The Morning Hark - 30 May 2024
Today’s focus...Higher yields dominate the macro landscape
Overnight Highlights
Prices are at 6.25 BST/1.25 EST, with changes reflecting movement from midnight GMT
Oil - Oil off smalls in Asia with Brent and Crude July futures currently at 83.30 and 79.10. Oil gave back some of its recent gains as US yields pressed higher raising the prospect of more distant rate cuts.
EQ - Asian equity markets continued to leak lower overnight with the Hang Seng and Nikkei futures trading now at 18,130 and 38,000 respectively as they followed the US sell off.
The US indicies equally softer with the S&P and Nasdaq futures now at 5255 and 18,670 respectively. The German inflation print seems to have been the catalyst for the further sell off in equities but that excuse seems fairly overdone. Seems much more like a nervy, over extended market starting to give back some of its ill gotten gains.
Gold - Gold lower in Asia with the June futures trading currently at 2333 and at last succumbing to the higher USD.
FI - US yields coming off a touch overnight after yesterday’s further gains. Currently the US2y futures trading at 4.98% whilst the US10y futures yield at 4.61%.
European yields closed higher following the higher German inflation print with the German 10y closing at 2.69% and the Italian 10y yield at 4%.
UK gilt 10y at 4.41%.
FX - The USD extending yesterday’s gains, on the back of higher US yields, in Asia with the USD Index currently at 105.15. The majors now trading at; JPY, EUR and GBP 157.10, 1.0790 and 1.2690 respectively.
Today’s major FX option expiries sees; in the EUR €1.7bn at both 1.0825 and 1.0850.
Others - Bitcoin and Ethereum nothing new and all very rangy with currently the pair at 68,060 and 3775 respectively.
Macro Themes At Play
Recap
German Inflation Report for May did little for volatility with an as expected uptick for the YoY to 2.4%. Nothing to know the ECB off a June rate cut but little beyond that to get excited about.
Central Bank Speakers
Fed’s Bostic again emphasised that inflation will be bumpy but the trend is generally down. Breadth of price gains is still pretty significant. Less breadth would add to our confidence.
RBA’s Hunter stated that the CPI print confirmed that there was strength in some price sectors. The Board is focused on inflation staying out of the target band.
SNB’s Jordan felt that the weaker CHF was most likely the source of higher Swiss inflation. HE noted that there is a small upward risk to the SNB’s inflation forecast.
The Day Ahead
GDP the order of the day with the Swiss q1 first reading and the US’s second estimate. In addition some US Housing Data as well as some Fed speakers.
Early doors tomorrow we get the Japanese Data Dump as well as the China PMIs.
As we go to print tomorrow the German Retail Sales for April are revealed.
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Main Highlights Ahead
All times in BST (EST+5 / CET-1 / JST-9)
The main highlights for the day ahead ahead in terms of data and speakers:
Thursday
Switzerland GDP Growth Rate QoQ q1 consensus 0.3% vs previous 0.3% (08.00 BST)
Switzerland GDP Growth Rate YoY q1 consensus 0.6% vs previous 0.6% (08.00 BST)
US GDP Growth Rate QoQ 2nd est q1 consensus 1.3% vs previous 3.4% (13.30 BST)
US GDP Price Index QoQ 2nd est q1 consensus 3.1% vs previous 1.7% (13.30 BST)
US GDP PCE Prices QoQ 2nd est q1 consensus % vs previous 1.8% (13.30 BST)
US GDP Core PCE Prices QoQ 2nd est q1 consensus 3.7% vs previous 2% (13.30 BST)
US Pending Home Sales MoM Apr consensus -0.6% vs previous 3.4% (15.00 BST)
US Pending Home Sales YoY Apr consensus % vs previous 0.1% (15.00 BST)
Fed Speakers
Bostic (00.00 BST)
Williams (17.05 BST)
Logan (22.00 BST)
Early Friday
Japan Unemployment Rate Apr consensus 2.6% vs previous 2.6% (00.30 BST)
Japan Tokyo CPI YoY May consensus % vs previous 1.8% (00.30 BST)
Japan Tokyo Core CPI YoY May consensus 1.9% vs previous 1.6% (00.30 BST)
Japan Industrial Production MoM Prel Apr consensus 0.9% vs previous 4.4% (00.50 BST)
Japan Industrial Production YoY Prel Apr consensus % vs previous -6.2% (00.50 BST)
Japan Retail Sales MoM Apr consensus 1.9% vs previous 1.2% (00.50 BST)
Japan Retail Sales YoY Apr consensus % vs previous -1.2% (00.50 BST)
China NBS Manufacturing PMI May consensus 50.5 vs previous 50.4 (02.30 BST)
China NBS Non-Manufacturing PMI May consensus 51.5 vs previous 51.2 (02.30 BST)
Germany Retail Sales MoM Apr consensus -0.1% vs previous 1.8% (07.00 BST)
Germany Retail Sales YoY Apr consensus % vs previous 0.3% (07.00 BST)
Good luck.
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