1130hrs UK EU ECB Vice President Vitor Constancio speaks in Frankfurt
1300hrs UK EU ECB Vice President Vitor Constancio speaks in Frankfurt
1330hrs UK US Weekly Jobless Claims (est 216K vs previous 211K)
1330hrs UK US Philadelphia Fed Business Index (est 20.8 vs previous 23.2)
1500hrs UK US Leading Indicators (est 0.38% vs previous 0.3%)
1545hrs UK US Minneapolis Fed President Neels Kashkari speaks in Minneapolis
1700hrs UK UK Bank of England Chief Economist Andy Haldane speaks in London
1830hrs UK EU Dallas Fed President Robert Kaplan speaks in Richardson, Texas
EU EU Leaders meet in Sofia, Bulgaria
Earnings releases from US include Walmart, JC Penney and Applied Materials
In the UK, National Grid reports earnings, and the FTSE has 6.789 points Ex Dividend today
STOCKS: Retail and Technology stocks led Wall Street higher on Wednesday with the Russell 2000 small cap Index hitting a record and closing very close to the all time high. All this as the US bond yields trade close to 7 year highs. Smaller companies continued this year’s trend of outperforming their big brothers with the R2K closing up 1% at 1616.367after printing an all time high of 1620.641. Macys reported analyst beating numbers and soared 10.8% which boosted rivals such as JC Penney who report today. The S&P500 closed 11.01 points up at 2722.46, the Dow ended the day 62.52 points better at 24768.93, and the Nasdaq100 finished 41.43 points up at 6929.965
Stocks in Asia have drifted as the US Treasury yields climbed above 3.1%. Positive momentum from the US only carried through to some markets with equities rising in Japan but falling in Hong Kong, China and Australia. Hang Seng currently trading down 125 points despite a 130 index point positive boost from Tencent Hldgs who surged after reporting a record profit
US TREASURYS: Tsys have traded in a tight range in the Asia session with comments by China`s Ministry of Commerce regarding trade relations with the US failing to materially impact the space.
- The 30-year has modestly underperformed for a change, with the 10s30s curve edging higher to 12.04bps from multi-year lows of 11.55bps.
- US inflation expectations are picking up pace, with 5-year breakevens back at 2013 levels. The long end of the yield curve is at risk from a continuation of this trend.
- Tsy ylds: 2Y 2.581%, 3Y 2.759%, 5Y 2.938%, 7Y 3.061%, 10Y 3.098%, 30Y 3.220%
GOLD: Gold clawed back some of its recent gains in early Asian trading but has since fallen back into the middle of its 1287-1297 range, with recent comments from Chinese MOFCOM regarding trade relations with the US failing to spark any volatility. - The ongoing rise in US yields continues to pose a headache to bulls, with the inflation-linked bond yields still the main driver of the metal and pointing to further losses.
- A gain back about the May 1 low of 1302 would be needed to shift the focus higher.
OIL: Oil benchmarks continue to push higher with both Brent and WTI rising to within a few ticks of all-time highs. The recovery in EM FX is helping to remove a headwind to the markets, which show no sign of reversing their bullish trends. - $71.92 marks resistance for WTI and $79.48 for Brent. The spread has edged back in the US market`s favour ever so slightly and sits at $7.67. - Traders now await the weekly Baker Hughes rig count release, due Friday.
FX: Hong Kong intervened to defend its currency peg for a second day after the city’s dollar fell to the weaker end of its trading band. The HK Monetary Authority bought HK$9.5bln of local dollars overnight as lower rates than the US have made it an attractive target for shorts. GBP/USD rallied on news the UK may stay in the EU customs union beyond 2021, although cable remains in a bearish trend below 1.3712