Marking Time Ahead Of The Week's Big Events

Overview: The capital markets appear to be in a holding pattern ahead of this week's big events, including the US CPI and the ECB meeting. Equities are little changed but with heavier bias evident. Most of the large bourses in the Asia Pacific region were lower, except Australia, which eked out a small gain. European markets are little changed, and the Dow Jones Stoxx 600 is straddling unchanged levels. US futures are a little heavier. Benchmark 10-year yields are going no place quickly. The US 10-year is holding just above 1.55%, while European yields are slightly softer. Despite the limited yield support, the dollar is steady to firmer, with sterling, New Zealand dollar, and yen nursing 0.20%-0.35% losses. The Norwegian krone and Swiss franc are posting small gains. Emerging market currencies are little changed, with most of the liquid and accessible currencies posting small declines. Gold was sold after pushing above $1900, and July WTI, which tested $70 yesterday, slipped to around $68.50 today. Those industrial commodities we track, like iron ore, steel rebar, and copper, are down for the second or third consecutive session. The Baltic Dry Index fell for the ninth consecutive session yesterday to bring the decline to more than 25% over the past month. It has returned to mid-April levels, which are still nearly 80% above where it settled at the end of last year.

Asia Pacific

Japan's Q1 21 GDP was revised to show a contraction of 3.9% at an annualized rate rather than 5.1%. However, inventory accumulation was revised up to 0.4%, the biggest rise since Q3 17, and the unwinding could weigh on Q2 GDP. Private consumption was revised down to a 1.5% contraction. Yet, looking forward, the unexpectedly strong gain in April cash earnings (1.6% in April, twice the gain the median in Bloomberg's survey anticipated and the March series revised to 0.6% from 0.2%). The April increase was the most in three years and could fuel a boost in consumption after the emergency is lifted.

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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