Italian government bonds also turned lower with 10-year yield up around 21 basis points after the new PM Conte laid out his intentions for the new government. We saw a slightly higher open on Wall Street meanwhile as losses in financial and energy stocks weighed on the broader market. In currency space, the Greenback has risen with the Dollar Index taking a firmer footing above 94 after some better than expected US macro data including Markit Service PMI, ISM non-manufacturing and JOLTS job openings.
Sterling has also retained a bid following a beat for service PMI earlier today. In Washington, White House Economic Advisor Kudlow said US President Trump is seriously considering splitting NAFTA talks and may be moving quickly towards separate bilateral talks with Canada and Mexico. The Mexican Economy Ministry meanwhile confirmed they will impose tariffs of 15% to 25% on US steels products and some agricultural goods. Still to come today, possible comments from the ECB’s Weidmann at 18:30 BST.
* Mexican Economy Ministry confirmed they will impose tariffs of 15% to 25% on US steels products and some agricultural goods.
* @realDonaldTrump – Meeting in Singapore with North Korea will hopefully be the start of something big…we will soon see!
* UK cabinet gave its backing for a third runway at Gatwick.
* White House Economic Advisor Kudlow said US President Trump is seriously considering splitting NAFTA talks and may be moving quickly towards separate bilateral talks with Canada and Mexico.
* Canadian Labor Productivity Q/Q (Q1) -0.3% versus +0.3% expected, previous +0.2
* US Service PMI (May F) 56.8 versus 55.7 flash/expected, previous 54.6:
– Output growth quickens to strongest in over three years
– Capacity pressures intensify
– Input price inflation fastest since October 2013
* ISM Non-Manufacturing (May) 58.6 versus 57.9 expected, previous 56.8:
– Business Activity 61.3 versus 59.3 expected, previous 59.1
– Employment 54.1, previous 53.6
– New Orders 60.5, previous 60.0
– Prices 64.3, previous 61.8
* US JOLTS Job Openings (Apr) 6.698 Mln versus 6.490 Mln expected, previous 6.550 Mln revised to 6.633 Mln
* China Offers to Buy Nearly $70 billion of U.S. Farm and Energy Products (WSJ):
– China offered to purchase nearly $70 billion of U.S. farm and energy products if the Trump administration abandons threatened tariffs, according to people briefed on the latest negotiations with American trade officials.
US Closing Report
Twitter shares were one of the largest gainers for the day after they were added to the S&P 500. Energy stocks had provided a weight earlier in the session but later recovered as oil prices did the same – US crude futures settled at $65.52 (+$0.77).
The other big move this afternoon came in the Euro which rallied in response to an ECB sources report that suggested policymakers could announce an end date for QE next week. Elsewhere in FX, the Dollar Index has edged back below the 94 level while Sterling continues to derive support from the earlier UK service PMI print.
Staying in Europe, Italian PM Conte said a Euro exit has never been discussed by the government while the ECB’s Weidmann said Italian market turmoil shows the currency union is not yet crisis proof. On the trade front, sources said China have offered to import an extra $70.0 Bln in US agricultural, energy commodities and manufactured goods over a two year period.
* ECB Is Said to See June 14 as Live Meeting to Debate QE Exit (Bloomberg):
– European Central Bank policy makers anticipate holding a pivotal discussion at their meeting next week that could conclude with a public announcement on when they intend to cease asset purchases, according to euro-area officials familiar with the matter.
– While some see the meeting as a suitable moment to take and announce a decision on what to do after that, it’s possible nothing will materialize next week.
– Draghi may use his press conference to signal an announcement will come in July, one of the people said. An ECB spokesman declined to comment.
* Italian PM Conte said a Euro exit has never been discussed by the government.
* Canadian Government Official said NAFTA is a trilateral agreement and they continue to negotiate that trilateral agreement.
* The proposed Trump-Kim summit is to be held at the Capella Hotel on Sentosa in Singapore
* Political Correspondent at The Times (@hzeffman): EXCLUSIVE: Labour about to announce major shift towards soft Brexit. Corbyn will table “internal market” amendment to the withdrawal bill, customs bill and trade bill.
* According to sources, China have offered to import an extra $70.0 Bln in US agricultural, energy commodities and manufactured goods over a two year period.
* Senate Majority Leader McConnell has cancelled most of the August recess to pass legislation, including appropriations bills, and to make additional progress on the president’s nominees.
* ECB’s Weidmann said Italian market turmoil shows the currency union is not yet crisis proof.
* Russian Energy Minister Novak said OPEC and non-OPEC countries should look into the possible easing of oil output restrictions depending on demand.
* US crude futures settled at $65.52 (+$0.77).
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