- US housing starts for April 1.401M vs. 1.400M estimate
- Biden speaks on debt ceiling: Says he's confident on agreement
- House Speaker McCarthy: We have a structure to find a way to come to a conclusion
- EIA weekly crude oil inventories +5040K vs -920K expected
- Atlanta Fed GDPNow tracker rises to 2.9% from 2.6% yesterday
- US treasury auctions $15 billion of 20 year bonds at a high yield of 3.954%
- US regional bank shares pop after Western Alliance reports deposit growth
- Reuters Poll: 65% expect Fed funds to be at 5% – 5.25% at end of year
- WTI crude oil up $1.89 $72.75
- US 10-year yields up 2.4 bps to 3.57%
- Gold down $5 to $1982
- S&P 500 rallies 46 points or 1.1%
- NZD leads, JPY lags
Better comments on the debt ceiling appeared to trigger a round of risk trades, though it was a bit of delayed, choppy reaction before stock and USD/JPY took off. There are plenty of people (myself included) that are waiting for some kind of panic around the ceiling to buy risk assets but the price action today suggests there has been a steady drag on risk assets that hasn't showed up as a jump in the VIX.
An alternative view of the risk-positive price action today is that retailers haven't been as negative as feared, especially after some worries from Home Depot yesterday. Today, Target affirmed full year forecasts (despite seeing weakness in Q2) and shares of the company rose 2.6%.
A chart on many screens at the moment is USD/JPY as it approaches the 138.00 that's held twice this year, in late April and early Mach. A break would clear the way for a return to the 140s as the mon pol divergence remains wide. Adding to that has been the better tone of economic data this week, including core US retail sales and industrial production. The housing stars numbers today were neutral and the Fed docket was quiet.
EUR/USD is also in focus as it flirts with 1.08 to the downside. It briefly hit a six-week low today before a moderate bounce.
The other spot dollar traders are watching is fixed income as US 10-year yields approach the two-month range high of 3.64%. Yields have risen in four straight days and are at 3.57%.