Friday, May 18, 2018

"Markets are Uninspired Ahead of the Weekend"

From Marc to Market:
The US dollar is mostly firmer. US yields have stabilized. Asian equities were mostly higher, while European bourses are struggling. Oil prices are steady.

There have been a number of sustained trends in the markets that we have been monitoring. The euro, for example, has fallen each day this week. It recorded its low for the year on Wednesday near $1.1765. It has been unable to distance itself much from the low. It has straddled the $1.18 level, where there is a 1.9 bln euro option expiring today. With this week in tow, the euro has fallen in 10 of the past 13 weeks.

With the help of a softer CPI report, the yen's declining streak is being extended. The greenback briefly traded above JPY111.00 for the first time since January 23. The dollar is higher against the yen for the fifth consecutive session, and eighth consecutive week.

Rising Japanese equities seems like one of the strongest trends in the equity markets. The Nikkei closed higher for the eighth consecutive week and 10th week in the past 11. Over this period, it has risen by about 8.25%.

The Dow Jones Stoxx 600 is off by about 0.25%, but this is not enough to turn the week negative. This European benchmark is still up about 0.5% on the week. Provided the session's losses do not accelerate after the session open, it will be the eighth consecutive weekly advance; during which time it has risen by almost 7.9%.

Another trend has been US yields. The US 10-year yield has risen for the past five sessions, coming into today. It has risen for 11 of the past 14 sessions and five of the past seven weeks. The 10-year yield finished last week near 2.97%. It reached almost 3.12% earlier today, before pulling back a little. It is straddling the 3.10% area now....