The NZD is the strongest and the USD is the weakest as the North American session begins. The NZD benefitted from a surprise trade surplus of 427M vs -1310M deficit expected. Next week, the expectations are for a 25 basis point hike to 5.5%.
- 21 of 25 analysts polled expect the RBNZ to raise its official cash rate by 25 bps to 5.50% at its May 24 meeting
- remaining 4 expect no change
- The largest banks in the country - ANZ, ASB, Bank of New Zealand, Kiwi Bank and Westpac - expect a 25 bps hike
- 14 of 21 forecast rates to stay at 5.50% next quarter. Of the others, four saw rates at 5.75% or higher and three at 5.25%
Today, Fed Chair Powell will lead a list of Fed speakers (ECBs Lagarde will also be speaking later in the day). Fed's Logan yesterday said that she would currently support a 25 basis point hike at the meeting in June. Fed's Jefferson was a bit more two way. Fed's Bullard (more of a hawk), could see a 25 basis point hike as well but will continue to watch the data. As the regional bank crisis fades, the Fed tone seems to be shifting back toward the inflation bias.
On the economic calendar in the North American session, there are no economic releases scheduled in the US, but Canada will release retail sales at 8:30 AM ET with expectations of -1.3% (vs -0.2% last month). The core measure is expected to decline -0.8% vs -0.7% last month.
Once again, Fed speak will be highlighted by Fed Powell who will speak at 11 AM ET. Below is a list and details of other Fed speakers along with ECB's Lagarde. Lagarde reiterated in the European session this morning that the ECB still needs to have sustainably high interest rates in the euro zone. However she also did say that the ECB is at a critical moment with inflation start to ebb. Eurozone CPI came in at 7.0% this month while the core measure came in at 5.6% (high for the move higher was only at 5.7%). Both measures are still well above the inflation target.
FOMC Member Williams Speaks
- Time: 8:45am (local time)
- Location: He is due to speak at the Thomas Laubach Research Conference, in Washington DC.
FOMC Member Bowman Speaks
- Time: 9:00am (local time)
- Speaker: Federal Reserve Governor Michelle Bowman
- Location: She is due to speak at the Texas Bankers Association Annual Convention, in San Antonio. Audience questions are expected.
Fed Chair Powell Speaks
- Time: 11:00am (local time)
- Speaker: Federal Reserve Chair Jerome Powell
- Location: He is due to participate in a panel discussion titled "Perspectives on Monetary Policy" at the Thomas Laubach Research Conference, in Washington DC.
ECB President Lagarde Speaks
- Time: 3:00pm (local time)
- Speaker: ECB President Christine Lagarde
- Location: She is due to deliver a pre-recorded video speech titled "Post-pandemic challenges: High inflation, high indebtedness and financial stability" at the Central Bank of Brazil's High-Level Seminar on Central Banking, in São Paulo.
In other news, the debt ceiling talks will continue sans the US President directly. Pres. Biden continues his participation at the G7 meeting in Japan, but is monitoring discussions. It was reported that prison Biden was planning on leaving a G7 leaders dinner early. Meanwhile, at the G7, Ukraine's President, Volodymyr Zelensky, will be present in person (unexpectedly). While the Ukrainian conflict was already a primary agenda, Zelensky's presence underscores Ukraine's appeal for increased Western military support.
Biden is scheduled to return from the G7 meeting on Sunday. Yesterday, positive remarks from lawmakers in Washington gave the stock market a boost. Although the ball seems to moving forward down the field with expectations of a vote next week, the looming issue of the U.S. reaching a damaging default persists and continues to threaten the markets. There was some discussion from Democratic Senators to prepare for the use of the 14th Amendment to avoid a default (which can be used to define a debt default as unconstitutional).
U.S. stock futures today are marginally higher after yesterday's gains saw the S&P close just below the key 4200 level:
- Dow Industrial Average Rose up 115.14 points or 0.34%
- S&P index rose 39.28 points or 0.94% at 4198.06. The 4200 level is a key level for traders.
- NASDAQ index led the way with a gain of 188.26 points or 1.51% at 12688.83 (the highest level since August 2022).
Oil prices are rebounding higher today. Oil is on pace to break a 4-week moving streak. Crude oil is up $3.06 or 4.37%.
Yields are marginally higher. Gold is also higher reacting to the lower dollar after yesterday's sharp declines on the dollar's rise.
A snapshot of the markets currently shows:
- WTI crude oil is up $0.98 or 1.36% at $72.90
- Gold is up $6.50 or 0.33% at $1964.16.
- Silver is up $0.10 or 0.43% at $23.57
- Bitcoin is trading at $26,887 which is marginally higher than the $26,734 price near the 5 PM ET end of the day yesterday
in the US stock market, the major indices are marginally higher:
- Dow Industrial Average up 98 points after yesterday's 115-point rise
- S&P index up 12 points after yesterday's 39.28-point rise. The present premarket is above the key 4200 level.
- NASDAQ index up 15 points after yesterday's 188.26-point rise
in the European equity markets, the German DAX continues its run to the upside and is testing the all-time high at 16290.19
- German DAX is up 120.72 points or 0.75% at 16283.89. The high price reached 16289.20 just short of the all-time high of 16290.19
- Frances CAC is up 59.31 points or 0.79%
- UK's FTSE 100 is up 33.56 points or 0.43%
- Spain's Ibex is a 49.3 points or 0.54%
- Italy's FTSE MIB is up 384 points or 1.41%
In the US at that market, yields are marginally higher after gains yesterday saw the 2 year rise about 10 basis points and the 10 year rise about 6.8 basis points:
- 2 year yield 4.268% +0.1 basis points
- 5 year yield 3.709% +1.1 basis points
- 10 year yield 3.665% +1.7 basis points
- 30 year yield 3.917% +1.7 basis points
In the European debt market, the benchmark 10 year yields are higher:
