As the North American session begins, the AUD is the strongest and the CHF is the weakest. The USD is tilting to upside but if you look at the net changes - and the changes of the major currencies other than the AUD and CHF - they are all scrunched together with modest moves against each.
In Australia, the quarterly inflation data came out and put the kabosh on hopes for a rate cut any time soon at least.
Headline CPI:
- Quarterly increase of 1.0%, higher than the expected 0.8% and the previous 0.6%.
- Year-over-year (y/y) increase of 3.6%, slightly above the expected 3.5% and down from the previous 4.1%.
Trimmed Mean CPI (a core measure):
- Quarterly increase of 1.0%, aligning with expectations but higher than the previous 0.8%.
- Year-over-year increase of 4.0%, above the expected 3.8% and slightly below the previous 4.2%.
Weighted Median CPI (another core measure):
- Quarterly increase of 1.1%, surpassing the expected 0.9% and matching the previous 0.9%.
- Year-over-year increase of 4.4%, higher than the expected 4.1% and consistent with the previous 4.4%.
Sector-specific Inflation:
- Services inflation at 4.3% y/y, the lowest since June 2022.
- Goods inflation at 3.1% y/y, the lowest since September 2022.
The AUDUSD did move higher and tested the 200-day MA at 0.6528 before stalling (see chart below). It will take a move above those MAs to increase the bullish bias with the 100 day MA up at 0.65828 as the next major technical target:
Westpac's chief economist Luci Ellis, who was previously Assistant Governor (Economic) at the Reserve Bank of Australia commented on the report and said:
- Inflation was a bit higher than expected in the March quarter. It is declining, but it has a way to go for the RBA to be confident of returning to the 2-3% target range on the desired timetable.
- We expect the Board to keep rates on hold in May, and have pushed out the date of the first rate cut to November this year, previously September.
The USDJPY did continue its little-by-little move toward 155.00 level. The high price today extended to 154.963. On the downside, in that pair, the 100 hour MA at 154.66 is support (and moving higher). On Monday and Tuesday, the price did peek below that MA level but not by much on each break. There just isn't a lot of downside momentum. The next BOJ two-day policy meeting starts Thursday, and they will deliberate on the implications of the yen's significant depreciation on inflation, particularly in the context of recent economic policies including the end of the negative interest rate policy in March. Despite the recent fall of the yen by about 500 pips against the dollar since the last meeting, and more broadly by 20 yen over the past year, most analysts foresee no immediate adjustments to BOJ's monetary stance. The central bank's attention is fixed on core inflation and the responses of small businesses to rising costs, indicating a cautious approach toward future rate hikes, with the majority of market experts anticipating possible increases later in the year around September or October. The strength in the pair is indicative of the markets view.
Takao Ochi of the ruling Liberal Democratic Party, a senior member of the Lower House Financial Affairs Committee said that a move in USD/JPY towards 160 (or 170) could prod action from policymakers as they would deem that as being "excessive". It was thought that 155.00 would prompt the BOJ interest.
With Meta and IBM still due to report after the close, the following companies did report this morning with more BEATs vs MISSes. Some 30% of the S&P500 report this week:
Boeing Co (BA): BEAT
- Adj. EPS: -$1.13 vs. -$1.76 expected (Beat)
- Revenue: $16.57 billion vs. $16.23 billion expected (Beat)
CME Group Inc (CME): BEAT
- Adj. EPS: $2.50 vs. $2.45 expected (Beat)
- Revenue: $1.50 billion vs. $1.48 billion expected (Beat)
General Dynamics Corp (GD):MIXED
- EPS: $2.88 vs. $2.93 expected (Miss)
- Revenue: $10.731 billion vs. $10.32 billion expected (Beat)
Biogen Inc (BIIB). MIXED
- Adj. EPS: $3.67 vs. $3.45 expected (Beat)
- Revenue: $2.29 billion vs. $2.31 billion expected (Miss)
Humana Inc (HUM): BEAT
- EPS: $7.23 vs. $6.12 expected (Beat)
- Revenue: $29.6 billion vs. $28.47 billion expected (Beat)
Hasbro Inc (HAS): BEAT
- EPS: $0.61 vs. $0.27 expected (Beat)
- Revenue: $0.75 billion vs. $0.74 billion expected (Beat)
AT&T Inc (T): MIXED
- Adj. EPS: $0.55 vs. $0.54 expected (Beat)
- Revenue: $30.03 billion vs. $30.54 billion expected (Miss)
Otis Worldwide Corp (OTIS): MIXED
- EPS: $0.88 vs. $0.87 expected (Beat)
- Revenue: $3.4 billion vs. $3.46 billion expected (Miss)
Thermo Fisher Scientific Inc (TMO): MIXED
- Adj. EPS: $5.11 vs. $4.71 expected (Beat)
- Revenue: $10.1 billion vs. $10.17 billion expected (Miss)
Hilton Worldwide Holdings Inc (HLT): BEAT
- EPS: $1.53 vs. $1.42 expected (Beat)
- Revenue: $2.57 billion vs. $2.52 billion expected (Beat)
Yesterday after the close Tesla MISSED on both the top and bottom lines, but the market fell in love with the idea of new more affordable models coming to market (and sooner than expected). The price is up 12.09% in pre-market trading. Visa and Texas Instrument also reported with Visa up 2.44% and Texas Instrument up 6.97% after beating.
US major indices are trading mixed with Dow down marginally, the S&P and Nasdaq indices implying a higher open led by the Nasdaq index.
Other key earnings to be released this week:
Other key earnings this week:
- Wedsnesday after the close: Meta Platforms, IBM, Ford, Chipotle, ServiceNow, Lamb Research
- Thursday: American Airlines, Caterpillar, Southwest, Bristol-Myers Squibb. After close Microsoft, Alphabet, Intel, Western Digital, T-Mobile, Gilead.
- Friday: Exxon Mobil, Chevron, Colgate-Palmolive.
A snapshot of the other markets as the North American session begins currently shows.:
- Crude oil is trading down -$0.33 or -0.41% at $83.02. At this time yesterday, the price was at $81.30
- Gold is trading down -$6.50 or -0.29% at $2314.95. At this time yesterday, the price was higher at $2300.41
- Silver is trading down -$0.20 or -0.74% at $27.08.. At this time yesterday, the price was at $26.94
- Bitcoin currently trades at $66,615. At this time yesterday, the price was trading at $66,051
In the premarket, the US major indices are trading mostly higher. The major indices are on a two day one streak this week.:
- Dow Industrial Average futures are implying a gain of 8.31 points. Yesterday, the index rose 263.71 points or 0.69% at 38503.70.
- S&P futures are implying a gain of 12.70 points. Yesterday, the index rose 59.97 points or 1.20% at 5070.56
- Nasdaq futures are implying a gain of 117 points. Yesterday, the index rose 248.33 points or 1.59% at 15696.64
The European indices are trading mostly higher ahead of the US open:
- German DAX, +0.27%
- France CAC , +0.49%
- UK FTSE 100, +0.56%
- Spain's Ibex, -0.12%
- Italy's FTSE MIB, +0.11% (delayed 10 minutes)
Shares in the Asian Pacific markets were mostly higher
- Japan's Nikkei 225, +2.42%
- China's Shanghai Composite Index, +0.76%
- Hong Kong's Hang Seng index, +2.21%
- Australia S&P/ASX index, -0.01%
Looking at the US debt market, yields are trading higher, but marginally lower than the levels at this time yesterday:
- 2-year yield 4.939%, +3.4 basis points. At this time yesterday, the yield was at 4.997%
- 5-year yield 4.663%, +4.2 basis points at this time yesterday, the yield was at 4.690%
- 10-year yield 4.639%, +4.2 basis points. At this time yesterday, the yield was at 4.648%
- 30-year yield 4.759%, +3.7 basis points. At this time yesterday, the yield was at 4.750%
Looking at the treasury yield curve spreads moved more inverted:
- The 2-10 year spread is at -30.1 basis points. At this time yesterday, the spread was at -34.8 basis points
- The 2-30 year spread is at -18.0 basis points. At this time yesterday, the spread was at -24.7 basis points
European benchmark 10-year yields are higher:
