Fed rate betting is cool

Remarks/Observations

– Risk appetite regains fresh legs as speculation of a pause in the Fed’s tightening cycle in September Sentiment has shifted to the positive outlook of a slower rate trajectory calendar due to negative economic growth forecasts.

-Asian markets closed higher and Europe starts with modest gains between 0 and 1% for the indices after momentum was sustained from yesterday’s Wall Street rally. US futures in the green.

-FTSE remains underperforming in Europe after UK Chancellor Sunak’s statement on the household aid package and a one-off 25% tax levy on the profits of UK energy companies. The UK energy sector is trading lower.

– ECB’s De Cos reiterated a gradual rate hike path after Germany’s ZEW chief said the ECB needed to do more to fight inflation.

-No significant covetous news from China, but Foreign Minister Wang’s comments continue to heighten US-China tensions by chastising US claims that China threatens the international order as disinformation .

– Ukraine’s focus has shifted from conflict to a side effect of a global food crisis as more and more countries talk about the impending humanitarian crisis. Italian Prime Minister Draghi has said he is interested in unblocking Black Sea ports, as Russia’s Agriculture Ministry invites the idea of ​​Russia building ships for grain export.

– Toyota slashes June production plans by 50,000 citing Chinese lockdowns.

Asia

– Japan May Tokyo CPI Y/Y: 2.4% vs. 2.5%e; CPI (excluding fresh produce) Y/Y: 1.9% vs. 2.0%e.

– April retail sales M/M in Australia: 0.9% vs. 1.0%e.

– China Apr Industrial profits -8.5% y/y (first contraction in 2 years).

– The Chinese Politburo will hold a meeting on Friday. Reports circulated that Chinese Premier Li believed his economic growth was slipping outside of a reasonable range and warned of dire economic consequences if the government did not act decisively to prevent the economy from plummeting. any further. Li said to see to avoid an economic contraction in the second quarter.

– Japanese Prime Minister Kishida reiterated his position that recent moves in the JPY (Yen) currency were driven by a variety of factors.

– BOJ Gov Kuroda said that unless energy prices fall sharply, core CPI should stay around 2.0% for about 1 year.

– The United States and Taiwan plan to announce negotiations to deepen economic ties. The bilateral talks will focus on strengthening economic cooperation and supply chain resilience.

– Beijing officials have begun probing a medical lab over violations of covid testing rules. The Chinese Bureau of Statistics later said it would not tolerate fake statistics (**Reminder: Beijing City Health Chief Yu Luming has reportedly been removed from his post).

Ukrainian conflict

– The United States is reportedly ready to send Ukraine advanced long-range rocket systems which are now the main demands of Ukrainian officials.

– Russian Foreign Minister Lavrov warned the West that supplying Ukraine with weapons that could hit Russian territory would be a step towards an unacceptable escalation.

– Russian President Putin has told Italian Prime Minister Draghi that he intends to continue supplying gas to Italy. Russia was willing to help with the food crisis if the sanctions were lifted.

– Russia has approx. $100 million in interest on debt maturing Friday, May 27. If Russia’s obligations are not met, a 30-day grace period ensues. expires Wednesday, May 25).

Speakers/Fixed Income/FX/Commodities/Erratum

Shares

clues [Stoxx600 +0.50% at 440, FTSE -0.15% at 7553, DAX +0.52% at 14302, CAC-40 +0.67% at 6453, IBEX-35 +0.00% at 8889, FTSE MIB -0.31% at 2390, SMI +0.49% at 11549, S&P 500 Futures +0.25%].

Market Focal Points/Key Themes: European indices generally open higher and progress in the green as the session progresses; sectors among those leading up are consumer discretionary and technology; underperforming sectors include real estate and energy; Denmark closed for holidays; utilities sector under pressure from rising crude oil prices; apparently Air France-KLM could participate in the acquisition of Ita Airways; UPM-Kymmene acquires AMC in Germany; earnings expected in the upcoming Americas session include National Bank of Canada and Hibbett.

Shares

Discretionary consumption: Adevinta ADE.NO +7.7% (analyst share), Maisons du Monde MDM.FR -24.5% (lower guidance).

Basic consumption: Henkel HEN3.DE -1.3% (analyst share).

Energy: BW Offshore BWO.NO +4.5% (results), REC Silicon REC.NO -4.1% (results).

Financial: doValue DOV.IT +4.6% (transaction with Cerberus).

Health care: AB Science AB.FR +1.0% (Health Canada is reviewing NDPs for the treatment of ALS).

Industrial: Awilco LNG ALNG.NO -3.1% (result).

Immovable: Unibail-Rodamco-Westfield URW.NL -2.1% (analyst share).

Technology: Kahoot! KAHOT.NO +3.7% (analyst share).

Speakers

From ECB Cos (Spain, Dove) reiterated Council’s view that the process of increasing rates should be gradual.

British Chancellor of the Exchequer (Fin Min) Sunak noted that the recently announced household support package to add

Taiwan Government changed its economic outlook due to covid. Cut its GDP growth forecast for 2022 from 4.4% to 3.9% while raising the CPI inflation forecast for 2022 from 1.9% to 2.7%.

Currency/fixed income

– The USD ended the week on softer footings as speculation of a possible pause in the Fed’s tightening cycle arrives in September. The greenback is poised for its biggest weekly drop in nearly four months.

– EUR/USD is holding around the 1.0750 area, with focus on next week’s CPI data (Germany on Monday, Eurozone on Tuesday) ahead of the June 9 policy meeting of the ECB.

– GBP/USD – reverses some gains after Sunak’s household relief package, trading at 1.262.

– AUD/USD – slightly higher above 0.710.

– NZD/USD – accelerates its rise passing 0.652.

– USD/CAD – steady decline to 1.274.

– USD/CHF – down slightly to 0.956.

– USD/JPY – remains around the 127.00 level despite the drop in the USD index.

Economic data

– (FI) Finland May Consumer confidence: -11.6 vs. -11.7 before; Business confidence: 14.0 vs. 15.0 before.

– (SE) Sweden Apr Retail sales M/M: 0.4% vs. 0.6% before; Y/Y: 2.4% vs. 1.8% before.

– (SE) Sweden Apr Household Lending Y/Y: 6.8% vs. 6.8% before.

– (ES) April adjusted retail sales in Spain Y/Y: +1.5% v -2.0%e; Retail sales (unaj) Y/Y: +3.3% vs. -5.5% before.

– (ES) Spain Mar Total mortgage loans Y/Y: 20.1% vs. 23.3% before; Mortgage approvals Y/Y: 18.0% vs. 14.6% previously.

– (CN) Weekly copper stocks in Shanghai (SHFE): 41.6 K against 54.4 K tonnes previously.

– (EU) Euro zone Apr M3 Money supply Y/Y: 6.0% vs. 6.3%e.

– (AT) Austria Apr Manufacturing PMI: 56.6 vs. 57.9 before (23rd consecutive expansion).

– (RU) Narrow money supply of Russia with May 20 (RUB): 14.31 T against 14.36 T before.

– (TW) Preliminary Taiwan Q1 GDP (2nd reading) Y/Y: 3.1% vs. 3.1%e.

Issuance of fixed income securities

– (THIS) Italian Debt Agency (Tesoro) sold 5.0 billion euros against 5.0 billion euros indicated in the 6-month invoices; Average return: -0.088% versus -0.308% before; Bid-to-cover: 1.54xv 1.49x front.

Look forward

– 05:25 (EU) Daily ECB liquidity statistics.

– 05:30 (IN) India will sell combined INR330B bonds in 2023, 2029, 2032 and 2061.

– 05:30 (ZA) South Africa will sell the ZAR1.2B handset in I/L 2033, 2038 and 2046 Bonds.

– 06:00 (UK) DMO to sell £2.0 billion in 1 month, 3 month and 6 month bills (respectively £0.5 billion, £0.5 billion and £1.0 billion pounds sterling).

– 06:45 (US) Libor daily fixing.

– 07:00 (IN) India announces next issue of bills (held on Wednesday).

– 07:30 (IN) India Weekly Forex Reserve with May 20: No east against $593.3 billion previously.

– 07:30 (IE) ECB’s Lane (Ireland, Chief Economist).

– 08:00 (UK) Daily Baltic Dry Bulk Index.

– 08:00 (ES) Announcement by the Spanish Debt Agency (Tesoro) on the upcoming bond issue.

08:30 (US) April Personal Income: 0.5%ev 0.5% before; Personal expenses: 0.7% vs. 1.1% before; Real personal expenditure (PCE): 0.7% against 0.2% before.

08:30 (US) Apr PCE Deflator M/M: 0.2%ev 0.9% forward; Y/Y: 6.2%ev 6.6% before.

– 08:30 (US) Apr PCE Core Deflator M/M: 0.3%ev 0.3% forward; Y/Y: 4.9%ev 5.2% before.

08:30 (US) Apr Advance Merchandise trade balance: -$114.8 billion vs. -$127.1 billion prior (revised from -$125.3 billion).

– 08:30 (US) April Preliminary Wholesale Inventories M/M: 1.9%ev 2.3% forward; Retail stocks M/M: 2.0%ev 2.0% before.

10h00 (USA) May Final University of Michigan Confidence: 59.1ev 59.1 prelim.

– 11:00 am (EU) Potential sovereign ratings after European close.

– 1:00 p.m. (US) Baker Hughes Platform Weekly Count.

– (CO) Meeting of the Board of Directors of the Central Bank of Colombia.

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