- US stocks saw two-way price action as markets digested the latest US data releases including softer-than-expected PPI data and with Initial Jobless Claims at the highest since August last year. The data initially provided tailwinds for stocks which were then pressured following the open before rebounding off their lows to close mixed in which the S&P 500 and Nasdaq posted their fourth consecutive day of record closes.
- USD swung between gains and losses in which the DXY traded on both sides of the 105.00 level but ultimately shrugged off the brief headwinds from the softer-than-expected PPI data, while Initial Jobless Claims was well above market estimates and printed its highest reading since August 2023.
- Looking ahead, highlights include Australian MI Inflation Expectations & Consumer Sentiment, Japanese Industrial Production April Final Reading, BoJ Policy Announcement & Governor Ueda's Post-Meeting Press Conference.
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LOOKING AHEAD
- Highlights include Australian MI Inflation Expectations & Consumer Sentiment, Japanese Industrial Production April Final Reading, BoJ Policy Announcement & Governor Ueda's Post-Meeting Press Conference.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks saw two-way price action as markets digested the latest US data releases including softer-than-expected PPI data and with Initial Jobless Claims at the highest since August last year. The data initially provided tailwinds for stocks which were then pressured following the open before rebounding off their lows to close mixed in which the S&P 500 and Nasdaq posted their fourth consecutive day of record closes.
- SPX +0.23% at 5,434, NDX +0.57% at 19,577, DJI -0.17% at 38,647, RUT -0.88% at 2,039.
- Click here for a detailed summary.
NOTABLE HEADLINES
- US Treasury Secretary Yellen said the unemployment rate has drifted up a little bit, while the labour market has become a little less hot and a little more than normal. Furthermore, she said the labour market is now resembling pre-pandemic levels and wages are not a threat to contribute to inflation. Yellen later commented that strong US growth is lifting global growth and that the labour market remains strong, while she added that US labour market pressures have eased and wages are rising more slowly.
DATA RECAP
- US PPI Final Demand MM (May) -0.2% vs. Exp. 0.1% (Prev. 0.5%)
- US PPI Final Demand YY (May) 2.2% vs. Exp. 2.5% (Prev. 2.2%, Rev. 2.3%)
- US Initial Jobless Claims w/e 242.0k vs. Exp. 225.0k (Prev. 229.0k)
- US Continued Jobless Claims w/e 1.82M vs. Exp. 1.798M (Prev. 1.792M, Rev. 1.790M)
FX
- USD swung between gains and losses in which the DXY traded on both sides of the 105.00 level but ultimately shrugged off the brief headwinds from the softer-than-expected PPI data, while Initial Jobless Claims was well above market estimates and printed its highest reading since August 2023.
- EUR was among the worst G10 performers and slipped beneath the 1.0800 handle against the firmer dollar, while the latest commentary from ECB's Vasle, Nagel, and Muller had little impact on the single currency.
- GBP retreated beneath 1.2800 alongside the selling in cyclical peers and with a lack of major UK catalysts.
- JPY marginally weakened with USD/JPY back above 157.00 as the attention turns to the BoJ policy decision.
FIXED INCOME
- T-notes saw gains after softer-than-expected PPI data provided the initial catalyst and with prices also buoyed by a strong 30-year note auction.
CRYPTO
- US SEC Chair Gensler envisions ETH spot ETF S-1s will likely be approved by the end of the summer, according to Fox's Terret.
COMMODITIES
- Oil prices settled relatively flat on what was a choppy session amid geopolitical tensions and US data.
- Russia is fully committed to the OPEC+ deal and will solve the oil overproduction issue in June, while Russia overproduced oil in May and production volumes exceeded since April which will be fully adjusted in the future, according to the energy ministry.
GEOPOLITICAL
MIDDLE EAST
- Hezbollah fired 150 rockets and 30 drones on 15 Israeli bases in northern Israel during its largest attack since the start of the fighting in the northern border, according to an official cited by Al Jazeera.
- Israeli army said its warplanes bombed Hezbollah infrastructure in the Deir Syriac area in southern Lebanon, according to Sky News Arabia.
- Israeli government said it will restore security on the northern border through diplomatic efforts or otherwise, while it added that Lebanon and Hezbollah, under the direction of Iran, bear full responsibility for the deteriorating security situation, according to Sky News Arabia.
- Israeli politician Gantz's State Camp party submitted a motion of no confidence in the emergency government after withdrawing from it, according to Al Jazeera.
- US President Biden said he hasn't lost hope but Hamas has to step up regarding a Gaza ceasefire.
- Iran informed the IAEA on June 9th/10th that eight cascades each containing 174 IR-6 centrifuges would be installed at the Fordow enrichment plant over the next 3-4 weeks, according to an IAEA report on Iran seen by Reuters. Furthermore, a separate report also noted the IAEA said Iran is increasing its nuclear capabilities, according to Al Jazeera.
- Iran and Azerbaijan conducted joint military drills on the border, according to ISNA.
OTHER
- G7 agreed on how to tap frozen Russian assets for USD 50bln to Ukraine, according to Bloomberg. It was separately reported that NATO countries have approved a plan for a security assistance and training mission for Ukraine, according to alliance sources cited by dpa.
- Ukraine's Energy Minister Galushchenko said the 50% of the energy infrastructure remaining is "not enough to get through the winter".
- Russian Foreign Ministry said France is getting more deeply involved in the Ukraine conflict and thus increasing the risk of a direct clash with Russia.
- China is lobbying developing nations to join its alternative Ukraine peace plan before the Swiss peace summit which it is not attending, while China said the Swiss peace summit would prolong the Ukrainian war, according to diplomats cited by Reuters.
- Russian affiliates at Chinese banks have reportedly halted processing in Russia-China trade in USD and EUR, while banks will likely increase settlements in national currencies using RUB and CNY, according to Reuters sources.
ASIA-PAC
NOTABLE HEADLINES
- Japanese Banking Association Chair said the BoJ will increase rates extremely gradually while ascertaining the market impact.
- Taiwan's Central Bank kept its key rate unchanged at 2.00%, as expected, but raised RRR by 25bps in a move that would help slow the flow of credit into the real estate market and it introduced some curbs on buying property.
EU/UK
NOTABLE HEADLINES
- UK Labour Party Manifesto contained no new policies beyond what's been telegraphed in recent days and weeks with Labour to keep mortgage rates as low as possible. Furthermore, it will take a long-term and strategic approach regarding China and noted that Britain will remain outside of the EU but will reset its relationship with the bloc.
- ECB's Muller said the ECB has not yet achieved the inflation target and it is possible that inflation could temporarily rise again, while services inflation is still relatively high and wage growth remains strong.
- ECB's Vasle said there is a risk that the disinflation process could slow and they will be data dependent, while he added wage momentum is still relatively strong and more cuts this year are probable if the baseline holds.
- French left-wing parties issued a joint statement that they have reached an agreement to create a new popular front for the parliamentary election.
DATA RECAP
- EU Industrial Production MM (Apr) -0.1% vs. Exp. 0.2% (Prev. 0.6%, Rev. 0.5%)
- EU Industrial Production YY (Apr) -3.0% vs. Exp. -1.9% (Prev. -1.0%, Rev. -1.2%)
