In a market wrap, analysts at Westpac explained that European equities rallied modestly -noting that even Italian shares and bonds recaptured some lost ground.
Key Quotes:
“US stocks held small gains for much of the day but then rolled over into the close.”
“News and data flow was limited but various comments by President Trump didn’t help, including saying that there is a “substantial chance” that the 12 June US-North Korea summit won’t happen and saying he is not really pleased with the progress of trade talks with China.
AUD/USD initially rose from 0.7580 to 0.7605 – a one-month high – before slipping back to 0.7570/75. NZD similarly made a two-week high at 0.6975 before slipping back to 0.6930. AUD/NZD rose from 1.0900 to 1.0947 – a four-month high – before trimming gains.
EUR/USD made a round trip from 1.1770 to 1.1830 and back. USD/JPY ranged sideways between 110.80 and 111.20. GBP/USD was lively, bouncing as high as 1.3492 in London trade on some unexpectedly hawkish testimony by Bank of England MPC members. In particular, Gertjan Vlieghe suggested that the bank rate could be lifted as many as 6 times over the next 3 years, twice as fast as projected in the May Inflation Report. The pound’s gains faded in NY trade however.
The US 10yr treasury yield rose from 3.05% to 3.08% before slipping back to 3.06%, 2yr yields holding around 2.57%. Fed fund futures yields continued to predict a rate hike in June plus at least another in H2 2018.
The Richmond Fed’s regional district PMI for May was robust, the composite index swinging from -3 to +16 in May (consensus: +13). The detail was almost all stronger with shipments, new orders, prices paid and received, employment and wages all firming in the month. The stronger read mimics firmer trends in other regional surveys released so far in May, albeit not quite to the same extent; the rise in the Richmond index mostly just recoups the prior month’s fall while other surveys like last week’s Philly Fed survey showed unexpected 45 year highs for new orders.”
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