From Marc to Market:
Overview: Market optimism over the possibility of a vaccine in early 2021 overshadowed the continued surge in US cases, where the 50k-a-day threshold of new cases has been breached. Following the NASDAQ close yesterday at record highs, global equities have advanced. Led by Hong Kong returning from yesterday's holiday, Asia Pacific equities rallied. Most local markets rose by more than 1%, though Tokyo and Taiwan lagged. Europe's Dow Jones Stoxx 600 is up over 1% to extend its rally for the fourth consecutive session. The S&P 500 is trading more than 0.5% higher in electronic trade, which is sufficient to take out a month-old downtrend line. The equity rally has not sapped demand for government bonds, and peripheral European yields are off 3-5 bp. The US 10-year is little changed around 67 bp. The dollar has been sold against nearly all the world's currencies. Among the majors, the Canadian dollar is struggling to join the party, while among emerging market currencies, Indonesia, Thailand, and Turkey are the notable exceptions. Gold is firm above $1770, while August WTI continues to straddle the $40 a barrel level. Note that some US markets close early today ahead of tomorrow's holiday and liquidity will suffer for it after the flurry of US data.....MUCH MORE
Asia Pacific
Australia's May trade figures were better than expected. Exports fell by 4% year-over-year. This compares with an 11% decline in April and expectations for a 7% drop in May. Imports were off 10% in April and were off only 6% in May. This, too, was better than economists expected. The result was the trade surplus came in at A$8 bln after a revised A$7.8 bln in April. Goods exports to China rose in May, but to most other countries, except New Zealand and Hong Kong.
South Korea emerged from deflation in May. The headline CPI rose 0.2% in May for a flat year-over-year performance. In April, consumer prices had fallen by 0.3% year-over-year. Core prices ticked up to 0.6% year-over-year from 0.5% in April.
The dollar posted a potential key downside reversal yesterday, but new selling has been limited. Yesterday the dollar rose above recent high but met a wall of sellers near JPY108.15 that drove it through the previous session's low (~JPY107.50) and closed below there. Today's low is near JPY107.30. There is an option for $950 mln at JPY107.50 and another for about $475 mln at JPY107.00. Both expire today. The Australian dollar is firm in the upper end of yesterday's range. It is trading through a downtrend line drawn off the June 10 high. The next target is near $0.6950, where an option for about A$505 mln is struck that rolls off today. The PBOC set the reference rate for the dollar a little softer than the models suggested at CNY7.0566. The yuan has risen its highest level in about a month against its basket.
Europe
The eurozone wholesale deflation intensified in May. Producer prices fell 5.0% year-over-year in May after a 4.5% decline in April. In May alone, they fell by 0.6%, a bit more than expected. Energy and construction accounted for about half of the monthly decline. Non-durable consumer goods prices fell 0.6% in May and were up less than 1% for the year. Durable consumer goods prices were unchanged and up 1.3% year-over-year. Capital goods prices were also stable in May but were 0.9% higher from a year ago....
