European cash equity markets were mostly lower at the closing bell (FTSE +0.2%, DAX -0.3%, CAC 0.0%). US cash equity markets have nosedived this afternoon (DJIA -1.7%, S&P -1.3%, NASDAQ -1.7%).

European Closing Report

US government bond yields continued their recent run higher this afternoon with the ten-year finally breaching the three-percent level – the first time it has done so since January 2014. 

A positive open on Wall Street provided the final push while stronger-than-expected readings for US consumer confidence and new home sales will also have provided support. 

Gains in US bourses have since faded however while European cash equity markets are also mostly lower at the closing bell (FTSE +0.2%, DAX -0.3%, CAC 0.0%). Earnings remain in focus with some big moves in the early exchanges including Alphabet and 3M who have both fallen sharply. 

Oil related stocks have outperformed meanwhile, boosted by gains in crude prices as tensions between Saudi Arabia and Yemen continue to escalate. In currency space, the Dollar Index is flat for the day while the Japanese Yen is the weakest of the G10 currencies. 

Elsewhere, German IFO data came up short of expectations as the ECB’s Villeroy said the Governing Council think the slowdown in the first quarter could be temporary. In Italy, the acting leader of the PD party said they are ready to look into government talks with the 5-Star, on the terms that they stop seeking a deal with the centre-right. 

Still to come today, a $32.0 Bln two-year note auction at 18:00 BST and earnings after the US close from Amgen, Chubb and Capital One.

Key Headlines/Data:

* Irish border backstop is flawed, say EU officials (The Times):
– Doubts have been raised that a solution for the Irish border in Brexit talks will be agreed by June after it emerged that EU officials have concerns about the viability of the backstop plan inserted into the withdrawal bill.

* Iranian President Rouhani has warned US President Trump to remain in the nuclear deal or face severe consequences.

* Swiss Trade Balance (Mar) Chf1.77 Bln, previous Chf3.14 Bln revised to Chf 3.08 Bln

* French Business Confidence (Apr) 108 versus 108 expected, previous 109

* German IFO Data (Apr):
– Business Climate 102.1 versus 102.8 expected, previous 103.2
– Current Assessment 105.7 versus 106.0 expected, previous 106.5
– Expectations 98.7 versus 99.5 expected, previous 100.1

* Italian Consumer Confidence (Apr) 117.1 versus 116.9 expected, previous 117.5

* ECB Bank Lending Survey:
– Loan growth continued to be supported by easing credit standards and increasing demand
– Credit standards eased considerably for loans to enterprises and housing loans
– ECB asset purchases and negative deposit facility rate have a positive impact on lending volumes

* According to a PBOC source, they expects more RRR cuts and M2 growth to rebound above 9% this year.

* UK Public Sector Net Borrowing (Mar) -£0.3 Bln versus -£1.3 Bln expected, previous -£0.3 Bln
– Ex Banks -£1.3 Bln versus -£3.0 Bln expected, previous -£1.2 Bln

* ECB Governing Council member Villeroy said they think the slowdown in the first quarter could be temporary

* UK CBI Trends Total Orders (Apr) 4 versus 4 expected, previous 4
– Selling Prices 18, previous 18

* Acting leader of the Italian PD party said they are ready to look into government talks with the 5-Star, on the terms that they stop seeking a deal with the centre-right.

* Germany sold €3.2 Bln of a 2020 bond versus €4.0 Bln target:
– Bid to Cover: 2.6, previous 1.4
– Yield: -0.56%, previous -0.59%

* Philadelphia Fed Non-Manufacturing (Apr) 27.6, previous 30.1

* US FHFA House Price Index (Feb):
– House Price Index M/M +0.6% versus +0.6% expected, previous +0.9%
– House Price Index Y/Y +7.2%, previous +7.3%

* US S&P/CS House Price Index (Feb):
– House Price Index M/M +0.83% versus +0.68% expected, previous +0.81%
– House Price Index Y/Y +6.80% versus 6.35% expected, previous +6.43 %

* US Consumer Confidence (Apr) 128.7 versus 126.0 expected, previous127.7 revised to 127.0

* US New Home Sales (Mar) 694K versus 625K expected, previous 618K revised to 667K

* Richmond Fed Manufacturing (Apr) -3 versus 16 expected, previous 15

* Mexico NAFTA negotiator says they are no guarantees a NAFTA deal can be reached.





































































































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US Closing Report

US cash equity markets have nosedived this afternoon (DJIA -1.7%, S&P -1.3%, NASDAQ -1.7%). Investors appear to be spooked by rising borrowing costs as the ten-year yield crossed above three-percent for the first time since January 2014. 

Earnings are also in play with heavy losses for Alphabet, 3M, Caterpillar, Coca Cola and Travelers after their respective updates. Verizon is the only Dow component to have risen after reporting over the last twenty-four hours. 

Going back to the Treasury market, demand at the $32.0 Bln 2-year note auction was on the soft side with a 0.5 basis point tail and lowest cover since December. In currency space, the US Dollar has also declined this afternoon while the Japanese Yen has moved off its worst levels amid the decline in risk sentiment. 

This may also have been aided by reports via AP that Iran have threatened to abandon the nuclear deal if the US opts out. Elsewhere, US crude oil futures settled at $67.70 (-$0.94) ahead of the API inventory report after the bell. We also await earnings from Amgen, Chubb and Capital One.

Key Headlines/Data:

* According to sources, the German government have lowered their 2018 growth forecast to +2.3% from +2.4%

* Italian Five Star Movement leader Di Maio said the idea of a coalition government with the centre-right has passed. He added that they do see the possibility of negotiations for a coalition government with the PD.

* US President Trump said Treasury Secretary Mnuchin is going to China in a few days to negotiate on trade, adding that they have a very good chance of a deal with China. He added that NAFTA talks are going nicely.

* Canadian Foreign Minister Freeland said NAFTA negotiators are making good progress on autos but the issue is fiendishly complex.

* US sells $32.0 Bln of 2-Year Notes:
– Bid to Cover: 2.61, previous 2.91
– Indirect Bidders: 41.6%, previous 44.5%
– Direct Bidders: 15.4%, previous 14.1%
– Yield: 2.498% (WI: 2.493%)

* Iran says if U.S. exits nuclear deal, it would ‘most likely’ abandon the deal as well (AP):
– Iran’s top diplomat warned the Trump administration on Tuesday that a U.S. withdrawal from the nuclear deal would undermine talks with North Korea by proving that America reneges on its promises, telling The Associated Press that Iran would “most likely” abandon the deal as well.

* US crude oil futures settled at $67.70 (-$0.94) | Brent crude futures settled at $73.86 (-$0.85).















   
 
 
 
 
 
 

 
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