degree… and 75% percent do not require an associate’s degree.” President Biden also struck a more hawkish tone against Russia and China, particularly where he sees American interests being at risk – such as election tampering and the South China Sea. S&P futures rose around +0.6% after the start of the speech having already rallied slightly on the stronger tech earnings after the close.

Asian markets are also trading up this morning on the prospect of more stimulus from the US with the Hang Seng (+0.62%), Shanghai Comp (+0.17%), Kospi (+0.16%) and India’s Nifty (+1.04%) all up. Japan’s markets are closed for a holiday. European futures are also pointing to a positive open. Elsewhere, Reuters has reported that China is preparing to fine Tencent as part of its antitrust crackdown on the country’s internet giants. The report added that the fine could be as much as CNY 10bn.

In other news, the global chip shortage is worsening with Honda and BMW joining the growing list of automakers (including Jaguar Land Rover, Volvo and Mistubishi Motors) temporarily pausing production for a few days next month to deal with the crisis. Meanwhile, Ford has gone a step further and reduced its full year earnings guidance due to the shortage and has said that it now sees the shortage extending into next year. Elsewhere, tech giants like Apple and Samsung have also flagged production cuts and lost revenue as a result of the shortage in their earnings releases overnight. Apple’s CFO Maestri warned that supply constraints are crimping sales of iPads and Macs, two products that performed especially well during lockdowns. Maestri added that this will knock $3 bn to $4 bn off revenue during the fiscal third quarter.

Risk assets had performed well in Europe ahead of the Fed, with the DAX (+0.28%), the CAC 40 (+0.53%) and the FTSE 100 (+0.27%) all posting solid gains. The STOXX 600 (+0.02%) lagged behind somewhat thanks to an underperformance in Swedish equities, but still managed to close just shy of its all-time high. Separately, sovereign bond yields outside of the US climbed to their highest level in months, with yields on 10yr bunds up +1.8bps to -0.23%, their highest closing level in over a year, as those on 10yr OATs (+2.0bps) and BTPs (+5.1bps) similarly moved higher.

There wasn’t a great deal of news on the pandemic yesterday, though in New York, Governor Cuomo said that the 12am outdoor dining area curfew for bars and restaurants would be lifted from May 17, and that the 12am indoor curfew would go on May 31. Poland announced an easing of restrictions as well, with shopping malls partially open from May 4 and outdoor dining to recommence on May 15. Meanwhile on the Tokyo Olympics, it was announced that athletes will now be tested on a daily basis, though a decision on whether to have domestic spectators won’t be made until June. Sticking with Japan, the Nikkei has reported overnight that the country is considering making vaccines and medical treatments that have yet to be domestically approved available for emergency use in order to reduce regulatory delays to vaccination as cases are continuing to rise. Elsewhere, the US has issued a level 4 travel advisory for India overnight and have told its citizens to leave India as soon as possible and not to travel there because of the escalating coronavirus crisis. India reported 379k cases and 3645 fatalities over the past 24 hours, marking new record highs.

Here in the UK, yesterday saw the ONS published their latest antibody survey, which found that in England 68% of the adult population had tested positive for antibodies in the week ending April 11, the highest since they began running this survey late last year. The effects of the vaccination drive could be seen through the age breakdowns, as all the groups covering the over-50s had an antibody rate of higher than 80%. See the graph below for the breakdown. There was also late news in the UK that the government had secured a deal with Pfizer and BioNtech for an additional 60 million doses of its vaccine as part of a booster program to protect the most vulnerable ahead of the winter.

To the day ahead now, and we’ll get a fresh round of earnings releases with the highlights including Amazon, Mastercard, Comcast, Merck, Thermo Fisher Scientific, McDonald’s, Bristol Myers Squibb, Caterpillar, American Tower and Twitter. On the data front, we’ll get the advance estimate of Q1 GDP in the US, as well as the weekly initial jobless claims and March’s pending home sales. In Europe, we’ll get the change in German unemployment for April and the country’s preliminary CPI reading for that month, on top of the final Euro Area consumer confidence reading for April. Central bank speakers include Fed Vice Chair Quarles, ECB Vice President de Guindos, and the ECB’s Elderson and Holzmann.

Tyler Durden Thu, 04/29/2021 - 07:58
Published:4/29/2021 7:10:09 AM
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