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US stocks eked mild gains in quiet trade ahead of Wednesday's US CPI and FOMC - Newsquawk Asia-Pac Market Open

  • US stocks eked mild gains after having shrugged off the downbeat mood seen in Europe following the EU Parliamentary elections over the weekend which saw far-right parties make notable gains and spurred French President Macron to call for a snap election. Nonetheless, US equities clawed back earlier losses once cash trade got underway, while both the S&P 500 and Nasdaq 100 printed fresh record closes albeit with gains capped in quiet trade and as participants await upcoming risk events.
  • USD was marginally higher on the day in which the DXY gained a firmer footing above 105.00 although was off today's best levels amid a lack of fresh US data releases aside from a mixed NY Fed Consumer Inflation Expectations survey, while the attention turns towards Wednesday's US CPI release, the Fed rate decision and latest SEPs.
  • Looking ahead, highlights include South Korean Current Account, Japanese Money Supply, Australian NAB Business Confidence, Supply from Australia and Japan.

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LOOKING AHEAD

  • Highlights include South Korean Current Account, Japanese Money Supply, Australian NAB Business Confidence, Supply from Australia and Japan.
  • Click here for the Newsquawk Week Ahead.

US TRADE

  • US stocks eked marginal gains after having shrugged off the downbeat mood seen in Europe following the EU Parliamentary elections over the weekend which saw far-right parties make notable gains and spurred French President Macron to call for a snap election. Nonetheless, US equities clawed back earlier losses once cash trade got underway, while both the S&P 500 and Nasdaq 100 printed fresh record closes albeit with gains capped in quiet trade and as participants await upcoming risk events.
  • SPX +0.26% at 5,361, NDX +0.39% at 19,075, DJI +0.18% at 38,868, RUT +0.25% at 2,032.
  • Click here for a detailed summary.

NOTABLE HEADLINES

  • WSJ's Timiraos noted that most sell-side economists and other professional Fed watchers now anticipate one or two rate cuts this year in either September or December.
  • NY Fed SCE (May): 1yr ahead inflation expectations at 3.2% (prev. 3.3%), 3yr view at 2.8% (prev. 2.8%), while the 5yr at 3.0% (prev. 2.8%)

FX

  • USD was marginally higher on the day in which the DXY gained a firmer footing above 105.00 although was off today's best levels amid a lack of fresh US data releases aside from a mixed NY Fed Consumer Inflation Expectations survey, while the attention turns towards Wednesday's US CPI release, the Fed rate decision and latest SEPs.
  • EUR underperformed against its G10 counterparts as French President Macron called for a snap election in response to performing poorly in the European parliamentary elections.
  • GBP was ultimately little changed on the day after recovering from a brief dip beneath the 1.2700 handle, while participants look ahead to UK Employment Change and Average Earnings data due on Tuesday morning.
  • JPY was somewhat indecisive although USD/JPY ultimately returned to above the 157.00 level amid firmer US yields.

FIXED INCOME

  • T-notes saw mild headwinds from the selling pressure in JGBs and EGBs overnight and early morning while a soft 3yr auction later dragged T-notes to session lows.

COMMODITIES

  • Oil prices were firmer amid upcoming summer fuel demand and as geopolitical tensions remained rife after a Ukrainian warplane struck targets in Russia for the first time (they had previously used drones), while a senior Russian lawmaker warned that F-16 jets and their bases beyond Ukraine will be legitimate goals for Russian forces if they take part in combat missions.
  • European officials are reportedly in talks to keep gas flowing through a key Russia-Ukraine pipeline, according to Bloomberg.

GEOPOLITICAL

MIDDLE EAST

  • US President Biden’s administration discussed the possibility of negotiating a unilateral deal with Hamas independently of Israel to release American hostages through Qatari mediators, according to Sky News Arabia citing NBC.
  • Hamas official said US Secretary of State Blinken's ceasefire comments were "biased to Israel" and the stance is a real obstacle to reaching a ceasefire agreement.
  • Yemeni sources confirmed the continued flow of Iranian weapons to the Houthis in Hodeidah including missile parts and remote drone parts, according to Sky News Arabia.

OTHER

  • Senior Russian lawmaker said F-16 jets and their bases beyond Ukraine will be legitimate goals for Russian forces if they take part in combat missions.
  • Belarus Defence Ministry said that participation in joint nuclear weapons drills with Russia is a regular one and not aimed at escalation, according to TASS.

ASIA-PAC

NOTABLE HEADLINES

  • Japanese government is to state its goal of achieving a primary balance surplus by FY25/26 in its mid-year economic policy framework, according to Nikkei.

EU/UK

NOTABLE HEADLINES

  • UK PM Sunak pledged to 'keep cutting people's taxes' as part of the Tory election manifesto, according to The Standard.
  • UK opposition leader Starmer said the Labour Party will unveil its election manifesto on Thursday, according to the BBC.
  • ECB President Lagarde said interest rates are not necessarily on a linear declining path and there might be periods when they hold, while she said it is possible the ECB will hold rates for longer than a single meeting and noted that time-dependent guidance on rates is not helpful.
  • ECB's Kazaks said future rate cuts depend on economic outlook and it is too early to make a definite statement about the future of rate cuts, according to Econostream.
  • ECB's Kazimir said should not rush into another rate cut and should sit out the summer, while he added that September will be a pivotal month as a lot of new data will be published by then. Kazimir also commented that the inflation beast is not broken yet and price pressures can resurface, while he added that disinflation will be bumpy but confident ECB is moving towards the target.
  • ECB's Nagel said should be cautious about future rate reductions and that rates are on a mountain ridge, not a peak.
  • German government spokesperson said Germany is not considering a snap election in the wake of the European Parliamentary elections.

via June 10th 2024