Wall Street has opened to the downside meanwhile with new lows for the major bourses in recent trade. Energy stocks have been the bright spot with gains for major oil producers as crude prices continue their recent run higher.
We have seen broad gains in government bond yields meanwhile with UK borrowing costs leading both Germany and the US higher today. This is despite the weaker-than-expected UK retail sales data released earlier this morning which also only weighed briefly on the pound.
Elsewhere in FX, the Aussie and Kiwi Dollar are the weakest of the G10 currencies while we also saw Eur/Chf touch 1.20 for the first time since the peg removal in 2015. US data releases were largely ignored with jobless claims little changed at 232K (f/c. 230K), Philly Fed at 23.2 (f/c. 21.0) and the leading index at +0.3% (f/c. +0.3%). Still to come today, possible comments from the BoE’s Cunliffe at 17:30 BST and a 5-year TIPS auction at 18:00 BST.
* Euro Zone Current Account SA (Feb) €35.1 Bln versus €32.3 Bln expected, previous €37.6 Bln revised to €39.0 Bln
* German economic institutes raised their forecast for 2018 domestic growth to +2.2%, and 2019 to +2.2%. They also see CPI at +1.7% this year and +1.9% in 2019.
* UK Retail Sales Data (Mar):
• Retail Sales M/M -1.2% versus -0.6% expected, previous +0.8%
• Retail Sales Y/Y +1.1% versus +1.9% expected, previous +1.5%
• Retail Sales Ex. Fuel M/M -0.5% versus -0.4% expected, previous +0.6% revised to +0.4%
• Retail Sales Ex. Fuel Y/Y +1.1% versus +1.4% expected, previous +1.1% revised to +1.2%
* Fed Governor Brainard said they are some signs of financial imbalances in the economy
* US Initial Jobless Claims (Apr 14) 232K versus 230K expected,
• Continuing Claims (Apr 7) 1.863 Mln versus 1.845 Mln expected, previous 1.871 Mln revised to 1.878 Mln
* Philadelphia Fed Business Outlook (Apr) 23.2 versus 21.0 expected, previous 22.3
* Italian Northern league leader Salvini reportedly wants to discuss a government plan with the Five Star Movement
* NAFTA negotiators are said to have agreed on the telecom industry chapter.
* US Leading Index M/M (Mar) +0.3% versus +0.3% expected, previous +0.6%
* According to sources, the OPEC/non-OPEC panel meeting found that the oil market overhang is virtually eliminated.
The optimism stemming from a solid start to earnings season appears to have dissipated with heavy losses in technology and consumer staple stocks leading the broad market lower.
US government bond yield did rise this afternoon and this helped lift the Dollar in the second half of the US session. Earlier macro releases were largely ignored meanwhile with jobless claims little changed at 232K (f/c. 230K), Philly Fed at 23.2 (f/c. 21.0) and the leading index at +0.3% (f/c. +0.3%). In energy space, US crude oil futures settled at $68.29 (-$0.18).
The big move of the afternoon came in Sterling however which fell sharply after comments from Bank of England Governor Carney. His remarks suggested that rates might not rise in May, noting that the MPC are “conscious that there are other meetings over the course of this year”. After the bell, we await earnings from E-Trade.
* Trump administration has announced the overhaul of US arms export policy aimed at expanding sales to US allies.
* Oman Oil Minister said he would like to see the OPEC/non-OPEC deal continue until the end of the year, adding he still thinks the market is oversupplied.
* US sold $16.0 Bln of 5-Year TIPS:
• Bid to Cover: 2.55, previous 2.78
• Yield: 0.631%
* Bank of England Governor Carney:
• Prepare for a few interest rate rises over the next few years
• I don’t want to get too focused on the precise timing, it is more about the general path
• We have had some mixed data
• We are conscious that there are other meetings over the course of this year
• Productivity is not increasing, which will limit the rate at which people’s wages can pick up
* Italian Five Star leader Di Maio said his party and the Northern league are willing to discuss policies.
* Canadian Foreign Minister Freeland said the US, Canada and Mexico have made good progress on the rules of origin for autos.
* US crude oil futures settled at $68.29 (-$0.18) | Brent crude futures settled at $73.78 (+$.30)
* US Deputy Attorney General is said to have told President Trump he is not the target of the Mueller probe.
* Bank of Japan Governor Kuroda said protectionism is not hurting the Japanese economy now but they must watch as an imminent problem. He added that the G20 will likely discuss trade woes and geopolitical risks, and also the impact of earlier than expected monetary tightening on the economy.
* US official said the Treasury are weighing emergency measures on China.
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