US Closing Report 05 Apr 2018

US cash equity markets are broadly higher at the closing bell (DJIA +1.0%, S&P +0.7%, NASDAQ +0.5%).

US Closing Report (by Sigma Squawk)

The major bourses have now risen for three consecutive sessions as fears of a global trade war continue to recede. US officials have struck a more conciliatory tone in their dispute with China over the last twenty-four hours and signalled a willingness to negotiate before the proposed import tariffs are introduced. 

US government bond yields and the Dollar have also risen today and received a further boost earlier this afternoon after rating agency Fitch affirmed the US AAA rating with a stable outlook. They did warn however that rising deficits and debt could eventually test credit strengths, in the absence of reform. 

Elsewhere in FX, the Japanese Yen has slipped to the bottom of the G10 pile amid the resurgence in risk while Sterling is still on the back foot after a soft service PMI print earlier today. 

Data wise, the US trade deficit widened again in March to -$57.6 Bln (f/c. -$56.8 Bln) from -$56.7 Bln while jobless claims rose to 242K (f/c. 225K) from 218K. The Atlanta Fed GDPNow tracker was later cut to +2.3% from +2.8%. 

We did hear from Atlanta Fed President Bostic who argued that the FOMC should pause on rate increases once they reach the neutral rate. He also noted that some asset markets are getting aggressively priced


Key Headlines/Data:

* The US Treasury are to sell $30.0 Bln of 3-year notes, $21.0 Bln of 10-year notes and $13.0 Bln of 30-year bonds next week.

* Atlanta Fed President Bostic said there is still a little way to go before they reach the neutral rate which he sees at 2.25-2.75%, adding that they should pause once it is reached. Bostic said he sees inflation reaching two-percent in the next quarter or two. He also noted that some asset markets are getting aggressively priced.

* Italian President Mattarella said consultations have not produced any sign of a coalition deal, adding that they will hold new consultations next week.

* SNB’s Moser said the situation in the currency market remains fragile adding that the SNB must stay alert. He later said they observe the current market closely and are ready to influence if needed.

* SNB’s Maechler said the Swiss Franc is still seen as a safe haven and the pressure on the currency is there. He added that the Franc has devalued but the situation remains fragile.

* According to an aide, the White House and the agricultural sector are in talks about tariffs.

* US crude oil futures settled at $63.54 (+$0.17) | Brent crude futures settled at $68.33 (+$0.31).

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