The EUR is the strongest and the AUD is the weakest as the NA session begins

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As the North American session begins, the EUR is the strongest and the AUD is the weakest. The USD is mostly stronger.

Geopolitical risk is still at red hot levels as Isreal War Cabinet meets today to discuss a response to the Iranian attack over the weekend. Meanwhile in the US, the administration is preparing economic sanctions in support. “How far can you push without going too far?” is the tightrope walk that is unwinding.

In Europe today there was a dump of data with mixed results. Below is a summary:

  • German Wholesale Price Index (WPI) m/m (EUR): Actual data showed a 0.2% increase, slightly higher than the forecast of 0.1%, and an improvement from the previous -0.1%. This indicates a modest rebound in wholesale prices.

  • UK Claimant Count Change (GBP): The actual change was 10.9K, lower than the forecasted 17.2K but higher than the previous 4.1K.
  • UK Average Earnings Index 3m/y (GBP): Actual growth was 5.6%, slightly above the forecast of 5.5% and consistent with the previous 5.6%. This shows stable wage growth over the past three months.
  • UK Unemployment Rate (GBP): The actual unemployment rate was 4.2%, higher than the forecast of 4.0% and the previous 3.9%. Overall, a weakening job picture in the UK
  • Italian Trade Balance (EUR): Italy posted a trade surplus of 6.03 billion euros, surpassing the forecast of 3.44 billion euros and the previous 2.50 billion euros. This significant improvement suggests stronger-than-expected trade performance.
  • Trade Balance (EUR): The actual trade balance was 17.9 billion euros, lower than the forecasted 27.3 billion euros and a decrease from the previous 27.1 billion euros, indicating a weaker trade surplus than expected.
  • German ZEW Economic Sentiment (EUR): The sentiment index rose to 42.9, well above the forecast of 35.9 and the previous 31.7, showing increased optimism among financial analysts and institutional investors regarding Germany’s economic outlook.

  • EU ZEW Economic Sentiment (EUR): Overall European economic sentiment measured by ZEW increased to 43.9, higher than the forecast of 37.8 and previous 33.5, reflecting an improvement in overall economic confidence.

These indicators suggest mixed economic conditions across Europe, with signs of improving sentiment and trade performance in some areas, but issues like rising unemployment in the UK present challenges.

In China overnight, they reported stronger GDP at 5.3% vs 4.8% (and up from 5.2% last month). However, Industrial Production (4.5% vs 6.0% est.), and Retail sales were weaker (3.1% vs 5.1% est.).

The earnings calendar this morning showed mostly better-than-expected results.

  • Morgan Stanley (MS) Q1 2024 (USD):

    • EPS: $2.02 vs. expectations of $1.66 (BEAT)
    • Revenue: $15.14 billion vs. expectations of $14.41 billion (BEAT)
  • Bank of America Corp (BAC) Q1 2024 (USD):

    • Adj. EPS: $0.83 vs. expectations of $0.77 (BEAT)
    • Revenue: $25.82 billion vs. expectations of $25.46 billion (BEAT)
  • PNC Financial Services Group Inc (PNC) Q1 2024 (USD):

    • EPS: $3.10 vs. expectations of $3.02 (BEAT)
    • Revenue: $5.145 billion vs. expectations of $5.19 billion (MISSED)
  • Bank of New York Mellon Corp (BK) Q1 2024 (USD):

    • Adj. EPS: $1.29 vs. expectations of $1.19 (BEAT)
    • Revenue: $4.53 billion vs. expectations of $4.39 billion (BEAT)
  • Johnson & Johnson (JNJ) Q1 2024 (USD):

    • Adj. EPS: $2.71 vs. expectations of $2.64 (BEAT)
    • Revenue: $21.383 billion vs. expectations of $21.4 billion (MISSED)
  • UnitedHealth Group Inc (UNH) Q1 2024 (USD):

    • Adj. EPS: $6.91 vs. expectations of $6.61 (BEAT)
    • Revenue: $99.80 billion vs. expectations of $99.26 billion (BEAT)

What earnings are ahead this week? Below is a list of some of the major releases:

Tuesday after the close:

  • United Airlines,Interactive Brokers,JB Hunt

Wednesday before the open

  • Abbott,Travelers, U.S. Bancorp

Wednesday after the close:

  • Alcoa,Kinder Morgan,Discover, CSX

Thursday before the open

  • TSMC (Taiwan semi conductor), Nokia, DH Wharton

Thursday after the close:

  • Netflix, Intuitive Surgical

Friday before the open:

European Central Bank (ECB) policymaker Olli Rehn recently affirmed that the ECB is on track for a potential interest rate cut in June, provided that there are no inflation setbacks and the economic conditions align with their targets. Rehn emphasized that a decision to cut rates would be contingent on the June assessment confirming that inflation is converging towards the ECB’s target. He noted that this outlook assumes there will be no further geopolitical or energy price setbacks that could affect inflation. Additionally, Rehn stated that any future rate decisions would maintain a policy that is sufficiently restrictive to manage inflation effectively, indicating a cautious approach to ensure stability. The forthcoming wages data for Q1, expected next month, will play a crucial role in solidifying this outlook and potentially reinforcing the case for a rate cut

Today, several key speeches by Federal Reserve officials will be made as the clock ticks toward the so-called quiet period ahead of the May 1 interest decision on Friday after the close.

  • At 9:00 am, FOMC Member Jefferson will speak, likely addressing current economic conditions or monetary policy.
  • FOMC Member Williams will follow with a speech at 12:30 pm.
  • At 1:00 pm, FOMC Member Barkin is scheduled to speak.
  • Shortly thereafter, at 1:15 pm, Fed Chair Powell will also make remarks.

US stocks in premarket trading are higher. US yields are modestly higher after rebounding higher yesterday after better than expected retail sales data. Oil prices are lower to start the US trading day despite the Middle East conflict(s).

A snapshot of the other markets as the North American session begins currently shows.:

  • Crude oil is trading down $-0.45 or -0.49% at $84.96. At this time yesterday, the price was at $84.95
  • Gold is trading down $-9.30 or -0.39% at $2372.82. At this time yesterday, the price was $2359.67
  • Silver is trading down $0.58 or -2.0% at $28.26. At this time yesterday, the price was at $28.52
  • Bitcoin currently trades at $62,980. At this time yesterday, the price was trading at $66,097. Bitcoin has not been the safe haven, but the risk-off this time:

In the premarket, the major indices are trading higher:

  • Dow Industrial Average futures are implying a gain of 239.89 points. Yesterday, the index fell -248.13 or -0.68% at 37735.12
  • S&P futures are implying a gain of 11.43 points. Yesterday, the index fell -61.59 points or -1.20% at 5061.81
  • Nasdaq futures are implying a gain of 28.17 points. Yesterday, the index fell -290.08 points or -1.79% at 15885.02

The European indices are trading lower:

  • German DAX, -0.96%
  • France CAC , -0.96%
  • UK FTSE 100, -1.24%
  • Spain’s Ibex, -0.82%
  • Italy’s FTSE MIB, -0.85% (delayed 10 minutes)

Shares in the Asian Pacific markets were mostly lower:

  • Japan’s Nikkei 225, -1.94%
  • China’s Shanghai Composite Index, -1.65%
  • Hong Kong’s Hang Seng index, -2.12%
  • Australia S&P/ASX index, -1.81%

Looking at the US debt market, yields are marginally higher. Yesterday yields moved higher on the back of flight to safety flows reversal, and then stronger retail sales

  • 2-year yield 4.944%, +0.6 basis points. At this time Friday, the yield was at 4.959%
  • 5-year yield 4.658%, +1.3 basis points at this time Friday, the yield was at 4.625%
  • 10-year yield 4.6.2 percent, +1.5 basis points. At this time Friday, the yield was at 4.581%
  • 30-year yield 4.752%, +1.2 basis points. At this time Friday, the yield was at 4.674%

Looking at the treasury yield curve spreads, the yield curve statement over the last 24 hours:

  • The 2-10 year spread is at -30.1 basis points. At this time Friday, the spread was at -37.8 basis points
  • The 2-30 year spread is at – 19.2 basis points. At this time Friday, the spread was at -28.5 basis points

European benchmark 10-year yields are higher:

European 10 year yields

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