Macro Re-cap
It was bond auctions and whispered assurances from central banks (and probably some short covering) that settled risk markets, with most stocks up across the EU and US bourses. ECB Board member Benoit Courie said current conditions in Spain were “not justified”, which saw yields bounce back after touching 6% on speculation of more bond buying by the ECB, whilst the Fed continued its somewhat optimistic view that unemployment would ease, with its Beige Book indicating that all 12 regions are expanding at a moderate pace. Whilst Alcoa announced surprising first quarter profit results against a backdrop of increasing import prices.
Markets Update
All eyes on Spanish and Italian bonds again last night, with the expected dip in risk assets curtailed as EU stocks all gained around 1% or more, with US stocks slightly less ebullient. The VIX – something to watch I recall mentioning in Trading Week – still remains high. German bunds seem to be turning Japanese, with record low yields across the curve.
See charts of all major markets at bottom of post.
Bonds:
- US 10 year Treasury yields gained 5 pips to be at 2.03% – as risk aversion slipped
- German 10 year bunds saw the same, gaining 5 pips to 1.77%
- Spanish 10 year bonds came back from the Abyss – losing 11 pips now at 5.82%
- Australian 10 year government bonds remain steady at 3.88%
Currencies:
- King USD was down ever so slightly and remains strong, the dollar index at 79.75 points
- Euro gained slightly to 1.31 and continues to look weak
- AUD was also up slightly, barely moving above 1.03 against the USD where it remains at the start of Asian trading.
Equities:
- The broader Euro Stoxx 50 up 0.8% at 2341 points
- The FTSE 100 gained 0.7% to 5634, this time the laggard
- German DAX gained just over 1% to 6674 points to remain well below the important 7000 point barrier
- The FTSE MIB Italian bourse recovered 1.6% to 14689, still well down on its correction previously
- US markets rose slightly less, with the S&P 500 up 0.7% at 1368, the Dow Jones Industrial Average the same up 0.7% to 12805
Commodities:
- Oil prices recovered too, with ICE Brent futures up slightly by 30cents a barrel to $120.17 per barrel – teetering on its price support level as I mentioned in Trading Week with NYMEX WTI crude recovering all of previous losses, up 1.5% to $102.55USD per barrel, whilst natural gas lost another 3%, having fallen 34% YTD
- Gold (USD) had a relatively calm night again and remains steady at $1658USD an ounce as we wait the start of the Asian session.
Today in Asia
- As Asia wakes up to the recover story the ASX200 futures are pointing to a slightly higher open – up around 10 points to 4250 points.
- Data today includes the all-important Labour Force figures, with most economists expecting a slight uptick in jobs, but the unemployment rate to also tick up to 5.3% from current 5.2%. Japanese PPI results are only Asian data of note, whilst tonight sees another deluge of European and US data. Click here for our economic calendar.
Market Charts
| AUD_USD | EUR_USD |
| US DOLLAR INDEX | GOLD USD |
| S&P500 | VIX VOLATILITY |
| DAX 30 | SPOT BRENT CRUDE |
| RJ/CRB COMMODITY INDEX | CHINA IMPORT IRON ORE |
Sovereign 10 year bond yields
| UK | USA |
| JAPAN | |
| GREECE | IRELAND |
| SPAIN | ITALY |
| FRANCE | GERMANY |
| PORTUGAL | AUSTRALIA |
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