Notes/Observations
– European indexes started the day mostly in positive territory, but Real estate and industrial stocks led the way, reflecting the boom seen in Asian markets. Japan, Australia and Taiwan benefited, but Mainland China is lagging behind. In the US, futures gained momentum, supported by gains in Japanese growth stocks and rising real estate prices in China. Meanwhile, Australian short-term government bonds weakened, while long-term government bonds rose. Yields on EU bonds have fallen, with the long end of Italy's curve attracting the most attention. The dollar is showing a gradual decline. Oil maintained its overnight gains as the IEA Monthly Report (OMR) revised down its outlook for 2024, but remained roughly flat for 2025.
– Eurozone Q1 GDP preliminary figures (2 of 3) continue to signal the fastest growth since the third quarter of 2022, after the continent has battled stagflation over the past 18 months.
– Continue to focus on major economic indicatorsIt was better than expected, especially after the U.S. PPI, but the impact on the Fed's recommended personal consumption expenditures (PCE) deflator was muted. Fed Chairman Jerome Powell characterized the results as mixed and suggested there would be no immediate rate hikes. Attention now turns to the long-awaited CPI at 08:30 ET.
– In the Asia-Pacific region, President Biden's announcement of increased tariffs on imports from China, including electric vehicles, sparked concerns. In response, China urged them to pledge “resolute measures.” Additionally, Australia's federal budget revealed a larger-than-expected deficit, while the People's Bank of China (People's Bank) left MLF interest rates unchanged. However, Australia's first quarter wage price index showed a slowdown, further deteriorating regional economic dynamics.
– Tier 1 analysts noted in the US May Spending Survey (conducted May 8-13) that spending expectations for new vehicles over the next 12 months have declined. In May, there was a significant increase on a month-on-month and year-on-year basis, reaching the highest level since January 2023. 43.0% of respondents expect to buy a car, compared to 35.8% last month and 41.2% last year.; Plans to buy a new home in the next 12 months have returned to above 20% for the first time in 12 months, rising from 18.5% last month to 24.3% in May.
– Asia finished mixed with Shanghai underperforming at -0.8%. The EU index ranges from -0.1% to +0.6%. US futures are 0.0%. Gold +0.6%, DXY -0.2%; Commodities: Brent +0.6%, WTI +0.6%; Cryptocurrency: BTC +0.3%, ETH -0.5%.
Asia
– People's Bank of China disburses RMB 125 billion in 1-year medium-term lending facility (MLF) with interest rate unchanged at 2.50% – 21:30 (AU) Australian Q1 Wage Price Index QoQ: 0.9% 0.9% qoq. Year over year: 4.2% Previous 4.2%.
– Australian Q1 Wage Price Index Q/Q: 0.8% vs. 0.9%e; YoY: 4.1% vs. 4.2%e.
– The Chinese government is considering purchasing unsold Chinese homes to alleviate oversupply.
Europe
– The Bank of France (BdF) predicted a slight increase in GDP growth in the second quarter, following +0.2% in the first quarter.
Americas
– Fed's Schmidt (non-voter, hawk) sees signs that inflation is easing, but there's more work to do. Interest rates are likely to remain high for some time.
– Fed's Mester (voter) noted that the Fed is in a very good position to study the economy and consider various risks before setting its interest rate path. It is too early to conclude that inflation will reverse. The Bank is not proactive in considering interest rate hikes.
– Fed Chairman Jerome Powell noted that PPI readings were more mixed than hot. Mr. Zatt did not think the next move would be to raise rates, but noted that it was likely to keep them where they are.
energy
– Weekly API Crude Inventories: -3.1 million vs. +0.5 million previously.
Speakers/Bonds/FX/Commodities/Errata
stock
index [Stoxx600 +0.33% at 523.38, FTSE +0.37% at 8,458.97, DAX +0.50% at 18,817.35, CAC-40 -0.10% at 8,217.90, IBEX-35 +0.47% at 11,292.50, FTSE MIB +0.53% at 35,337.00, SMI +0.21% at 11,809.31, S&P 500 Futures +0.04%].
Market focus/key themes: European indexes opened generally higher and trended higher throughout the first half of the session. Sectors likely to see gains include energy and financials. Meanwhile, consumer discretionary and healthcare were among the key laggard sectors. Oil and gas subsector supported following OPEC monthly report. Focus on US CPI release later in the day. According to reports, Repsol is in talks to sell the state for its renewable energy business. Expected earnings for the next US session include Cisco, Grab Holdings, Dynatrace, and Dole.
stock
– Consumer optional: TUI [TUI.DE] +1.5% (revenue, reservation color), burberry group [BRBY.UK] -2.5% (Profit outlook continues to be difficult in the first half) – Consumer Essentials: Imperial Brands [IMB.UK] +4.0% (Revenue) – Energy: Neste Oil [NESTE.FI] -12.5% (guidance reduction and analyst downgrade).
– Finance: Commerzbank [CBK.DE] +3.5% (earnings, forecast raised), allianz [ALV.DE] -1.5% (revenue), ABN AMRO [ABN.NL] -5.5% (profit).
– Healthcare: Merck KGaA [MRK.DE] +4.5% (profit).
– Industrial: ThyssenKrupp [TKA.DE] -6.5% (profit, forecast lowered), Hapag Lloyd [HLAG.DE] -1.0% (increases the lower limit of profit and outlook), Experian [EXPN.UK] +8.5% (profit).
speaker
– ECB Villeroy (France) reiterated its view that it is very likely that it will start cutting interest rates in June. The domestic economy is strong and is expected to recover next year. The oil market in 2025 looks more balanced overall.
– Mr Lane of the ECB (Finland) said it could cut interest rates if inflation remained close to target.
– ECB's Mr. Muller (Estonia, Hawk) commented that while a rate cut in June is very likely, the path for interest rates over the remainder of 2024 is more complex.
– Central Bank of Sweden (Riksbank) May Minutes It said the policy rate could be cut two more times in the second half of this year.
– Türkiye Fin Min Simsek He reiterated his commitment to doing whatever it takes to curb inflation. Monetary policy has been tight enough to keep inflation expectations anchored.
– German Chemical Industry Association (VCI) predicted a 3.5% increase in production value in 2024.
– IEA Monthly Petroleum Report (OMR) lowers global oil demand growth in 2024 from 1.2 million barrels per day to 1.1 million barrels per day, while forecasting global oil demand growth in 2025 from 1.1 million barrels per day to 1.2 million barrels per day. I pulled it up.
Currency/bonds
– USD is consolidating post-PPI, with Fed Chair Powell commenting on the losses on Wednesday with a focus on the upcoming US CPI reading.
– EUR/USD is at a one-month high above 1.0830.
– GBP/USD maintains above the 1.26 level.
– USD/JPY rose from two-month highs during the session and tested the 155.60 area. The 160 region remained a vital resistance force.
economic data
– (FI) Finland March GDP indicator YoY: -0.8% vs. previous year +1.5%.
– (SE) Sweden April CPI m/m: 0.3% vs 0.4%e; YoY: 3.9% vs 4.0%e; CPI level: 415.50 v 416.02e.
– (SE) Sweden April CPIF m/m: 0.3% vs 0.4%e; y/y: 2.3% vs 2.4%e.
– (SE) Sweden April CPIF (Ex-Energy) M/M: 0.3% vs. 0.4%e; YoY: 2.9% vs. 3.0%e.
– (NO) Norway April trade balance (NOK): 65.3 billion vs. 63.3 billion previously.
– (DK) Denmark April PPI m/m: +0.8% -0.9% y/y. Year over year: -0.9% vs. -1.5% previously.
– (RO) Romania Q1 Advance GDP (1st of 3 measurements) Q/Q: 0.5% vs 0.9%e; YoY: 0.1% vs 2.7%e.
– (France) France April final CPI m/m: 0.5% vs preliminary 0.5%. YoY: 2.2% vs provisional 2.2%; CPI ex-tobacco index: 119.01 vs. 119.03e.
– (France) France April final CPI EU harmonization m/m: 0.6% vs provisional 0.6%. YoY: 2.4% vs. 2.4% provisional.
– (NL) Netherlands Q1 GDP QoQ: -0.1% vs 0.3%e; YoY: -0.7% vs -0.4% previously.
– (NL) Netherlands March trade balance: 13.6 billion euros vs. 11.6 billion euros previously. Export YoY: -5.9 -7.0%. Imports YoY: -0.3 vs. -4.6%.
– (NL) Netherlands March consumer spending year-on-year change: 0.4% year-on-year -\20.2%.
– (PL) Poland April final CPI m/m: 1.1% vs preliminary 1.0%. Year-on-year change: 2.4% vs provisional 2.4%.
– (PL) Poland Q1 GDP flash estimate: 0.4% QoQ vs 0.6%e; yy: 1.9% vs 1.8%e.
– (TR) Turkey April central government budget balance (TRY): -177.8 billion vs. -209 billion last time.
– (IT) Italy March general government debt: 2.895 euros vs. 2.871 trillion euros (record level).
– (EU) Eurozone Q1 GDP preliminary figures (2nd of 3 readings) QoQ: 0.3% vs 0.3% up. YoY: 0.4% vs. 0.4% increase.
– (EU) Eurozone Q1 employment provisional index: 0.3% vs. 0.3% quarter-on-quarter. Year over year: 1.0% vs. 1.2% previously.
– (EU) Eurozone March industrial production m/m: 0.6% vs 0.4%e; y/y: -1.0% vs -1.3%e.
– (CY) Cyprus Q1 GDP preliminary QoQ: 1.2% vs. 1.0% last year. Year over year: 3.5% vs. 2.2% previously.
– (IS) Iceland Q1 unemployment rate: 4.2% vs. 3.2%.
bond issue
– (in) India Comparison of gross sales amount of INR270B and INR270B shown on 3, 6 and 12 month invoices.
– (DK) Denmark Sold 500 million DKK with 3 month invoice. Average yield: 3.380% vs 3.535% before; Bid-to-cover: 2.48xv 2.60x before.
– (England) DMO Sold Green Gilts at 0.875% for £3 billion in July 2033. Average yield: 4.072% vs his previous 4.091%. Bid-to-cover: 3.52xv 2.66x ago. Tail: 0.7bps vs. 1.3bps.
– (no) Norway Comparison of total sales of NOK 3 billion indicated for 2027 and 2034 bonds.
– (SE) Sweden The total sales amount is SEK 15 billion and SEK 150 billion shown in the 3-month and 6-month invoices.
Looking to the future
– (NG) Nigeria April CPI YoY: 34.2% YoY 33.2%.
– (PE) Peru April unemployment rate: Not estimated, previously 7.7%.
– 05:25 (EU) ECB daily liquidity statistics.
– 05:30 (DE) Germany sells 2 billion euros in 2053 and 2054 German federal bonds.
– 05:30 (Pacific Time) Portuguese Indebtedness Agency (IGCP) sells between 75 and 1 billion euros in 12-month short-term bills.
– 05:30 (PL) Poland sells bonds.
– 05:30 (ZA) South Africa announces details of next bond auction (to be held on Tuesday).
– 06:00 (IE) Ireland March real estate prices m/m: No forecast, 0.3% from previous month. Y/Y: No expectations, previously 6.1%.
– 06:00 (CZ) Czech Republic sells 4 billion CZK in 2034 and 2037 bonds.
– 06:00 (RU) Russia sells OFZ Bon (2 tranches).
– 07:00 (US) May 10 MBA Home Loan Application: No forecast, previously 2.6%.
– 07:00 (ZA) South Africa March retail sales m/m: 0.2% vs. 0.4%. Year-on-year change: -1.0% -0.8%
– 07:00 (UK) In-hospital question time every afternoon
– 08:00 (BR) Brazil March Economic Activity Index (Monthly GDP) MoM: -0.3%ev +0.4%. YoY: -1.9% before +2.6%.
– 08:00 (UK) Daily Baltic Sea Dry Bulk Index.
– 08:15 (California) Canada April annual housing starts: 240.0Ke vs. 242.2K previously.
– 08:30 (USA) May Empire Manufacturing: -10.0ev -14.3 ago.
– 08:30 (US) April CPI m/m: 0.4% 0.4% m/m. Year-on-year change: 3.4% vs. 3.5%.
– 08:30 (US) April CPI (excluding food/energy) m/m: 0.3% 0.4%. Year over year: 3.6% vs. 3.8%.
– 08:30 (US) April CPI Index NSA: 313.752ev 312.332 ago. CPI Core Index: 317.734ev before 316.698.
– 08:30 (US) Real average hourly wage year-over-year change in April: No estimate, previously 0.6%. Average weekly return Y/Y: Not estimated, previously 0.6%.
– 08:30 (US) April retail sales m/m: 0.4% vs. 0.7%. Retail sales (excluding automobiles) m/m: 0.2% 1.1%; Retail sales (excluding auto/gasoline): 0.1% before 1.0%; Retail sales (control group): 0.1% before 1.1%.
– 08:30 (CA) Canada March manufacturing sales m/m: -2.8%ev +0.7% previous month.
– 09:00 (RU) Russia March trade balance: no forecast, previously $7.7 billion. Exports: No plans, previously $30.3 billion. Imports: No forecast, previously $22.6 billion.
– 09:00 (CA) Canada April existing home sales m/m: No forecast, 0.5% m/m.
– 10:00 (US) May NAHB Housing Market Index: 51e vs. 51 Previously.
– 10:00 (US) March Corporate Inventories: -0.1% before +0.4%.
– 10:00 (UK) Former Federal Reserve Director Bernake testifies in the UK Parliament.
– 10:30 (US) DOE weekly oil inventories.
– 11:00 (PE) Peru March Economic Activity Index (Monthly GDP) YoY: 0.8%ev 2.8% (revised from 2.9%).
– 11:30 (Illinois) Israel April CPI m/m: 0.6%ev 0.6% ago. Year over year: 2.5% vs. 2.7%.
– 11:30 (US) Treasury sells 17-week bills.
– 12:00 (RU) Russia Q1 H1 GDP (1 of 3 measurements) YoY: 5.1% YoY 4.9%.
– 12:00 (CO) Colombia Q1 GDP QoQ: 2.1%ev 0.0%. Year over year: 0.8% 0.3%.
– 12:00 (US) Kashkari Fed.
– 16:00 (US) March net long-term TIC flows: Not expected, previously $71.5 billion. Total net TIC flows: Not estimated, previously $51.6 billion.
– 19:40 (Australia) RBA Hunter.
– 19:50 (JP) Japan Q1 GDP QoQ preliminary figures: -0.3%ev +0.1%. Annualized GDP QoQ: -1.2% +0.4%; Nominal GDP QoQ: 0.2% QoQ 0.5%. GDP deflator YoY: 3.3% 3.9% before.
– 19:50 (Japan) Japan Q1 Private Consumption News Q/Q: -0.2%ev Previously -0.3%. Business Spending Q/Q: -0.5%ev +2.0% (QoQ). Inventory contribution rate % GDP: +0.1%ev previous -0.1%; Net export contribution GDP: -0.3%ev +0.2% (previous value).
– 21:30 (AU) Australia April employment change: +23.7Ke vs. -6.6Ke previously. Unemployment rate: 3.9 vs. 3.8%;Full-time employment change: None planned, previously +27.9K; Part-time employment change: Not scheduled v -34.5K ago. Participation rate: 66.6% before 66.6%.
– 22:00 (NZ) New Zealand sells NZ$500 million in 2031 and 2034 bonds.
– 23:00 (KR) Korea March M2 Money Supply M/M: No forecast, previous 0.1%. “L” Money Supply Monthly: No forecast, previously 0.3%.
– 23:00 (NZ) New Zealand April non-resident bond holdings: No forecast, previously 62.9%.
– 23:30 (JP) Japan sells 12-month bills.
– 23:35 (JP) Japan to sell 20-year government bonds.
