The Morning Hark - 4 June 2024
Today’s focus...ISM raises the fear of stagflation. Jimmy raises the spirits with Stairway
Overnight Highlights
Prices are at 6.45 BST/1.45 EST, with changes reflecting movement from midnight GMT
Oil - Oil continuing to slide in Asia with Brent and Crude August futures currently at 77.60 and 73.40. Oil was already on shaky ground yesterday before the ISM print put the final nail in its coffin as it hit a 4 month low.
EQ - Asian equity markets flat overnight with the Hang Seng and Nikkei futures trading at 18,360 and 38,760 respectively.
The US indicies similarly flat, as they lick their wounds from yesterday, with the S&P and Nasdaq futures now at 5300 and 18,650 respectively.
Gold - Gold unchanged in Asia with the August futures trading currently at 2369.
FI - US yields stabilising a touch overnight, after the post ISM sell off, with the US2y futures trading at 4.82% whilst the US10y futures yield at 4.41%.
European yields closed lower following the US with the German 10y closing at 2.58% and the Italian 10y yield at 3.90%.
UK gilt 10y at 4.22%.
FX - The USD flat in Asia after its sell off post ISM yesterday with the USD Index currently at 104.05. The majors now trading at; JPY, EUR and GBP 156.20, 1.0910 and 1.2810 respectively.
Today’s major FX option expiries sees in USDJPY $1.2bn at 156.50.
Others - Bitcoin and Ethereum nothing new and continues to remain rangy with currently the pair at 69,000 and 3770 respectively.
Macro Themes At Play
Recap
Switzerland Manufacturing PMI for May eventually printed at 46.4, its best since March 2023. Meanwhile Germany Manufacturing PMI final print for May showed a bang on 45.4.and the EU equivalent saw a tiny tick down to 47.3.
UK Manufacturing PMI final print for May showed a tiny downward revision to 51.2.
May’s Canada Manufacturing PMI disappointed with a lower print than previous and expected at 49.3. A third month of declines for the series and giving the BoC a nudge for Wednesday’s rate announcement.
The US Manufacturing PMI final print for May showed a nice uptick to 51.3.
US ISM Manufacturing PMI for May however was far from ideal. Headline printed at 48.7 a downtick on both previous and expected as demand starts to falter. The underlying measures were mixed with Employment hitting its best level since last September at 51.1. New Orders however hit a year’s low at 45.4 and Prices, although taking a step back from last month’s spike higher, still remain elevated at 57, the second highest print since July 2022. The Spectre of Stagflation returns or did it ever leave?
The Day Ahead
May’s Swiss Inflation and German Labour Reports are the morning highlights with the afternoon seeing the US Jolts and Factory Orders for April.
Early doors tomorrow the final May Services PMIs start to hit the tapes. In addition we get Australia q1 GDP.
Jimmy Page explaining how Stairway to Heaven was written
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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:
Tuesday
Switzerland Inflation Rate MoM May consensus 0.4% vs previous 0.3% (07.30 BST)
Switzerland Inflation Rate YoY May consensus % vs previous 1.4% (07.30 BST)
Germany Unemployment Rate May consensus 5.9% vs previous 5.9% (08.55 BST)
Germany Unemployment Change May consensus 10k vs previous 10k (08.55 BST)
US JOLTs Job Openings Apr consensus 8.34m vs previous 8.488m (15.00 BST)
US JOLTs Job Quits Apr consensus m vs previous 3.329m (15.00 BST)
US Factory Orders MoM Apr consensus 0.6% vs previous 1.6% (15.00 BST)
Early Wednesday
Australia Judo Bank Services PMI Final May consensus 53.1 vs previous 53.6 (00.00 BST)
Japan Jibun Bank Services PMI Final May consensus 53.6 vs previous 54.3 (01.30 BST)
Australia GDP Growth Rate QoQ q1 consensus 0.2% vs previous 0.2% (02.30 BST)
Australia GDP Growth Rate YoY q1 consensus 1.2% vs previous 1.5% (02.30 BST)
China Caixin Services PMI May consensus 52.6 vs previous 52.5 (02.45 BST)
Good luck.
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