At Tuesday's close, the Dow Jones Index (US30) decreased by 1.06% and fell to a 3-week low. The S&P 500 index (US500) was down 1.06%. The NASDAQ Technology Index (US100) closed negative 0.58%. Stocks declined amid rising bond yields driven by hawkish remarks from Fed officials. On Wednesday, Atlanta Fed President Bostic said that the path to 2% inflation is not guaranteed and that the scope for price increases is still significant. This came from recent comments from Minneapolis FRB President Kashkari, who said the US Central Bank should hold off on cutting rates until inflation improves significantly. Markets are pricing in a 25 bps chance of a rate cut to 0% at the June 12 FOMC meeting and 10% at the next meeting on July 31.

The Richmond Fed's May survey of the US manufacturing outlook rose 7 to a 7-month high, beating expectations of no change at negative 7. The Fed's Beige Book was neutral for stocks, showing that the US economy has grown at a "slight to moderate" pace in most regions since early April. Employment grew at a modest pace, with eight of twelve counties reporting "slight to moderate job growth," and prices rose at a "moderate pace," with business officials noting that consumers are resisting additional price increases.

Equity markets in Europe mostly fell yesterday. Germany's DAX (DE40) fell by 1.10%, France's CAC 40 (FR40) closed down 1.52%, Spain's IBEX 35 (ES35) lost 1.16%, and the UK's FTSE 100 (UK100) closed negative 0.86%.

The German GfK Consumer Confidence Index for June rose by 3.1 to a 2-year high of negative 20.9, which was stronger than expectations of negative 22.5. May German CPI (EU harmonized) rose to 2.8% y/y, beating expectations of 2.7% y/y and the largest increase in 4 months. ECB Governing Council spokesman Kazaks said the ECB should not go on "autopilot" when cutting interest rates after the expected rate cut next week.

WTI crude oil prices held near $79 a barrel on Thursday after losing nearly 1% in the previous session, weakened by growing expectations that borrowing costs could remain high for longer, dampening the demand outlook. Commodities and other risk assets sold off on Wednesday, and bond yields rose as traders bet that the US Federal Reserve may delay the start of its easing cycle or even decide not to cut rates at all this year. Today, the EIA will release last week's crude oil inventories report. A decline of 1.6m barrels is expected, which may support oil prices.

Asian markets were mostly rising on Monday. Japan's Nikkei 225 (JP225) was down 0.77%, China's FTSE China A50 (CHA50) added 0.20%, Hong Kong's Hang Seng (HK50) was down 1.83% for the day, and Australia's ASX 200 (AU200) was negative 1.30%. In Asia, investors are awaiting the release of China's PMI data for May on Friday to gauge the state of the world's second-largest economy. On Wednesday, Chinese stocks rose after the IMF raised its growth prognoses to 5% from 4.6% this year thanks to strong first-quarter data and supportive policy measures.

The Australian dollar slid to $0.66, hitting its lowest level in two weeks, amid pressure from a strong US dollar and Treasury yields. Investors await the US PCE Price Index report later this week. Risk-sensitive currencies also followed broad declines in commodity prices and other risk assets.

S&P 500 (US500) 5,266.95 −39.09 (−0.74%)

Dow Jones (US30) 38,441.54 −411.32 (−1.06%)

DAX (DE40) 18,473.29 −204.58 (−1.10%)

FTSE 100 (UK100) 8,183.07 −71.11 (−0.86%)

USD Index 105.14 +0.52 (+0.50%)

Important events today:

• – US FOMC Member Bostic Speaks at 02:00 (GMT+3);
• – Switzerland GDP (q/q) at 10:00 (GMT+3);
• – Switzerland KOF Leading Indicators (m/m) at 10:00 (GMT+3);
• – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US GDP (q/q) at 15:30 (GMT+3);
• – US Pending Home Sales (m/m) at 17:00 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 18:00 (GMT+3);
• – US FOMC Member Williams Speaks at 19:05 (GMT+3).

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