Front Month Crude, June, was hit hard overnight down almost 20% at its worst levels, the reason:
BFW *BIGGEST COMMODITY INDEX MOVES ALL WTI EXPOSURE AWAY FROM JUNE
*S&P SAYS MEASURE DUE TO RISK THAT WTI JUNE PRICE GOES NEGATIVE
*S&P DOW JONES IS BEHIND THE POPULAR GSCI COMMODITIES INDICES
*S&P DOW JONES TO PRE-ROLL ALL WTI JUNE INTO JULY CONTRACT TODAY
Treasury Curve was Undergoing a bit of Flattening over the last 2 weeks or so as the Fever pace of Fed QE purchase was starting to cause a bit of scarcity in the long end and the Increase in Auction size on the short end causing a bit more selling. Now that the Fed Pace of QE has been cut Aggressively thus less of flattening bias for curve, A bit of Commentary from IFR News below
Now that the Fed’s purchases and the risk-parity bid for duration is waning the tight supply/demand technical in the long-end are starting to loosen up. It appears as well that the market was carrying a substantial curve-flattening position into the week that was at least somewhat unwound in today’s 2 & 5-year auctions. Indeed, since the 2-year auction the 2s/10s spread has steepened by over 2 bps and since the 5-year auction the curve 5s/30s spread has steepened by roughly 1.5 bps.
A pause in the steepening may be in the cards for month-end (and its portfolio duration extensions) with the curve then expected to reengage steeper right through the May Refunding (to be announced next Wednesday) if not beyond
Sentiment and Actions continue to be positive for Virus the latest from Europe
Spain and France will give details today on plans to ease lockdowns as Europe moves to loosen restrictions. Spanish Prime Minister Pedro Sanchez plans to announce loosening measures after Tuesday’s weekly cabinet meeting, and France’s Prime Minister Edouard Philippe will present the government’s blueprint to the National Assembly (Mizuho)
Here in the US Optimism continues to be high that the Worst is behind us and Economy will be open sooner rather than later, Thus the Risk On Sentiment so far today, Spoos Trading above the Most recent highs is A good sign for the bulls if a close above 2785 is achieved.
Stock News, Earnings News:
3M, Merck Cat say worst is yet to come as they report earnings this morning
HOG Harley Davidson to cut pay, freeze hiring, this company is one of the Proxy’s for Discretionary Spending.
– 3M reported quarterly earnings of $2.16 per share, beating the consensus estimate of $2.03 a share. The healthcare and safety products maker’s revenue also beat forecasts, but the company withdrew its full-year outlook due to virus-related uncertainties.(CNBC) company also setting up Hotline to report Price gouging, suspended Dividend, Cuts Capex forecast Suspended Buybacks and Outside of Protective gear sales not so good
BP (BP) – BP’s latest earnings beat estimates, but profit fell by two thirds and debt levels rose to the highest level in five years. The energy producer kept its dividend intact, however, even as it warned of extreme uncertainty in the energy markets and its future results (CNBC)
UPS– To cut Capex and said “we wont even try to Guess what next quarter or year will look like” or how Long disruptions might last(BBG)
Plenty of Good information about US economy within today Earnings reports I only touched on a few, earnings conferences calls will start shortly which could cause some gyrations in Spoos and Dow.
Markets: A bit of Risk on Sentiment but treasuries and Bunds both Higher. Russell your U.S. leader once again to the upside, +2.1% Spoos +1.2%, Stoxx 50 +2%Dax +1.9% Copper little Changed as is Gold. Dollar working om a 3rd consecutive lower close, as we Know a weak dollar good for markets. Nat Gas Expiration for may Contract today June +3.2% today after rallying some 7% yesterday of Lows to finish higher by 1.1%. Hogs limit bid in