Round up of today's market news *

S&P Index Hits One-Month High, Signals Optimism. Dow up

Dow up for the 7th consecutive day

The final numbers are showing:

Dow industrial average rose 331.37 points or 0.85% at 39387.75
S&P index rose 26.41 points or 0.51% at 5214.07
NASDAQ index rose 42.51 points or 0.27% at 16346.26

The small-cap Russell 2000 index rose 18.49 points or 0.90% at 2073.63

Nvidia – who will announce their earnings on May 22 – fell $-16.65 or -1.84% at $887.47.
Super Micro Computers fell $-22.94 or -2.79% at $799.70.
Adobe shares fell $-5.45 or -1.12% at $482.65
Tesla fell $-2.75 or -1.57% at $171.97
Intuit fell $-5.57 or 0.88% at $626.86
IBM felt $-3.63 or 2.14% at $166.27
Micron fell $-1.51 or -1.27% at $117.81
Salesforce fell $-3.80 or -1.36% at $275.17.

Some gainers today included:

Meta Platforms rose $2.82 or 0.60% at $475.42
Amazon rose $1.50 or 0.80% at $189.50
Celsius shares rebounded $4.94 or 6.4% at $82.07
Apple shares rose $1.83 or 1.0% at $184.57.
Chipotle rose $49.72 or 1.56% at $3232.97
Trump Media surged by $5.13 or 10.41%

US treasury auctioned off $25 billion of 30 year bonds at high yield of 4.635%

The WI (when-issued) level at the time of the auction was 4.642%

The US treasury auctioned off $25 billion of 30-year bonds. The results vs the 6-month averages shows.

High Yield: 4.635
- Previous: 4.671%
- Six-auction average: 4.451%
WI level at the time of the auction: 4.642%
Tail: -0.7 bps
- Previous: 1.0 bps
- Six-auction average: 0.3 bps
Bid-to-Cover: 2.41X
- Previous: 2.37x
- Six-auction average: 2.38x
Dealers: 15.36%
- Previous: 17.3%
- Six-auction average: 16.6%
Directs: 19.78%
- Previous: 18.3%
- Six-auction average: 16.6%
Indirects: 64.86%
- Previous: 64.4%
- Six-auction average: 66.8%

US initial jobless claims 231K vs 215K estimate

The weekly US initial and continuing claims

Prior week 209K revised from 208K
Initial jobless claims 231K vs 215K estimate.
4-week moving average of initial jobless claims 215K vs 210.25K last week.
Continuing claims 1.785M vs 1.785M estimate.
4-week moving average of continuing claims 1.781M vs 1.787M last week.

Feds Daly :Last 3 months has left considerable uncertainty about next few months of inflation

SF Fed Pres.Mary Daly speaking

The last 3-months has left considerable uncertainty about the next few months of inflation.
There is a range of scenarios the Fed is facing right now.
Getting different signals from firms who say consumers seem to be getting juicy but input prices are not yet declining.
Balance sheet offers no signal about monetary policy.
Officials don’t know how the economy will evolve, only how they would react under different circumstances.
Right now no evidence that the labor market is approaching a worrisome position
Still see a really healthy labor market and inflation that is too high
Can’t count on productivity to save the US from inflation
Fed policy is restrictive but it may still take time to bring inflation down
If labor market were to falter in a ‘fundamental way’ policy action would be needed
Do see the labor market cooling but that is what should be happening
A softening labor market would be getting back to normal
Still seeing disinflation underway, no doubt things are slower than last year
Still seeing supply improvement, no evidence that the Fed has to really push the economy down

Goldman Sachs president Waldron: Speaking on AI

Goldman Sachs president John Waldron on CNBC

Goldman Sachs president John Waldron in an interview on CNBC says:

We are very bullish on AI.

BOCs financial stability report: Debt, asset valuations are key risks to stability

Bank of Canada report and comments from BOC officials

Bank of Canada financial stability report:

Debt serviceability and asset valuations are key risks to stability
Valuations of some financial assets appear to have become stretched, which increases risk of a sharp correction.
System appears resilient, over the last year financial system participants have continued to proactively adjust to higher rates.
Price corrections could be large and abrupt if there are significant changes to expectations around the path of rates or to the economic outlook.
Stretched asset valuations may not properly reflect the risks to economic outlook, thereby boosting likelihood of this orderly price correction.
Valuations remain under pressure in parts of commercial real estate sector, not all asset managers have fully reflected these reduced evaluations on their balance sheets.
Smaller mortgage lenders have seen a sharp uptick in credit arrears.
Signs of financial stress at risk primarily among households without a mortgage.
Largest entities of financial system appeared to have generally limited exposure to commercial real estate.
Global markets have continued to function well but uncertainty remains elevated.

From the BOCs Tiff Macklem:

Canada’s financial system remains resilient
could be volatility in global markets as expectations shift about scope of timing of the rate cuts.
Adjustment by financial institutions to higher rates and possible shocks has some way to go, presents risks to financial stability.
Some indicators of financial stress have risen, valuations of some financial assets appear to have become stretched.
Higher rates will continue to restrain household spending
We are taking that into account as we think about what rates need to be to get inflation back to target.

From BOCs Rogers:

Financial health of large businesses appear solid, but smaller businesses are showing more signs of financial stress.
Overall evidence suggests households and continue servicing debt at higher rates.
Increase in insolvency filings by smaller firms could be a normalization after years of below-average filings as pandemic support expire.
Overall credit performance of Canadian banks remain strong.

Mexican central bank rate decision: Rates unchanged at 11.0% as expected

The rate decision from Banxico

Prior was 11.0%
Decision was unanimous
Disinflation process is expected to continue
Revises 2024 year-end forecast for inflation to 4.00% from 3.6%
Boosts core inflation in 2024 forecast to 3.8% from 3.5%
Balance of risks to inflation within the forecast horizon remain to the upside
Inflationary shocks are foreseen to take longer to dissipate
Weak behaviour in Q4 2023 is expected to continue in Q1

Gold rises as rate cut chatter puts Fed back in the spotlight

Gold rebounds above $2,330, fueled by drop in US Treasury yields, weaker Greenback.
Unemployment claims increase, which pressures Fed to achieve its dual mandate goals and possibly cut rates sooner.
Fed officials reflect mixed views on economy’s health and monetary policy direction.

Gold price resumed its uptrend on Thursday and climbed more than 1% as US Treasury yields dropped, undermining the Greenback’s appetite. Labor market data from the United States was softer, increasing the chances for a rate cut by the Fed despite dealing with inflationary pressure.

Gold strengthens as US data increases Fed rate cut hopes

Gold prices fell amid lower US Treasury yields and a strong US Dollar. The US 10-year Treasury note is yielding 4.457%, down four basis points from its opening level. The US Dollar Index , which tracks the Greenback’s performance against six other currencies, dives 0.25% to 105.25.
US Department of Labor reported that Initial Jobless Claims for the week ending May 4 rose to 231K, exceeding the estimates of 210K and showing an increase from the previous week’s figure of 209K. The uptick in jobless claims suggests a cooling US labor market.
Softer-than-expected labor market figures, as shown by last month’s US employment report and unemployment claims data, may exert pressure on the Fed. Officials recognized that the risks to achieving the Fed’s dual mandate of fostering maximum employment and price stability have become more balanced over the past year.
Gold has advanced more than 12% so far in 2024, courtesy of expectations that major central banks will begin to reduce rates.
According to Reuters, the People’s Bank of China (PBoC) continued to accumulate Gold for the 18th straight month, adding 60,000 troy ounces to its reserves amid higher prices.
After the data release, Fed rate cut probabilities increased from around 33 basis points (bps) to 38 bps points of rate cuts toward the end of 2024.

Silver soars above key resistance as buyers’ eye $29.00

Silver rallies, gaining nearly $1.00 to pass $28.00, fueled by falling US Treasury yields and a weaker dollar.
Bullish technicals as RSI exceeds 60, indicating room for more upward movement.
Resistance levels at $28.49 and $29.00, targeting year-to-date high of $29.79; support at $28.00 and $27.70.

Silver prices rallied sharply as US Treasury yields tumbled, and the Greenback weakened as major central banks opened the door to ease policy. At the time of writing, XAG-USD trades at $28.29, up by more than 3.50%.

Goldman Sachs oil price forecasts show Brent to average US$82 / barrel through 2025

Says OPEC likely to extend cuts in June, citing higher inventories

Goldman Sachs on its oil outlook:

Says OPEC likely to extend cuts in June on higher inventories
no longer expect OPEC+ to announce a partial unwind of voluntary production cuts in June
GS says its model now estimates only a 37% chance of a production increase decision in June
GS still expect Brent to remain in a $75-90 range in most scenarios
and still forecast Brent to average $82/bbl in 2025

EU News

BOE leaves bank rate unchanged at 5.25%, as expected

The Bank of England announces its May 2024 monetary policy decision
Prior 5.25%
Bank rate vote 7-0-2 vs 8-0-1 expected (Dhingra, Ramsden voted to cut by 25 bps)
CPI inflation is expected to return to close to the 2% target in the near-term
But it is to increase slightly in the second half of this year, owing to the unwinding of base effects
There continue to be upside risks to the near-term inflation outlook from geopolitical factors
Key indicators of inflation persistence are moderating broadly as expected, although they remain elevated
Monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target
Monetary policy needs to be restrictive for an extended period of time until the risk of inflation becoming embedded above the 2% target dissipates
Prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably
Will consider forthcoming data releases and how these inform the assessment that the risks from inflation persistence are receding
Will keep under review for how long Bank Rate should be maintained at its current level

BOE Decision Maker Panel (DMP) survey: inflation expectations fall to 2.9% from 3.2%

The Decision Maker Panel (DMP) is a survey of Chief Financial Officers from small, medium and large UK businesses.

The BOE Decision-Maker Panel survey shows:

1-year inflation expectations fell to 2.9% down in April from 3.2% in March
The 3-month average fell by 0.2% points to 3.1% in April
3-year ahead CPI inflation expectations were unchanged at 2.7% in the three months to April
1-year ahead wage growth expectations declined slightly to 4.8% on a three month moving average basis.

UK data – RICS House Price balance -5 in April vs. -2 expected and -5 in March

Royal Institution of Chartered Surveyors (RICS) house price balance

BOE governor Bailey: We are not yet at a point to cut interest rates

Remarks by BOE governor, Andrew Bailey, in his press conference
But it is encouraging that inflation will be close to target in the coming months
Higher than expected wage and services inflation since February should give us pause for thought
But we should not overinterpret it, they are well within the normal margins of variance
Change in bank rate in June is neither ruled out nor a fait accompli
Inflation persistence outlook is similar to February
More data will help to assess outlook on CPI inflation
We are making very good progress in returning inflation to 2% target
Restrictive monetary policy stance is working
It is likely we will need to cut bank rate over the coming quarters
It is also possible to cut more than what is currently priced into market rates
We have no preconceptions on how far or how fast we will cut rates

BOE Bailey Q&A: Each meeting is a new decision on rates

Bailey comments in the Q&A session
We are evidence-based
Inflation dynamics in the UK are different to that in the US
There is always volatility when it comes to the data
We can’t not look at the labour market, even with the latest ONS data shortcomings
There is no law that says the Fed must move first before other central banks
One rate cut will still leave us with restrictive monetary policy
We do not have a very precise view on where rates will end up (Broadbent)
Politics are not a consideration for timing of next rate move

ECBs di Guindos: Europe’s economic growth gaining momentum

ECBs di Guindos speaking:

Europe’s economic growth is gaining momentum.
Inflation is converging to ECB goals by mid- 2025
ECBs path of rates beyond June does not want to be precommitted
Due to slowdown in globalization, regionalization of markets, inflation will probably be higher in the future than the one we’ve seen until now.
After Russia’s invasion of Ukraine, I believe that in Europe were going to focus more on ‘cannons’ than ‘butter’, meaning more inflation and slightly less growth
ECB is not dependent on the Federal Reserve, but it’s policies are relevant at a global level
Evolution of the US dollar is very important.
Says that US fiscal policy is much more expensive than in the euro zone, but their unemployment rate is lower
Number of future rate cuts will depend on multiple factors including salaries and possible adjustment in financial markets

Deutsche Bank noting a ‘unique event’ coming up from the ECB and Fed – EUR implications?

Are there any euro implications?

From a Deutsche Bank client note taking a look at the history of the relationship between Fed rate cuts and those from the European Central Bank (and Germany’s Bundesbank before them):

the potentially imminent European easing cycle has raised some eyebrows in terms of timing and how much they can cut before the Fed start their own easing cycle.
we investigate the Fed Funds vs. the German Bundesbank rate before 1999 and the ECB rate thereafter
table … shows the dates of the start of easing cycles in both regions over the last 65 years, and calculates the lag between the two
It highlights that over this period, the Bundesbank/ECB have not eased before the Fed, apart from in 2011 when the ECB cut rates due to the Sovereign crisis when the Fed was already at zero and didn’t cut rates further. Outside of that period (which was also complicated by QE on both sides of the Atlantic), the Fed has had more easing cycles and where they coincide, they have always previously been the first to cut.
So assuming the ECB does cut rates next month as expected, and the Fed remains on hold for at least the next several months before easing, it will be a unique event in modern times.

Asia-Pacific-World News

China April Trade data: Exports +1.5% y/y (+1.0% expected) Imports +8.4% y/y (exp +5.4%)

Trade balance data from China for April 2024

Trade balance data from China for April 2024

April dollar-denominated exports +1.5 % y/y (in yuan terms +5.1% y/y)

Reuters poll showed +1.5% expected
prior -7.5%

April dollar-denominated imports +8.4 % y/y (in yuan terms +12.2%)

Reuters poll +4.8 %
prior -1.9%

April USD denominated trade balance is a surplus of 72.35bn

expected 76.7bn, prior 58.55bn

The YTD, ie January – April numbers:

Dollar-denominated exports +1.5% y/y
Dollar-denominated imports +3.2% y/y
Trade balance +$255.66 bln

China’s property developer Country Garden says it will delay bond payment

Yuan denominated bond payment due

A Country Garden yuan-denominated bond

coupon payment on the 3.95% state-guaranteed bond
initial deadline of May 9
the firm says that while its due today, and they’ll pay a portion, the rest will be delayed until May 13
the firm cites slower sales than expected

Brazil’s central bank cuts its rate by 25bp

SELIC rate cut by 25bp, was nearly cut by 50

Banco Central do Brasil Monetary Policy Committee (Copom) decision:

5 Copom members voted in favour of a 25 bp cut, 4 members voted for a 50 bp reduction
Committee unanimously judges that the uncertain global scenario and the domestic scenario, marked by resilient economic activity and deanchored expectations, require greater caution
Monetary policy should continue being contractionary until the consolidation of both the disinflation process and the anchoring of expectations around the targets
Reinforces, with special emphasis, that the extension and adequacy of future changes in the interest rate will be determined by the firm commitment of reaching the inflation target in the relevant horizon
Current context requires serenity and moderation in the conduct of monetary policy
Global environment has become more adverse because of the heightened and persistent uncertainty about the beginning of the easing cycle in the US
The environment continues to require caution from emerging market economies

Japan March leading indicator index 111.4 vs 112.1 prior

Latest data released by the Japan Cabinet Office – 9 May 2024

Coincident index 113.9
Prior 111.5

Bank of Japan Summary – Easy monetary conditions are expected to continue

But rates may rise higher than market expects in time

Headlines via Reuters:

One member said if trend inflation accelerates, BOJ will adjust degree of monetary easing but accommodative financial environment likely to continue for time being
One member said if forecasts under quarterly report are met, interest rates might rise to levels higher than markets currently price in
One member said one option would be to hike rates moderately in accordance with economic, price, financial developments, to avoid shock from abrupt policy shift
One member said must hike rates at appropriate timing as likelihood of achieving our forecasts heightens
One member said BOJ must deepen debate on timing, pace of future rate hike
One member said extent of consumption recovery toward latter half of this year will be key in considering next policy change timing

One member said if inflation overshoot continues against backdrop of weak yen, pace of policy normalisation may become faster
One member said households’ purchasing power remains weak so must maintain easy monetary conditions for time being
One member said appropriate for BOJ to indicate, at some point, path toward reducing its bond buying

One member said BOJ must proceed with shrinking its balance sheet including by reducing bond buying when right time comes
One member said even if it takes a long time, BOJ must eventually eliminate its etf holdings
One member said must be mindful of upside risk to inflation as weak yen, rising crude oil prices affecting cost-push pressure

One member said weak yen weighs on economy short-term, but may push up trend inflation by boosting output, income in medium-, to long-term horizon
One member said must be vigilant to various upside risks to inflation, such as weak yen, fiscal stimulus and chance of stronger wage-inflation spiral
MOF rep said consumption lacking momentum, hope BOJ works closely with govt to achieve sustainable 2% inflation

Japan data – Real wages down 2.5% y/y in March, down for 24 consecutive months

Bank of Japan won’t be too happy with this

Japan March wages data:

total cash earnings +0.6% y/y (expected +1.5%, prior +1.8%)
overtime pay -1.5% y/y
real wages -2.5% y/y

Bank of Japan Governor Ueda says need to monitor FX

Ueada comments crossing from the Diet

Bank of Japan Governor Ueda is speaking from parliament again today, answering questions:

Low real rate supports economy and inflation
Need to monitor FX and oil for real wages
There is no clear evidence that Japan’s natural rate of interest continued to fall from five years ago, when its estimated to have been around zero
BoJ can adjust degree of monetary accommodation via rate hikes if trend inflation accelerates gradually
Sharp, one-sided yen fall undesirable, bad for economy
Expects positive wage-inflation cycle to strengthen
Fx moves are among key factors that affect economy, prices
If fx volatility affects, or risks affecting, trend inflation, BOJ must respond with monetary policy
BOJ will scrutinise recent weak yen in guiding monetary policy

Cryptocurrency News

Bitcoin corrects but fails to threaten BTC macro uptrend

Bitcoin price has retraced to $61K range, nearly 15% below its $73,777 all-time high recorded on March 14.
After its ATH, BTC dipped 20%, marking deepest correction on a closing basis since FTX lows in November 2022.
Amid a resilient macro uptrend, Bitcoin price consolidates in a falling wedge pattern.
Former President Donald Trump says, “Biden doesn’t even know what” crypto is, urging America’s pro-crypto community to vote for him.

Bitcoin is on a load-shedding exercise from a big-picture outlook, recording lower highs since March. However, despite the severity of the correction, it has not been enough to threaten the big-picture bullish outlook.

Bitcoin drops but fails to threaten macro uptrend

Since its all-time high on March 14 at $73,777, Bitcoin price has been unable to reclaim this level, with the price action thereafter characterized by lower highs. The lowest this dump has gone is a 23% fall to the May 2 intraday low after BTC bottomed out at $56,911.

Binance claps back at WSJ report, affirms strict market surveillance program

Binance Exchange has tried to clear its name on allegations of overlooking market manipulation.
Sources indicate Binance fired its head of surveillance after he flagged DWF’s suspected market manipulation.
In 2023, US authorities accused Binance of maximizing profits by protecting users, including those funding terrorist activities.

Binance Exchange is in the headlines again following revelations by insiders that the trading platform had punished an employee after he flagged an incident of market manipulation at its client DWF Labs, according to a Wall Street Journal report.

Binance responds to allegations of neglected market manipulation evidence

A report by the WSJ, which cited a former employee at Binance, indicated that the trading platform had fired the head of surveillance after he flagged suspected market manipulation by global digital asset market maker and multi-stage web3 investment firm DWS Labs.

The former staff member and his colleagues on the market surveillance team had been brought in to detect indications of market manipulation. However, after they discovered DWS Labs manipulating various tokens, the team leader was fired. Notably, a Lamborghini-loving crypto trader runs DWS Labs, according to the report.

Specifically, VIP clients trading over $100 million monthly were engaging in pump-and-dump schemes and wash trading. These activities are against Binance’s terms and conditions in its commitment toward delivering a safe and trusted platform.

Citing the WSJ, “Former company insiders say the firing of an internal investigator showed that the crypto exchange neglected evidence of market manipulation.”

Binance has since clapped back at the article titled “Binance Pledged to Thwart Suspicious Trading—Until It Involved a Lamborghini-Loving High Roller.” In its defense, the largest exchange on trading volume metrics indicates, “…we affirm our strict market surveillance program. We do not tolerate market abuse.”

Coinbase set to list JUP, TNSR, JTO perpetual markets

Coinbase seeks to expand its perpetual market offerings with the listing of contracts for new altcoins.
JUP, TNSR, JTO perpetuals will be available for trading on its International and Advanced platforms from May 16.
These assets may see a brief surge in their prices after the listing.

Coinbase announced on Thursday that it will list perpetual contracts for Jupiter (JUP), Tensor (TNSR) and Jito (JTO) on its International and Advanced platforms, and trading will begin on May 16.

Coinbase to list Solana-based altcoins on its perpetual market

Coinbase recently announced that it will be listing a new set of altcoins on its global exchange. The announcement was made on Thursday via its International Exchange X account.

The listing, set for May 16, will involve Jupiter (JUP), Tensor (TNSR) — the native token of the Tensor marketplace — and Jito’s JTO token. These tokens will be tradable on the International and Advanced Coinbase platforms.

The support of these tokens may suggest Coinbase International’s desire to redefine the global derivatives market, according to a post made by the exchange a few days ago. The exchange has 41 perpetual markets, driving $1 billion in average daily volume.

Coinbase International is the global exchange for Coinbase, available for non-US institutional users to trade crypto perpetual markets.

With the support of the new altcoins on Coinbase Exchange platforms, users may see a brief surge in their prices, considering they will be open to a wider reach of traders and institutions.

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Round up of today’s market news

ByBilals Tech

North American News