From Marc to Market:
Overview: New week, same refrain. Stocks down, yields up, and the dollar is broadly higher. The Nikkei and Taiwan fell by more than 2% and South Korea and Australia were off more than 1%. China's Shanghai and Shenzhen rose, but the CSI 300 fell again. Europe's Stoxx 600 is off around 1.5% near midday in Europe. US futures are 1.5%-2.0% lower. The US 10-year yield is near 3.20%. European bond yields are 3-8 bp higher. The core-periphery spreads are widening, and Italy now offer around 205 bp more than Germany on 10-year bonds. The dollar rules the roost. Among the majors, the Antipodean are leading the losses with declines of about 1%. In the emerging market complex the Russian rouble is off 3.4% followed by the South African rand's 1% decline.
Gold is off more than 1% near $1863. It peaked last week on Thursday near $1910. June WTI is a couple of bucks softer as its pulls away from $110 to trade near $107. US nat as is up 2.3% after falling 8.4% before the weekend. Europe's benchmark is off 4%, extending the pre-weekend 9.7% drop. Iron ore is off 6%, matching the loss from all last week. June copper sliding 2.6%. Last week it fell 3.2% and is off more than 10% in the past three weeks. It is at new lows for the year today. July wheat is rising for the fourth session. It rose 5% last week and is up around 1.4% today.
Asia Pacific
China reported April reserve and trade data. The dollar value of reserves fell 2.1% (~$68.3 bln), the most since November 2020. While there were portfolio capital outflows, the primary driver was valuation as foreign currencies slumped against the dollar and the price of financial assets fell. April was the fourth consecutive month; the dollar value of the reserves fell. At $3.120 trillion, they are at the lowest since June 2020.
China's trade surplus increased to $51.1 bln in April from $47.4 bln in March. Exports slowed to 3.9% year-over-year from 14.7% in March. Still, they held up better than expected. Imports for flat after slipping 0.1% in March. The rise in prices concealed a decline in the volume of commodity imports, including coal, oil, natural gas, and steel. The 57% rise imports from Russia were impacted by this. China's exports to Russia slowed. Exports to the US rose 9.4%. Separately, China's Premier Li, who will not serve a third term as President Xi is expected to secure later this year, gave his gravest warning about the economy, calling it "complicated and grave". He called on all levels of government to help businesses retain employment. The lockdowns in Beijing and Shanghai intensified over the weekend. Japan, the world's third-largest economy, likely contracted in Q1, but is recovering. The April service and composite PMI were revised higher from the flash estimates. The service PMI rose to 50.7 from 50.5 of the preliminary estimates and 49.4 in March. It was the first reading this year above the 50 boom/bust level. The composite PMI stands at 51.1, up from 50.9 initially, and 50.3 in March. It is the highest print this year....
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