Headlines:
- DBRS Morningstar places US ratings under review with negative implications
- ECB's Villeroy: Rates should peak in the next three meetings
- ECB's de Guindos: Wages pose upside risk to inflation outlook
- BOJ's Ueda reaffirms to patiently continue with monetary easing
- Germany Q1 final GDP -0.3% vs 0.0% q/q prelim
- Germany June GfK consumer sentiment -24.2 vs -24.0 expected
- France May business confidence 100 vs 101 expected
- UK May CBI retailing reported sales -10 vs 10 expected
- Ofgem announces lower price cap for energy bills
Markets:
- USD leads, NZD lags on the day
- European equities mostly lower; S&P 500 futures up 0.6%
- US 10-year yields up 0.9 bps to 3.755%
- Gold up 0.2% to $1,961.93
- WTI crude down 1.6% to $73.00
- Bitcoin down 0.2% to $26,277
There are murmurs of optimism on US debt ceiling talks but nothing really concrete, as the X-date looks likely to be pushed to the first week of June. Earlier in the day, Fitch moved to place US' AAA rating on negative watch and DBRS Morningstar has now followed on that as well.
That is leading to mixed sentiment in the equities space. Dow futures are down slightly but tech stocks are continuing to surge higher, led by Nvidia's strong earnings beat. Nasdaq futures are up nearly 2% on the day and that is highlighting a bit of a contrasting mood ahead of the Wall Street open.
In FX, the dollar continues to stay in the driver's seat as it is holding gains from yesterday. The advance today is more evident against the euro and the antipodeans but the technical picture is still positive mostly across the board for the dollar:
- EUR/USD at two month-lows as sellers hold their nerve
- USD/JPY continues to look poised in hunt towards 140.00 mark
- GBP/USD starts to get dragged back into the mud again
- USD/CAD buyers hopeful on latest upside break
- AUD/USD looks towards 0.6500 again in latest downside break
- NZD/USD looks for downside break in fall to lowest levels this year
The dollar was steady throughout European morning trade with Treasury yields also holding just a touch higher on the day.
In terms of data, we saw German Q1 GDP get revised lower and that signaled a winter recession. The euro wasn't too heavily impacted but it does add risks to the outlook for the euro area in Q2 despite some resilient data in the services sector.
It's now over to US trading where we will get Q1 GDP second estimate and the weekly initial jobless claims next.
