The upcoming Speech by Israel PM regarding new Information on Iran violating Sanctions and comments from Local iran media saying deal is dead has provided a bid for oil and reason to sell risk.Brent +.4% and NDX -.75%,Bonds +13 ticks and Bunds +22.US yield curve 2s10s flatter ,as short end unchanged on day.Fed meeting on Wednesday will keep short end contained unless something really drastic would occur.The key to these new revelations is what Trump will say or do,market believes that he will use it to cancel Iran deal
Oil finnaly reacting to headers….ISRAEL INTEL SAYS IRAN HAS
MISLED WORLD ON NUCLEAR PROGRAM: TV.
NETANYAHU TO ADDRESS NATION AT 8PM [1PM EST] TO ANNOUNCE
‘SIGNIFICANT DEVELOPMENT’ ON IRAN NUCLEAR DEAL: YEDIOT.
address to be in English.. that tells u something
Japan Closed today, Thursday and Friday. China Closed today and tomorrow .May 1 labor Day, is a national Holiday in many countries France, Germany Singapore to name a Few so markets will be closed FOMC decision on Wednesday, Payrolls on Friday, USA trade delegation in China Thursday and Friday for Trade negotiations, Apple Earnings on Tuesday. Treasury refunding announcement on Wednesday. Exemption period for Steel and Aluminum tariffs ends today and many Countries are applying for an Extension. Most likely, this period likely to be extended as the flood of requests for exemptions has overwhelmed the staff at commerce dept. (BB)
Dollar higher today as the outperformance of US economy compared to rest of world drives currency higher. Friday high and 200 d MA is 91.870-.The collapse in the GBP continues down .4% today. Euro down .4% as well as German Inflation numbers are benign, the area to watch in Euro is 1.2010, yen -.3% as the sideways to lower action continues. The last 3 days have seen with almost identical highs and Lows.US stocks higher as T-Mobile is trying to acquire Sprint for $26.5 b also marathon Petroleum to but rival Andeavor for $20B. Spoos +8 (.3%) handles Nasdaq + 31(+.4%).Mizuho story this morning via Bloomberg discussing the record high net shorts in Us 10’s.This morning treasuries a touch heavy as they are lower across all maturities, Bunds down a Bit as are Gilts. Dax and Stoxx 50 contained in a tight range but prices are higher as a Minor Risk on Theme prevails.
Commodities show Oil down 1%,gasoline -1.26%,Silver -1.1% Gold -.8%,Copper +.3% Aluminum Steady and Zinc +1.5%.Stronger dollar maybe impacting gold and Silver, base metals firm due to likely scenario that most European products will be granted an exemption from US tariffs and Decent China manufacturing PMI numbers. Holiday markets or Holiday as if markets are low in Volume and most time erratic and choppy.
• PCE core y/y will be monitored today to see if it does touch 2%,Bloomberg consensus is 1.9%
• North Korean leader has invited press from US and South Korea to Nuclear testing facility to prove that it is closed.
plenty of head scratching this morning regarding the move higher in soybeans post 8:30 open. Soybeans +60 ticks,meal +140 ticks cal spreads in both products continue to strengthen.A few ideas for move higher First, stats Canada released their planting forecasts and it shows less Soy to be planted then forecast.The move higher in Soy meal most likely comes from the damage to an Argentine Export facility that will curtail worldwide supply.lastly US trade delegation heads to China next week to iron out differences causing a sigh of relief for those who worried about tariffs.Of the Three the Soymeal story is the One I place responsibility on for pushing soy complex higher. A surprise move higher during a week with plenty of surprises in other markets.
From Morgan Stanley
USD rally to continue… “Robust US data, aided by expansionary fiscal policy, contrast with growing concerns about further acceleration in the rest of the world. A plateauing in Eurozone growth was acknowledged by the ECB, while headwinds to Chinese growth prompted a surprise cut in the RRR. These conditions, coupled with risk sentiment staying supported, which may continue the steepening of the US yield curve, should keep the USD rallying. For the USD bear trend to fall back into place we need to see either the rest of the world looking stronger and more synchronized or the US slowing down.”
Overnight Euro broke below another minor support area and eyes now set on the important 1.2010 Area. A break of this level could accelerate the unwinding of the near record Longs in the Currency.UK GDP released over night Missed expectations. .1 vs f/c .3 on Q/Q, this fits right into the MS comment above that rest of world slowing down, GBP -1 %. In fact it has closed lower 7 of last 9 days dropping a whopping 6 big handles .Dollar index is +1.7% this week and approaching the 200 D MA of 91.992.The last few days the currency complex has been driven by position adjustment and not anything macro or Central bank related. Today the Economic calendar has first look at Q1 GDP and Q1 employment cost index the latter but might be more important than the former.
Gilts and Bunds have erased this week’s losses after 2-day rally, US 10s drifting higher as yields moving away from the 3% level and futures prices not far removed from this week’s highs. Stocks Mixed Spoos and Dow little changed to lower, NASDAQ a bit higher but Dax +.7%. .Amazon earnings yesterdays were just fantastic Stock +$100 8%.6 months ago with amazon performing as she is Nasdaq would +1% at a minimum instead of the .25%.This is another sign of the stock market having already priced in the much better than expected earnings. Crude oil Steady Bloomberg running a story discussing how cash oil traders are starting to shy away from doing business with Iran as concerns mount that Nuclear deal will be torn up. Base metals trading lower with aluminum -1.4 % and both Nickel and Copper -2%.Russia’s Rusal still in the news as the Oligarch who owns said he will not follow US wishes and Divest.
North Korean leader Kim Jung Un and South Korean leader Moon Jae embraced after signing a Historic deal to official end the conflict between the 2 countries. This also marked the first time a North Korean leader set foot on South Korean soil since the armistice was signed in 1953 (Via Bloomberg).A historic moment indeed
BOJ left policy unchanged as expected but tweaked language on when the bank expects the inflation to hit 2% target. BOJs Kiroda went out of way to say this is not a new policy shift. Yen thought it was as dripped aggressively when statement hit wires. Yen little changed now
This is the daily Average price for regular gasoline at the Pump.I mentioned this earlier but here it is in graphical form.
A Daily chart of Spot Euro showing it Trading below the first area of concern for the speculators( red line) who are long.The blue horizontal line at 1.2089 is the old breakout level and likely the second area of Concern for the longs.I pondered earlier as to why dollar was higher along with bonds and stocks.The answer may well be that Dollar is being pushed higher by unwind of Euro shorts and for now Cares little of what is going on with Bonds or stocks.
A head scratcher today as market Theme hard to put into one category. Making session highs and trending higher are Dollar,Spoos ,Bunds Dax. Steady near session highs are treasuries as Bonds +20 ticks and Ultras + 1 handle,Bunds +60. Dollar bid as Euro longs are unwound post Draghai and An Upgrade to Q1 GDP from Atlanta Fed and Barclays brings stronger Growth story back on table. If lower rates were cause of move higher in Bonds and stocks then dollar should not be making new highs.Treasuries having a hard time moving lower with Bunds higher.Marching to own beat today as Categorizing the whole market with one term is impossible .Watch for European Close at 10:30 and 7 year auction at noon it is possible once these events pass treasuries will act accordingly and move lower
Stocks, Bunds, and bonds trading higher this morning. Facebook trading +5% this morning after real solid earnings ECB meeting and press conference today expected to lean a bit dovish providing a bid For bunds and thus bonds. Brent and Crude with a bid, The Former +.8% and the latter +.6%.Comments from French president Macron hinting that Trump likely will back out of Iran deal has brought a Bid back to complex. Retail Gasoline prices have risen 10% over the last 2 months and will continue to move higher as the calendar moves into peak driving season. These prices excluded from the Core Inflation calculations but still should catch FOMC attention and politicians. The higher prices can and will impact consumer discretionary spending so if impact on inflation ignored the slowdown in spending that may come from higher prices at pump should not.
European 10 year yields all lower Germany, Spain, and Italy all -2.2 Bps. percent changes see Bunds +.28%; long end Buxl +.7%. Stocks in Europe show Dax a bit higher, MIB +.7% Spoos +.3% and NASDAQ +.6%.Earnings deluge continues today with 68 SPX companies reporting this morning and Amazon, MSFT and Intel after the close. Dollar little changed as markets await Draghi press conference for clues on how concerned ECB is on Euro strength.
Today we do get Durable goods a second tier number impact if any on trade will be short lived.
Lower rate trade Theme today
Storage numbers outside of Distillates where bearish compared to estimates.Demand for Both gasoline and Distillate dropped vs. last week and production was higher. Offsetting these bearish Domestic metrics were record highs for exports of Products and oil. Now that the US is becoming a major Player in Global Oil production/exports it is becoming important to combine both categories into one metric to determine bullish or bearish for weekly report.
Stocks trying to claw way back after a nervous first hour of trading which saw prices trade below yesterdays lows for all 3 major Indices.Fang Stocks especially NFLX have rallied back from sustainable losses and Boeing has not collapsed like her Dow friend, CAT did yesterday.10 year yields have maintained a hold above 3% yield level.
Side note whilst I Have been typing nasdaq off to the races as FANG stocks have turned entire market around. NFLX now unchanged after being down 5%,Amzn +4% after being down by 3%. With this rally VIX still trading higher indicating not all is well even though stocks have gone bid.