Europe shuts down for Labor Day

EU mid-market update: Eyes on Fed outlook; Europe shuts down for Labor Day; Bitcoin keeps falling.

Notes/observations

- Quiet session of news due to Labor Day holiday across most of Europe, trading is closed except for the UK.

- Two major events in focus. Fed rate decision and Treasury’s Quarterly Refunding announcement. FOMC are expected to leave policy unchanged, focus is on the visibility for the rest of the year, with market rate cut expectations continually trimmed as economic data paints a more positive picture. Chair Powell to speak at 14:30 ET in presser.

- Upcoming US premarket earnings: ADP, AVT, COR, CVE, CVS, EL, FLEX, GOLD, JCI, MA, MAR, PFE, PPL, SMG, WEC, YUM.

- Partial Asia close with ASX200 underperforming -1.2%. UK FTSE +0.1%. US futures are -0.6% to -0.1%. Gold +0.1%, DXY +0.1%; Commodity: Brent -1.4%, WTI -1.5%; Crypto: BTC -7.2%, ETH -5.9%.

Asia

- Japan Apr Final Manufacturing PMI: 49.6 v 49.9 prelim (confirmed its 11th month of contraction).

- Australia Apr Final PMI Manufacturing: 49.6 v 49.9 prelim (confirmed 3rd month of contraction).

- New Zealand Q1 Unemployment Rate: 4.3% v 4.2%e (three year high).

- Bank of Japan (BoJ) accounts data suggests ¥5.26-5.55T (~$37B) of FX intervention on Mon, Apr 29th.

Global conflict/tensions

- Israel reportedly ready to send a delegation to Cairo in the coming days to discuss ceasefire.

Energy

- Weekly API Crude Oil Inventories: +4.9M v -3.2M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 closed, FTSE +0.20% at 8,160.09, DAX closed, CAC-40 closed, IBEX-35 closed, FTSE MIB closed, SMI closed, S&P 500 Futures -0.31%].

Market focal points/key themes: Virtually all European bourses closed for holiday; UK only major market open in the European session, with the FTSE 100 trending higher in the early part of the session; Trinity Exploration to be acquired by Touchstone Exploration; BBVA proposes to merge with Sabadell'; focus on FOMC rate decision later in the day; earnings expected in the upcoming US session include Mastercard, Qualcomm, Pfizer and Automatic Data Processing.

Equities

- Consumer discretionary: Next [NXT.UK] -1.0% (trading update).

- Healthcare: GSK [GSK.UK] +2.0% (earnings, raises guidance), Smith & Nephew [SN.UK] +3.5% (trading update, below estimates), Haleon [HLN.UK] -2.0% (profit beat estimates, affirms FY guidance).

- Industrials: Aston Martin [AML.UK] -7.0% (earnings, misses estimates).

- Technology: IQE [IQE.UK] -1.0% (in sympathy with Super Micro and AMD).

- Telecom: Spirent Communications [SPT.UK] -0.5% (trading update).

Speakers

- None seen.

Currencies/fixed income

- FX trading was quiet with all of continental Europe closed for May Day holiday. Focus on the upcoming FOMC rate decision where analysts expect the Fed top keep policy steady. The trend of higher for longer rate outlook continued as Fed futures prices less than a 10% chance for a rate cut at June 12th's meeting and under a 25% chance a cut by July 31st's meeting. Dealers suspect that Powell would likely to repeat a message that recent data had "clearly not given us greater confidence" that inflation would continue declining to 2%.

- EUR/USD drifted higher towards 1.0670 in a quiet session with Continental Europe out for May Day holiday.

- USD/JPY inched higher towards the 158 level despite BoJ accounts data suggesting approx. 37B of FX intervention back on on Mon, Apr 29th.

Economic data

- (NL) Netherlands Mar Retail Sales Y/Y: 4.8% v 3.7% prior.

- (NL) Netherlands Apr Manufacturing PMI: 51.3 v 49.7 prior (1st expansion in 20 months).

- (UK) Apr Nationwide House Price Index M/M:-0.4% v + 0.1%e; Y/Y: 0.6% v 1.2%e.

- (GR) Greece Apr Manufacturing PMI: 55.2 v 56.9 prior (15th month of expansion).

- (UK) Apr Final Manufacturing PMI: 48.7e v 48.7 prelim (confirmed move back into contraction).

Fixed income issuance

- (UK) DMO sold £3.75B in 4.625% Jan 2034 Gilts; Avg Yield: 4.371% v 4.015% prior; bid-to-cover: 3.10x v 3.33x prior; Tail: 1.0bps v 0.7bps prior.

Looking Ahead

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- (IL) Israel Mar Leading 'S' Indicator M/M: No est v 0.5% prior.

- (US) Apr Total Vehicle Sales Seasonally Adj Rate (SAAR): No est v 15.00M prior.

- 06:00 (IE) Ireland Apr Unemployment Rate: No est v 4.3% prior.

- 07:00 (US) MBA Mortgage Applications w/e Apr 26th: No est v -2.7% prior.

- 07:00 (UK) Weekly PM Question time in House.

- 08:15 (US) Apr ADP Employment Change: +180Ke v +184K prior.

- 08:30 (US) US Treasury Quarterly Refunding.

- 09:30 (CA) Canada Apr Manufacturing PMI: No est v 49.8 prior.

- 09:45 (US) Apr Final S&P Manufacturing PMI: 49.9e v 49.9 prelim.

- 10:00 (US) Mar JOLTS Job Openings: 8.690Me v 8.756M prior.

- 10:00 (US) Apr ISM Manufacturing: 50.0e v 50.3 prior; Prices Paid: 55.4e v 55.8 prior; New Orders: 51.0e v 51.4 prior; Employment: 48.2e v 47.4 prior.

- 10:00 (US) Mar Construction Spending M/M: +0.3%e v -0.3% prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:00 (PE) Peru Apr CPI M/M: 0.3%e v 1.0% prior; Y/Y: 2.7%e v 3.1% prior.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 13:30 (EU) ECB’s De Cos (Spain).

- 14:00 (US) FOMC Interest Rate Decision: Expected to leave Target Range unchanged at 5.25-5.50%.

- 14:30 (US) Fed Chair Powell post rate decision press conference.

- 16:10 NZ) RBNZ testified in Parliament on Financial Stability Report.

- 18:45 (NZ) New Zealand Mar Building Permits M/M: No est v 14.9% prior.

- 19:00 (KR) South Korea Apr CPI M/M: 0.1%e v 0.1% prior; Y/Y: 3.0%e v 3.1% prior; CPI Core Y/Y: 2.3%e v 2.4% prior.

- 19:50 (JP) Bank of Japan (BOJ) Summary of Opinions for April.

- 19:50 (JP) Bank of Japan (BOJ) Mar MPM Minutes (2 decisions ago).

- 19:50 (JP) Japan Apr Monetary Base Y/Y: No est v 1.6% prior.

- 20:30 (KR) South Korea Apr PMI Manufacturing: No est v 49.8 prior.

- 20:30 (TW) Taiwan Apr PMI Manufacturing: No est v 49.3 prior.

- 20:30 (ID) Indonesia Apr PMI Manufacturing: No est v 54.2 prior.

- 20:30 (MY) Malaysia Apr PMI Manufacturing: No est v 48.4 prior.

- 20:30 (PH) Philippines Apr PMI Manufacturing: No est v 50.9 prior.

- 20:30 (TH) Thailand Apr PMI Manufacturing: No est v 49.1 prior.

- 20:30 (VN) Vietnam Apr PMI Manufacturing: No est v 49.9 prior.

- 21:30 (AU) Australia Mar Trade Balance (A$): 7.3Be v 7.3B prior; Exports M/M: No est v -2.2% prior; Imports M/M: No est v 4.8% prior.

- 21:30 (AU) Australia Mar Building Approvals M/M: +3.4%e v -1.9% prior; Private Sector Houses M/M: No est v 10.7% prior.

- 23:30 (JP) Japan to sell 3-Month Bills.