Financial service stocks are leading declines while healthcare provided a bright spot after Trump unveiled his blueprint for lowering drug prices on Friday. Wall Street opened to the upside meanwhile with US-China trade talks in focus after the US President also threw a lifeline to Chinese telecoms giant ZTE.
In the bond markets, both US and European yields have inched higher amid some hawkish central bank chatter from the ECB’s Villeroy and Cleveland Fed President Mester. Data releases were relatively sparse meanwhile. Turning to currencies, the Dollar Index is nursing a minor decline as last week’s CPI miss continues to weigh while Sterling sits towards the top of the G10 pile.
The Norwegian Krone was boosted by hawkish remarks from Norges Bank Governor Olsen. Elsewhere, Italian President Mattarella was expected to hold government formation talks with the Five Star at 15:30 BST and League at 17:00 BST. Five Star leader Di Maio has since said he asked the President or more time to finalize a government. Still to come today, a US 10-year TIPS auction at 18:00 BST.
Key Headlines/Data: * Swedish Unemployment Rate (Apr) 7.1%, previous 7.2%
* ECB’s Villeroy said the end of the asset purchase program is nearing but whether it occurs in September or December is not an existential question. He suggested that a rate increase could come in quarters rather than years. He also argued that the recent slowdown in inflation is temporary and expects it will resume its progress in the coming months.
* Cleveland Fed President Mester reiterated her support for gradual rate increases.
* Italian President Mattarella were expected to hold government formation talks with the Five Star at 15:30 BST and League at 17:00 BST. Five Star leader Di Maio said he has asked the President for more time to finalize a government.
* Norges Bank Governor Olsen said it will soon be time to hike rates.
* UK PM May spokesman states that there is no timeline for defining the details of the two options for the future customs relationship with the EU, priority is getting things right
* OPEC Monthly Oil Report:
– World oil demand growth for 2017 was kept unchanged from last month’s assessment, despite some adjustments to both OECD and non-OECD regions, which offset each other.
– World oil demand is estimated to have grown by 1.65 mb/d in 2017 to average 97.20 mb/d.
– For 2018, oil demand growth is forecast to increase by around 1.65 mb/d to average 98.85 mb/d. Growth was revised higher by 25 tb/d compared with last month’s assessment
– Non-OPEC supply for 2017 was revised down slightly by 0.01 mb/d to now show growth of 0.87 mb/d y-o-y and average 57.89 mb/d.
* ECB’s Lautenschlaehger said the Euro Zone economy is still within the ECB projections.
* ECB Chief Economist Praet said inflation is likely to hover around 1.5% in the coming months. He also said an ample degree of monetary stimulus remains necessary
* Canadian Teranet/National Bank House Price Data (Apr):
– House Price Index M/M +0.2%, previous 0.0%
– House Price Index Y/Y +5.6%, previous +6.6%
* US House Speaker Ryan said no top level NAFTA meetings are scheduled before May 17th
* EU Brexit Minister Barnier said there has not been much progress in Brexit negotiations since the last EU leaders summit.
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