Wednesday, May 29, 2024

Capital Markets: "Stocks and Bonds Retreat; Greenback Extends Recovery but Little Changed Ahead of North American Session"

A bit surprised that commodities and equities didn't trade worse than they did after lousy 2-year and 5-year Treasury note auctions yesterday.

From Marc to Market:

Overview: Stocks and bonds are lower today, and the dollar is slightly firmer having extended yesterday's recovery. Most of the G10 currencies are lower, though the Japanese yen has recovered from after falling to its lowest level since May 1. Slightly softer than expected German states' CPI did the euro no favors. It was sold to a three-day low near $1.0830 before stabilizing. Sterling steadied after dipping briefly below $1.2750. Most emerging market currencies are lower. The Mexican peso and South African rand are exceptions, posting minor gains. The Chinese yuan edged lower and has not risen against the dollar since May 15. 

Asia Pacific equities sold off, and Chinese mainland indices managed to buck the regional move that saw Australia, Hong Kong, South Korea, and several smaller bourses drop more than 1%. Europe's Stoxx 600 is off about 0.6%, the same as yesterday. US futures indices are 0.5%-0.7%, signaling a gap lower opening is possible. Bonds are finding no comfort. The 10-year JGB yield jumped nearly six basis point to 1.07%, the highest since the end of 2011. European benchmark yields are 2-4 bp higher, though the 10-year Gilt yield is more than five basis points higher. The 10-year Treasury yield is up nearly two basis points around 4.57%. Gold is trading heavier but has held above yesterday's low near $2340. July WTI gapped higher yesterday and reached nearly $80.30 yesterday, its best level since May 1. It is traded up to almost $80.60 today but has not settled above $80 this month. It reached a low before last week near $76, a two-month low....