Quiet sitting as focus turns to Friday’s U.S. jobs report
Remarks / Observations
- German retail sales data for April missed expectations.
- Focus on the next US employment report on Friday and the ECB meeting next week.
- South Korea’s May CPI recorded its second month above target and the fastest annual pace since April 2012 (year-on-year: 2.6% vs. 2.6% e).
- Australian GDP for the first quarter beats the consensus with growth above the pre-covid level (Q / T: 1.8% vs. 1.5% e; YoY1.1% vs. 0.6% e).
- BOJ Adachi said the national economy was improving as a trend due to the boost in external demand, but great uncertainty remained. Must be ready for a long battle to reach 2.0% CPI; Premature standardization of policies could be costly.
- Chinese Vice Premier Liu He held talks with US Treasury Secretary Yellen, both of whom expressed their willingness to maintain communications and that economic ties are important.
- BOE’s Cunliffe said BOE is closely monitoring the housing market as it is boosted by the tax holiday.
- Germany’s Econ Min Altmaier experienced GDP growth in 2021 of between 3.4% and 3.7%.
- Turkish President Erdogan said he had spoken with the governor of the central bank and stressed the need to lower interest rates to slow inflation.
- The Fed’s Brainard saw inflation slightly higher in the near term but broadly unchanged after the economy fully reopened.
- OPEC + ministers agreed to extend existing plans to ease oil production cuts in June and July (as planned).
- Saudi Oil Min Abdulaziz noted that OPEC + had not discussed the return of Iranian oil. OPEC + will hold monthly meetings until the end of the supply agreement.
Speakers / Fixed income / FX / Commodities / Erratum
- Indices [Stoxx600 +0.15% at 450.78, FTSE +0.26% at 7,098.65, DAX -0.02% at 15,564.85, CAC-40 +0.04% at 6,491.76, IBEX-35 +0.10% at 9,199.00, FTSE MIB +0.16% at 25,362.50, SMI +0.37% at 11,476.72, S&P 500 Futures -0.07%].
Market focal points / Key themes:
- The European indices open in a mixed way and have changed little but tend to rise and to new all-time highs as the session progressed; the best performing sectors include energy and consumer discretionary; technologies and materials leading to the decline; Wizz Air in London trades slightly lower after earnings and outlook release; Lufthansa in Frankfurt increases up to 3% according to press report German government plans to participate in Lufthansa capital increase; earnings expected for the next US session include Advance Auto Parts and Splunk after the close.
- Consumer Discretionary: Bloomsbury Publishing [BMY.UK] + 5% (earnings; special dividend), Wizz Air [WIZZ.UK[ -1% (earnings).
- Consumer staples: Clas Ohlson [CLASB.SE] -3% (gains).
- Technology: Auto1 [AG1.AV] -8% (placement).
- Materials: Lonza Group [LONN.CH] + 1% (agreement with Moderna).
- Knot of the ECB (Netherlands) said the recovery in Europe was faster than expected, but added that a lasting recovery was only possible if the pandemic was contained globally.
- RBA Dep Gov Debelle has said he does not expect wage growth to be high enough until 2024.
- Japan’s chief of staff Sec Kato has said he does not see any additional budgets at this time.
- Central Bank of the Philippines (BSP) Governor Diokno noted that the current policy framework was appropriate but open to further monetary easing if needed.
Currency / Fixed Income
- The USD moved away from multi-month lows against many pairs in a calm session. Attention turned to the US jobs report due on Friday.
EUR / USD fell back below the 1.22 level after German retail sales data for April missed consensus. The pair remained well contained in the 1.20-1.24 range. Focus on next week’s ECB meeting.
- GBP / USD continued to post profit taking after testing 3 year highs earlier in the week. Pair at 1.4130 at mid-session.
- The currency TRY (Lira) was weaker and nearer all time highs on central bank independence concerns after Turkish President Erdogan said he spoke to the central bank governor about the need to lower prices. interest rate to slow inflation.
- (DE) Germany Apr Retail sales M / M: -5.5% v -2.5% e; Y / Y: 4.4% against 10.1% e
- (NO) Norway Q1 Current account balance (NOK): 94.3 billion against 5.1 billion before.
- (FR) France Budgetary balance since the start of the year: -91.4 billion euros against -60.1 billion euros previously.
- (ES) Net change in unemployment in Spain in May: -129.4K against -115.0Ke.
- (BR) Brazil May FIPE IPC (Sao Paolo): 0.4% e.
- (United Kingdom) April net consumer credit: – £ 0.4 against + £ 0.5; Net loan: £ 3.3 billion compared to £ 7.0.
- (United Kingdom) Apr. Mortgage approvals: 86.9K vs. 81.0K.
- (United Kingdom) Apr. M4 Money supply M / M: 0.1% against 0.7% previously; Y / Y: 9.1% against 10.8% previously; M4 (ex-IOFC): 6.4% against 9.7% previously.
- (EU) Euro zone Apr PPI M / M: 1.0% vs. 1.0% e; Y / Y: 7.6% vs. 7.5% e.
Issue of fixed income securities
- (IN) India sold a total of INR360B against INR360B shown in the 3 month, 6 month and 12 month invoices.
- (ID) Indonesia sold in total IDR11.0T against target IDR10.0T in Islamic bills and bonds.
- (DK) Denmark sold a total of 3.8 billion Danish kroner in 2024 and 2031 DGB bonds.
- (SE) Sweden sold a total of SEK 5.0 billion against the SEK 5.0 billion shown in the 2025 and 2032 bonds.
- ((NO) Norway sold NOK 3.0 billion vs. NOK 3.0 billion indicated NOK 3.0 billion in March 2025 1.75% bonds; Average yield: 1.40% vs. 0, 52% previously; cover offer: 1.73 x vs. 1.62 times previously.
- (UK) DMO sold £ 2.75 billion in 0.25% gilts in July 2031; Average return: 0.941% against 0.924% previously; cover offer: 2.64xv 2.67x front; Tail: 0.1 bps against 0.1 bps before.
- (United States) Major automakers report May sales throughout the session.
- (RO) Romania May International reserves: no estimate against 43.2 billion dollars previously.
- 05:20 (EU) Daily liquidity statistics from the ECB.
- 05:30 (DE) Germany to sell 4.0 billion euros 0% April 2026 BOBL.
- 5:30 am (GR) The Greek Debt Agency (PDMA) sells 26 week bonds.
- 06:00 (IE) Ireland May Unemployment rate: No is v 5.8% before.
- 6:15 a.m. (NL) Elerson from the ECB (Netherlands, SSM).
- 6:30 a.m. (UK) DMO will sell £ 2.0 billion at 0.875% in January 2046.
- 07:00 (UK) Russia will sell OFZ 2025 and 2031 bonds.
- 7:00 am (US) MBA mortgage applications w / e May 28: none is -4.2% v before.
- 07:00 (MX) Mexico in May Vehicle sales in the domestic market: no earlier version of version 83.6K.
- 07:00 (MX) Mexico Apr Advanced M / M indicators: No is v 0.26 before.
- 07:00 (UK) Weekly PM House Question Time.
- 08:00 (BR) Brazil Apr Industrial production M / M: -0.2% ev -2.4% before; Y / Y: 36.2% ev 10.5% before.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (CA) Canada Apr. Building permits M / M: -5.0% ev + 5.7% before.
- 08:55 (US) Weekly sales data for the Redbook LFL.
- 9:00 am (SG) Singapore May Purchasing Managers Index: 51.0ev 50.9 before; Electronics sector index: no is v 50.7 before.
- 9.45am (UK) BOE buys £ 1.147bn in a 20-year Gilt APF deal.
- 11:00 (DK) Denmark May Foreign Reserves (DKK): No is v 438.7B before.
- 12:00 (US) Fed Harker.
- 12:00 (CA) Canada will sell 30-year bonds.
- 1:00 p.m. (MX) Central Bank of Mexico (Banxico) Quarterly Inflation Report (QIR).
- 1:10 p.m. (EU) The head of the ECB Lagarde.
- 2:00 p.m. (US) Federal Reserve Beige Book.
- 2:00 p.m. (US) Evans and Kaplan of the Fed on the panel.
- 4:30 p.m. (US) Weekly API oil inventories.
- 17:00 (KR) South Korea May Foreign reserves: no estimate compared to $ 452.3 billion previously.
- 6:00 p.m. (NZ) New Zealand Government 10-Month Financial Statements.
- 18:30 (AU) Australia May Construction index performance: No is v 59.1 before.
- 7:00 p.m. (AU) Australia May Final PMI Services: No est v 58.2 prelim; Composite PMI: No is v 58.1 prelim.
- 20:01 (IE) Ireland May PMI Services: No version earlier than 57.7; Composite PMI: No earlier version than version 58.1.
- 8:30 p.m. (SG) Singapore May PMI (whole economy): No est v 51.8 before.
- 8:30 p.m. (HK) Hong Kong Mai PMI (whole economy): no est v 50.3 before.
- 20:30 (JP) Japan May Final PMI Services: No est v 45.7 prelim; Composite PMI: No is v 48.1 prelim.
- 9:00 p.m. (NZ) New Zealand Commodity Price Index in May: Not valued at 2.3% before.
- 9:30 p.m. (AU) Australia Apr Trade balance: A $ 8.3 billion versus A $ 5.6 billion previously; M / M exports: + 7% ev -2% before; M / M imports: -3% ev + 4% before.
- 21:30 (AU) Australia Apr Final Retail Sales M / M: 1.1% ev 1.1% prelim.
- 9.45 p.m. (CN) China May Services PMI Caixin: 56.2ev 56.3 before; Composite PMI: No earlier version than version 54.7.
- 11:35 p.m. (JP) Japan will sell 10-year JGB bonds.