TradeTheNews.com Weekly
Market Update: Stocks Rise, Bond Yields Flatten Amid Lukewarm Data and Central
Banks’ Eyeing Normalization
Fri, 02 Jun 2017 16:12 PM EST
Global stock markets pushed out to new highs this week despite continued buying
in government bond markets. By Friday the FTSE 100, DAX, S&P 500, Dow and
NASDAQ Composite all reached new all-time highs. Economic figures continued to
point at better relative growth outside the US, but overall solid footing for
Central Banks and their policy prescriptions. The narrative that Fed would
continue to raise rates like in June was unswayed while more focus was given to
the upcoming ECB meeting and the cover the next round of staff projections may
give to officials seeking to start reshaping expectations. By the end of the
week, President Trump’s decision to pull out of the Paris climate accord, a
continued retreat in crude oil prices, and a lower than forecasted May nonfarm
payroll figure did little to derail global stock markets.
Recent sellers in the Greenback and buyers of US Treasuries were rewarded by
the May jobs report on Friday. The Dollar Index dipped back below 97 and gold
rallied 1% to a fresh one-month high. The Euro touched a fresh 7-month high,
while the 10-year US Treasury yield fell to a new 2017 low below the 200-day
moving average. The 2-10 spread narrowed by ~4 bps to the flattest levels since
before the US election in November. The VIX finished the week back below 10.
For the week, the DJIA gained 0.6%, the S&P added 0.9%, and the Nasdaq rose
1.5%.
In corporate news, financial executives tempered Q2 banking expectations at an
investor conference this week. Wells Fargo CEO Sloan said Q2 loan growth has
not been as robust as everyone would have hoped, while BofA’s Moynihan noted Q2
earnings would be squeezed by a 10-12% drop in trading revenues, and JPMorgan
CFO Lake added she doesn’t see a reason for down trends to change in June.
Shares in Lululemon surged after reporting a beat on profit and revenue,
boosted by positive trends that materialized late in Q1 and are seen as
continuing into Q2. On the M&A front, First Data agreed to acquire credit
card payment processor CardConnect for $15/share in a $750M all-cash deal,
which will add $26B worth of payments a year to First Data’s books. And media
outlets indicated ConAgra had made an approach to acquire Pinnacle Foods, but
CNBC’s Faber poured cold water on the report, pointing to sources that say
merger talks have ended and are unlikely to be restarted.
SUNDAY 5/28
(EU) Official G7 communique from meeting May 26-27 in Taormina, Italy
MONDAY 5/29
(EU) EURO ZONE APR M3 MONEY SUPPLY Y/Y: 4.9% V 5.2%E
(JP) JAPAN APR JOBLESS RATE: 2.8% V 2.8%E (matches lowest rate since Jun 1994)
TUESDAY 5/30
(FR) FRANCE Q1 PRELIMINARY GDP Q/Q: 0.4% V 0.3%E; Y/Y: 1.0% V 0.8%E
(DE) GERMANY MAY CPI SAXONY M/M: -0.1% V -0.1% PRIOR; Y/Y: 1.6% V 2.1% PRIOR
(ES) SPAIN MAY PRELIMINARY CPI M/M: -0.1% V 0.0%E; Y/Y: 1.9% V 2.1%E
(EU) EURO ZONE MAY BUSINESS CLIMATE INDICATOR: 0.90 V 1.11E; CONSUMER
CONFIDENCE (FINAL): -3.3 V -3.3E
(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL €5.75B VS. 4.75-5.75B INDICATED
RANGE IN 5-YEAR AND 10-YEAR BTP BONDS
(DE) GERMANY MAY PRELIMINARY CPI M/M: -0.2% V -0.1%E; Y/Y: 1.5% V 1.6%E
(US) APR PCE DEFLATOR M/M: 0.2% V 0.2%E; Y/Y: 1.7% V 1.7%E
(US) APR PCE CORE M/M: 0.2% V 0.1%E ; Y/Y: 1.5% V 1.5%E
(US) APR PERSONAL INCOME: 0.4% V 0.4%E ; PERSONAL SPENDING: 0.4% V 0.4%E
(US) MAY CONSUMER CONFIDENCE: 117.9 V 119.5E
(US) Atlanta Fed raises Q2 GDP to 3.8% from 3.7% on 5/26
(EU) European Commission paper proposes packaging different countries' debt
into new sovereign bond-backed securities - FT
(CN) CHINA MAY MANUFACTURING PMI (GOVT OFFICIAL): 51.2 (matches 7-month low;
10th month of expansion) V 51.0E; NON-MANUFACTURING PMI: 54.5 V 54.0 PRIOR
(HK) Macau Apr Hotel Occupancy Rate: 86.1% v 82.7% prior
WEDNESDAY 5/31
(FR) FRANCE MAY PRELIMINARY CPI M/M: 0.1% V 0.1%E; Y/Y: 0.8% V 0.9%E
(DE) GERMANY MAY UNEMPLOYMENT CHANGE: -9K V -15KE; UNEMPLOYMENT RATE: 5.7% V
5.7%E
(EU) EURO ZONE MAY CPI ESTIMATE Y/Y: 1.4% V 1.5%E (2nd month remaining below
ECB target); CPI CORE Y/Y: 0.9% V 1.0%E
(EU) EURO ZONE APR UNEMPLOYMENT RATE: 9.3% V 9.4%E (lowest since 2009)
JPM CFO: seeing resonably active capital markets activity in Q2 - DB conf
comments
(US) May Chicago Purchasing Manager corrected to 59.4 from erroneously reported
55.2 (v 57.0e)
(US) Association of American Railroads weekly rail traffic report for week
ending May 27th: 548.1K carloads and intermodal units, +6.7% y/y (20th straight
week of gains)
(US) Weekly API Oil Inventories: Crude: -8.7M v -1.5M prior (biggest draw since
Sept 2016)
(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 100BPS TO 10.25%; AS
EXPECTED
(CN) PBOC SETS YUAN MID POINT AT 6.8090 V 6.8633 PRIOR; Biggest margin of
increase since Jan 6th; Strongest Yuan fix since Nov 10th
(CN) CHINA MAY CAIXIN PMI MANUFACTURING: 49.6 V 50.1E (1st contraction in 11
months)
THURSDAY 6/1
(HK) Macau May Gaming Rev MOP22.7B v MOP20.2B prior; +23.7% y/y v 16.2%e
(DE) GERMANY MAY FINAL MANUFACTURING PMI: 59.5 V 59.4E (confirms 30th month of
expansion and highest since Apr 2011)
(UK) MAY MANUFACTURING PMI: 56.7 V 56.5E (10th month of expansion)
(US) MAY ADP EMPLOYMENT CHANGE: +253K V +180KE
WFC CEO: overall, credit is "very strong"; auto loan market started
getting out of sorts about a year ago, was the right decision to pull back from
auto market - Bernstein conf comments
GM Reports May US sales -1% y/y, to 237.3K units v 254.1Ke
(US) MAY FINAL MARKIT MANUFACTURING PMI: 52.7 V 52.5E (lowest since Sept)
(US) MAY ISM MANUFACTURING: 54.9 V 54.8E; PRICES PAID: 60.5 V 67.0E
(US) Atlanta Fed raises Q2 GDP to 4.0% from 3.8% on 5/30
FRIDAY 6/2
(US) MAY UNEMPLOYMENT RATE: 4.3% V 4.4%E (lowest since May 2001)
(US) MAY CHANGE IN NONFARM PAYROLLS: +138K V +182KE
(US) MAY AVERAGE HOURLY EARNINGS M/M: 0.2% V 0.2%E; Y/Y: 2.5% V 2.6%E; AVERAGE
WEEKLY HOURS: 34.4 V 34.4E
(US) APR TRADE BALANCE: -$47.6B V -$46.1BE
EUR at 7-month highs following disappointing US payroll data; tested 1.1270
level
