The Morning Hark - 8 May 2024
Today’s focus...Quiet markets. Riksbank rate decision on a knife-edge and Fed speakers up but little else.
Overnight Highlights
Prices are at 6.30 BST/1.30 EST, with changes reflecting movement from midnight GMT
Oil - Oil trading lower with Brent and Crude July futures currently at 82.70 and 77.70.
Another choppy day with the Middle East headlines on ceasefires and the Rafa incursion. Elsewhere the API data showed inventory builds across all measures. In addition the Russian Deputy PM suggested that OPEC+ could move to raise crude production. The latter two stories causing the drift lower.
EQ - Asian equity markets off overnight with the Hang Seng and Nikkei futures trading lower at 18,325 and 38,270.
The US indicies unchanged in Asia, with the S&P and Nasdaq futures now at 5210 and 18,180 respectively.
Gold - Gold flat with the June futures trading currently at 2327.
FI - US yields continuing to firm up overnight with currently the US2y futures trading at 4.84% whilst the US10y futures yield at 4.47%.
European yields softened a touch yesterday with the German 10y closing at 2.42% and the Italian 10y yield at 3.72%.
UK gilt 10y closed similarly lower at 4.14%.
FX - The USD up smalls overnight and retaining their yield driven gains from yesterday with the USD Index currently at 105.56. The majors now trading at; JPY, EUR and GBP 155.20, 1.0740 and 1.2490 respectively.
Today’s FX option expiries sees in the EUR; €1bn at 1.0750.
Others - Bitcoin and Ethereum struggling again as they are hit by a sell program during the illiquid period overnight. The pair currently at 62,650 and 3020 respectively.
Macro Themes At Play
Recap
Later in the day we have the EU Retail Sales print for March was a nice upside surprise with MoM at 0.8% which helped to take the YoY back into positive territory at 0.7%, the first time since September 2022.
The Canadian Ivey PMI for April was a strong upside surprise to 63, a two year high, and well above expectations and the previous month’s print. Underlyings were not as rosy as you would think with prices at their highest level since December and employment up smalls. However both inventories and supplier deliveries showed sharp declines.
Central Bank Speakers
Fed’s Kashkari said that the housing market resilience raises questions about the neutral rate. He also noted that the progress on inflation in the latter half of 2023 appears to have stalled. The question now is whether disinflation is still underway or just taking longer. He sees monetary policy remaining here for an extended period of time. Also depending on the inflation outlook he could see rates going up or down from here.
ECB’s de Cos stated that rates can be cut in June if the price path holds and on that basis the ECB is data dependent but will not pre-commit to a predetermined rate path.
BoJ’s Ueda emphasised that a weak JPY poses inflation risks.
Japan’s Finance Minister Suzuki would not comment on whether the US has agreed on Japan’s FX intervention.
The Day Ahead
Little on the cards today with the knife edge Riksbank Rate Decision the main focus and a slew of Fed Speakers.
Overnight the BoJ’s Summary of Opinions from the April meeting.
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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:
Wednesday
Germany Industrial Production MoM Mar consensus -0.6% vs previous 2.1% (07.00 BST)
Riksbank Interest Rate Decision knife edge decision on a 25bp cut or remain on hold at 4% (08.30 BST)
Fed Speakers
Jefferson (16.00 BST)
Collins (16.45 BST)
Cook (18.30 BST)
Early Thursday
BoJ Summary of Opinions April meeting opinions (00.50 BST)
Good luck.
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