Overnight Markets and News

Jun E-mini S&Ps (ESM18 -0.10%) this morning are down -0.18% and European stocks are down -0.05%. Higher interest rates are undercutting stocks as the 10-year T-note yield rose to a 4-week high of 2.89% and the 10-year German bund yield climbed to a 4-week high of 0.574%. An increase in inflation expectations is boosting government bond yields as the 10-year T-note breakeven inflation rate climbed to a 3-1/2 year high of 2.16% due to the recent surge in metals and energy prices. Strength in energy stocks is limiting the downside in U.S. and European bourses with May WTI crude oil (CLK18 +1.29%) up +0.54% at a new 3-1/3 year nearest-futures high. Oil prices are extending gains from Wednesday after the EIA reported a surprise drop in weekly U.S. crude inventories. Oil prices are also moving higher ahead of Friday's OPEC meeting in Saudi Arabia where the cartel may signal an extension of their production cuts past this year. Asian stocks settled higher: Japan +0.15%, Hong Kong +1.40%, China +0.84%, Taiwan +1.14%, Australia +0.33%, Singapore +1.15%, South Korea +0.46%, India +0.28%. Japan's Nikkei Stock Index rallied to a 1-1/2 month high as trade tensions eased when U.S. President Trump and Japanese Prime Minister Abe agreed to work closely on bilateral trade.

The dollar index (DXY00 -0.02%) is up +0.03%. EUR/USD (^EURUSD +0.01%) is down -0.08%. USD/JPY (^USDJPY +0.17%) is up +0.18%.

Jun 10-year T-note prices (ZNM18 -0-050) are down -5 ticks at a 4-week low.

Boston Fed President Rosengren said the capacity of the U.S. to respond to an economic or financial shock has been diminishing as historically low interest rates mean conventional monetary policy response will be limited and unconventional tools may encounter resistance.

UK Mar retail sales ex auto fuel fell -0.5% m/m and rose +1.1% y/y, weaker than expectations of -0.4% m/m and +1.4% y/y. Mar retail sales including auto fuel fell -1.2% m/m and rose +1.1% y/y, weaker than expectations of -0.6% m/m and +1.9% y/y.

U.S. Stock Preview

Key U.S. news today includes: (1) Fed Governor Lael Brainard speaks on regulatory reform at the 2018 Global Finance Forum in Washington, (2) weekly initial unemployment claims (expected -3,000 to 230,000, previous -9,000 to 233,000) and continuing claims (expected -26,000 to 1.845 million, previous +53,000 to 1.871 million), (3) Apr Philadelphia Fed business outlook index (expected -1.3 to 21.0, Mar -3.5 to 22.3), (4) USDA weekly Export Sales, (5) Fed Governor Randal Quarles speaks at an Institute of International Finance event in Washington, (6) Mar leading indicators (expected +0.3% m/m, Feb +0.6% m/m), (7) Treasury auctions 5-year TIPS, (8) Cleveland Fed President Loretta Mester (voter) discusses the outlook for the economy and monetary policy at the University of Pittsburgh Joseph M. Katz Graduate School of Business.

Notable S&P 500 earnings reports today include: Bank of NY Mellon (consensus $0.96), KeyCorp (0.38), Danaher (0.94), Genuine Parts (1.32), BB&T (0.92), Quest Diagnostics (1.50), Nucor (1.12), Pentair (0.83), WW Grainger (3.44), PPG (1.39), Snap-On (2.72), People's United Financial (0.30), Alliance Data Systems (4.25), E-trade (0.79).

U.S. IPO's scheduled to price today: FirstCaribbean Intl Bank (FCI), Level One Bancorp (LEVL), Pivotal Software (PVTL).

Equity conferences this week: RSA Conference on Mon-Thu.

Market Comments

June S&P 500 E-minis (ESM18 -0.10%) this morning are down -4.75 points (-0.18%). Wednesday's closes: S&P 500 +0.08%, Dow Jones -0.16%, Nasdaq +0.25%. The S&P 500 on Wednesday rallied to a 4-week high and closed higher on hopes for improved U.S-Japan trade relations after the 2-day Abe-Trump summit. There was also a rally in energy stocks as crude oil prices rose +2.93% to a new 3-1/3 year high. Metal producers and mining stocks rallied after nickel prices jumped to a 2-3/4 year high and copper rose to a 1-month high.

June 10-year T-notes (ZNM18 -0-050) this morning are down -5 ticks at a 4-week low. Wednesday's closes: TYM8 -13.50, FVM8 -8.00. Jun 10-year T-notes on Wednesday fell to a 3-1/2 week low and closed lower on the rally in the S&P 500 to a 4-week high and on increased inflation expectations after the 10-year T-note breakeven inflation rose to a 3-1/2 year high.

The dollar index (DXY00 -0.02%) this morning is up +0.03 (+0.03%). EUR/USD (^EURUSD +0.01%) is down -0.0010 (-0.08%). USD/JPY (^USDJPY +0.17%) is up +0.19 (+0.18%). Wednesday's closes: Dollar Index +0.107 (+0.12%), EUR/USD +0.0004 (+0.03%), USD/JPY +0.23 (+0.21%). The dollar index on Wednesday closed higher on the jump in the 10-year T-note breakeven inflation rate to a 3-1/2 year high, which is hawkish for Fed policy. In addition, the Fed Beige Book stated that all 12 Fed districts said economic activity expanded at a modest to moderate pace in March and early April, which was positive for the U.S. economy and hawkish for Fed policy.

Metals prices this morning are weaker with Jun gold (GCM18 -0.21%) -3.4 (-0.25%), May silver (SIK18 -0.22%) -0.043 (-0.25%), and May copper (HGK18 -0.44%) -0.008 (-0.24%). Wednesday's closes: Jun gold +4.00 (+0.30%), May silver +0.461 (+2.75%), May copper +0.790 (+2.57%). Metals on Wednesday closed higher with May silver at a 2-1/2 month high and May copper at a 1-month high. Metals prices were boosted by a surge in inflation expectations that boosts demand for precious metals as an inflation hedge after the 10-year T-note breakeven inflation jumped to a 3-1/2 year high. There was also carry-over support from a surge in aluminum prices to a 6-1/2 year high and in nickel prices to a 2-3/4 year high as U.S. sanctions on Russia's Rusal cut off aluminum supplies.

May crude oil prices (CLK18 +1.29%) this morning are up +37 cents (+0.54%) at a fresh 3-1/3 year nearest-futures high and May gasoline (RBK18 +0.70%) is +0.0025 (+0.12%) at a 7-1/2 month nearest-futures high. Wednesday's closes: May crude +1.95 (+2.93%), May gasoline +0.271 (+1.33%). May crude oil and gasoline on Wednesday closed higher with May crude at a new 3-1/3 nearest-futures high. Crude oil prices were boosted by the unexpected -1.07 million bbl decline in EIA crude inventories, less than expectations of a +600,000 bbl increase and the -1.12 million bbl decline in crude supplies at Cushing, OK, delivery point of WTI futures. Gasoline prices were boosted by the unexpected -2.97 million bbl decline in EIA gasoline stockpiles, less than expectations of +450,000 bbl.

Overnight U.S. Stock Movers

Clorox (CLX -0.09%) was downgraded to 'Underweight' from 'Equal-Weight' at Morgan Stanley with a price target of $116.

American Express (AXP +1.37%) climbed more than 3% in after-hours trading after it reported Q1 revenue of $9.72 billion, better than consensus of $9.51 billion.

Morgan Stanley (MS +0.04%) was upgraded to 'Strong Buy' from 'Outperform' at Vining Sparks with a price target of $67.

PTC Inc (PTC +0.53%) slipped 2% in after-hours trading after it said it sees Q3 adjusted EPS of 30 cents to 34 cents, the midpoint below consensus of 33 cents.

Alcoa (AA +4.06%) rose over 3% in after-hours trading after it reported Q1 adjusted Ebitda of $653 million, better than consensus of $612.9 million, and said it sees full-year adjusted Ebitda of $3.5 billion to $3.7 billion, well above consensus of $2.58 billion.

Sleep Number (SNBR -1.16%) sank 10% in after-hours trading after it reported Q1 comparable sales fell -3%, weaker than consensus of -2%, and then said it sees full-year EPS of $1.70 to $2.00, the midpoint below consensus of $1.86.

Novocure Ltd (NVCR +2.37%) was upgraded to 'Buy' from 'Hold' at Deutsche Bank with a price target of $29.

Kinder Morgan (KMI +0.94%) gained 2% in after-hours trading after it reported Q1 adjusted Ebitda of $1.90 billion, higher than consensus of $1.86 billion, and then raised its quarterly dividend to 20 cents from 12.5 cents.

Ship Finance International Ltd (SFL +0.68%) dropped 4% in after-hours trading after ii said it intends to offer $150 million in convertible senior subordinated notes due 2023.

Paratek Pharmaceuticals (PRTK -2.21%) slid over 9% in after-hours trading after it proposed a private offering of $125 million in convertible senior subordinated notes due 2024.

Sientra (SIEN +7.70%) jumped over 12% in after-hours trading after it said the FDA approved its PMA supplement allowing commercialization of its OPUS-branded breast implant products.

Helios & Matheson Analytics (HMNY -3.28%) fell over 10% in after-hours trading after it announced an at-the-market equity offering sales agreement with Canaccord Genuity LLC to sell up to $150 million shares of its common stock.

Rigel Pharmaceuticals (RIGL -5.60%) lost nearly 4% in after-hours trading when it announced that it intends to offer 15 million shares of its common stock in an underwritten public offering.

Pier 1 Imports (PIR -3.08%) tumbled nearly 15% in after-hours trading after it said it will discontinue paying its 7 cents a share quarterly dividend to allocate greater resources towards its 3-year strategic plan to drive sales and increase shareholder value.