Notes/observations

- European indices have begun the day mostly in positive territory, led by real estate and industrials, mirroring the buoyant sentiment seen in the Asian markets. While Japan, Australia, and Taiwan enjoyed gains, mainland China lagged behind. In the US, futures gained momentum, buoyed by the rise of growth stocks in Japan and a rally in real estate in China. Meanwhile, long-end Treasuries strengthened, but Australia's short end softened. EU bonds yields decline with longer end of Italian curve taking most attention. The dollar is showing moderate weakness. Oil held overnight gains as IEA Monthly Report (OMR) cut 2024 forecasts but kept 2025 mostly steady.

- Euro Zone Q1 GDP preliminary reading (2nd of 3 readings) continues to suggest fastest growth since Q3 2022, after continent has battled with stagflation for last 18 months.

- Focus remains on key economic indicators, particularly after US PPI, which exceeded expectations, though its impact on the Fed’s preferred Personal Consumption Expenditures (PCE) deflator was tempered. Fed Chair Powell characterized the results as mixed, signaling no immediate rate hike. Attention now shifts to the eagerly awaited CPI at 08:30 ET.

- In the Asia-Pacific region, President Biden's announcement of tariff hikes on Chinese imports, including electric vehicles, stirred concerns, prompting China to vow "resolute measures" in response. Additionally, Australia's federal budget revealed larger deficits than anticipated, while the People's Bank of China (PBOC) maintained the MLF rate unchanged. However, Australia's Q1 Wage Price Index showed a slowdown, adding to regional economic dynamics.

- Tier1 analysts US May Spending Survey (conducted May 8-13th) noted that New Vehicle next 12-month spending expectations have increased significantly in May on a sequential and Y/Y basis to highest level since Jan 2023, with 43.0% of respondents expecting to buy a vehicle vs. 35.8% last month and 41.2% last year; Plans to buy a New Home over the next 12 months have returned to 20%+ levels for the first time in twelve months and increased from 18.5% last month to 24.3% in May.

- Asia closed mixed with Shanghai underperforming -0.8%. EU indices are -0.1% to +0.6%. US futures are 0.0%. Gold +0.6%, DXY -0.2%; Commodity: Brent +0.6%, WTI +0.6%; Crypto: BTC +0.3%, ETH -0.5%.

Asia

- China PBOC conducted CNY125.0B in 1-Year Medium Term Lending Facility (MLF) with Rate unchanged at 2.50%- 21:30 (AU) Australia Q1 Wage Price Index Q/Q: 0.9%e v 0.9% prior; Y/Y: 4.2%e v 4.2% prior.

- Australia Q1 Wage Price Index Q/Q: 0.8% v 0.9%e; Y/Y: 4.1% v 4.2%e.

- Chinese govt is considering purchasing unsold Chinese homes in an attempt to ease the supply glut.

Europe

- France central bank (BdF) forecasted slight Q2 GDP growth after +0.2% in Q1.

Americas

- Fed's Schmid (non-voter; hawk) saw signs that inflation was easing but more work to do; Rates could remain high for some time.

- Fed's Mester (voter) noted that Fed was in a really good place to study the economy and review a range of risks before setting the rate path. Too early to conclude that inflation would reverse; Not eager to consider rate hikes.

- Fed Chair Powell noted that PPI reading was quite mixed rather than hot. Noted that did not think the next move will be a hike, but more likely we hold rates where they were.

Energy

- Weekly API Crude Oil Inventories: -3.1M v +0.5M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.33% at 523.38, FTSE +0.37% at 8,458.97, DAX +0.50% at 18,817.35, CAC-40 -0.10% at 8,217.90, IBEX-35 +0.47% at 11,292.50, FTSE MIB +0.53% at 35,337.00, SMI +0.21% at 11,809.31, S&P 500 Futures +0.04%].

Market focal points/key themes: European indices open generally higher and trended upward through the early part of the session; among sectors leading to the upside are energy and financials; while consumer discretionary and health care were among the chief laggard sectors; oil & gas subsector supported following OPEC monthly report'; focus on release of US CPI later in the day; reportedly Repsol in talks to sell a state in renewables business; earnings expected in the upcoming US session include Cisco, Grab Holdings, Dynatrace and Dole.

Equities

- Consumer discretionary: TUI [TUI.DE] +1.5% (earnings; booking color), Burberry Group [BRBY.UK] -2.5% (earnings; sees H1 to remain challenging) - Consumer staples: Imperial Brands [IMB.UK] +4.0% (earnings) - Energy: Neste Oil [NESTE.FI] -12.5% (guidance cut and analyst downgrade).

- Financials: Commerzbank [CBK.DE] +3.5% (earnings; raises outlook), Allianz [ALV.DE] -1.5% (earnings), ABN Amro [ABN.NL] -5.5% (earnings).

- Healthcare: Merck KGaA [MRK.DE] +4.5% (earnings).

- Industrials: Thyssenkrupp [TKA.DE] -6.5% (earnings; cuts outlook), Hapag-Lloyd [HLAG.DE] -1.0% (earnings; raises lower-end of outlook), Experian [EXPN.UK] +8.5% (earnings).

Speakers

- ECB Villeroy (France) reiterated view that very likely to begin cutting rates in June. Domestic economy is robust, see a recovery next year. Oil market looked more balanced overall in 2025.

- ECB’s Rehn (Finland) stated that if inflation continued to approach target, then could cut rates.

- ECB's Muller (Estonia, hawk) commented that a June rate cut was very probable but the rate path over rest of 2024 was more complicated.

- Sweden Central Bank (Riksbank) May Minute noted that Policy Rate could be cut two more times during H2 of year.

- Turkey Fin Min Simsek reiterated stance to do whatever it take to bring inflation down. Monetary policywais tight enough to anchor inflationary expectations.

- German Chemical Industry Association (VCI) saw 2024 production values to rise by 3.5%.

- IEA Monthly Oil Report (OMR) cut the 2024 global oil demand growth from 1.2M bpd to 1.1M bpd whuke raising the 2025 global oil demand growth from 1.1M bpd to 1.2M bpd.

Currencies/fixed income

- USD was consolidating its post PPI and Fed Chair Powell comment losses on Wed with focus on upcoming US CPI reading.

- EUR/USD at 1-month highs above 1.0830.

- GBP/USD holding above the 1.26 level.

- USD/JPY moved off its 2-month highs to test the 155.60 area during the session. The 160 area remained pivotal resistance.

Economic data

- (FI) Finland Mar GDP Indicator Y/Y: -0.8% v +1.5% prior.

- (SE) Sweden Apr CPI M/M: 0.3% v 0.4%e; Y/Y: 3.9% v 4.0%e; CPI Level: 415.50 v 416.02e.

- (SE) Sweden Apr CPIF M/M: 0.3% v 0.4%e; Y/Y: 2.3% v 2.4%e.

- (SE) Sweden Apr CPIF (ex-energy) M/M: 0.3% v 0.4%e; Y/Y: 2.9% v 3.0%e.

- (NO) Norway Apr Trade Balance (NOK): 65.3B v 63.3B prior.

- (DK) Denmark Apr PPI M/M: +0.8% v -0.9% prior; Y/Y: -0.9% v -1.5% prior.

- (RO) Romania Q1 Advance GDP (1st of 3 readings) Q/Q: 0.5% v 0.9%e; Y/Y: 0.1% v 2.7%e.

- (FR) France Apr Final CPI M/M: 0.5% v 0.5% prelim; Y/Y: 2.2% v 2.2% prelim; CPI Ex-Tobacco Index: 119.01 v 119.03e.

- (FR) France Apr Final CPI EU Harmonized M/M: 0.6% v 0.6% prelim; Y/Y: 2.4% v 2.4% prelim.

- (NL) Netherlands Q1 Preliminary GDP Q/Q: -0.1% v 0.3%e; Y/Y: -0.7% v -0.4% prior.

- (NL) Netherlands Mar Trade Balance: €13.6B v €11.6B prior; Exports Y/Y: -5.9 v -7.0% prior; Imports Y/Y: -0.3 v -4.6% prior.

- (NL) Netherlands Mar Consumer Spending Y/Y: 0.4% v -\20.2% prior.

- (PL) Poland Apr Final CPI M/M: 1.1% v 1.0% prelim; Y/Y: 2.4%v 2.4% prelim.

- (PL) Poland Q1 Preliminary GDP Q/Q: 0.4% v 0.6%e ; Y/Y: 1.9% v 1.8%e.

- (TR) Turkey Apr Central Govt Budget Balance (TRY): -177.8B v -209.0B prior.

- (IT) Italy Mar General Government Debt: €2.895 v €2.871T prior (record level).

- (EU) Euro Zone Q1 Preliminary GDP (2nd of 3 readings) Q/Q: 0.3% v 0.3% advance; Y/Y: 0.4% v 0.4% advance.

- (EU) Euro Zone Q1 Preliminary Employment Q/Q: 0.3% v 0.3% prior; Y/Y: 1.0% v 1.2% prior.

- (EU) Euro Zone Mar Industrial Production M/M: 0.6% v 0.4%e; Y/Y: -1.0% v -1.3%e.

- (CY) Cyprus Q1 Preliminary GDP Q/Q: 1.2% v 1.0% prior; Y/Y: 3.5% v 2.2% prior.

- (IS) Iceland Q1 Unemployment Rate: 4.2% v 3.2% prior.

Fixed income issuance

- (IN) India sold total INR270B vs. INR270B indicated in 3-month, 6-month and 12-month bill.

- (DK) Denmark sold DKK500M in 3-month bills; Avg Yield: 3.380% v 3.535% prior; Bid-to-cover: 2.48x v 2.60x prior.

- (UK) DMO sold £3.0B in 0.875% July 2033 Green Gilts; Avg Yield: 4.072% v 4.091% prior; Bid-to-cover: 3.52x v 2.66x prior; Tail: 0.7bps v 1.3bps.

- (NO) Norway sold total NOK3.0B vs. NOK3.0B indicated in 2027 and 2034 Bonds.

- (SE) Sweden sold total SEK15.0B vs. SEK15.0B indicated in 3-month and 6-month Bills.

Looking ahead

- (NG) Nigeria Apr CPI Y/Y: 34.2%e v 33.2% prior.

- (PE) Peru Apr Unemployment Rate: No est v 7.7% prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell combined €2.0B in 2053 and 2054 bunds.

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €0.75-1.0B in 12-month Bills.

- 05:30 (PL) Poland to sell Bonds.

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

- 06:00 (IE) Ireland Mar Property Prices M/M: No est v 0.3% prior; Y/Y: No est v 6.1% prior.

- 06:00 (CZ) Czech Republic to sell combined CZK4.0B in 2034 and 2037 bonds.

- 06:00 (RU) Russia to sell OFZ Bons (2 tranches).

- 07:00 (US) MBA Mortgage Applications w/e May 10th: No est v 2.6% prior.

- 07:00 (ZA) South Africa Mar Retail Sales M/M: 0.2%e v 0.4% prior; Y/Y: -1.0%e v -0.8% prior

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

- 08:00 (BR) Brazil Mar Economic Activity Index (Monthly GDP) M/M: -0.3%e v +0.4% prior; Y/Y: -1.9%e v +2.6% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:15 (CA) Canada Apr Annualized Housing Starts: 240.0Ke v 242.2K prior.

- 08:30 (US) May Empire Manufacturing: -10.0e v -14.3 prior.

- 08:30 (US) Apr CPI M/M: 0.4%e v 0.4% prior; Y/Y: 3.4%e v 3.5% prior.

- 08:30 (US) Apr CPI (ex-food/energy) M/M: 0.3%e v 0.4% prior; Y/Y: 3.6%e v 3.8% prior.

- 08:30 (US) Apr CPI Index NSA: 313.752e v 312.332 prior; CPI Core Index: 317.734e v 316.698 prior.

- 08:30 (US) Apr Real Avg Hourly Earning Y/Y: No est v 0.6% prior; Avg Weekly Earnings Y/Y: No est v 0.6% prior.

- 08:30 (US) Apr Advance Retail Sales M/M: 0.4%e v 0.7% prior; Retail Sales (ex-auto) M/M: 0.2%e v 1.1% prior; Retail Sales (ex-auto/gas): 0.1%e v 1.0% prior; Retail Sales (control group): 0.1%e v 1.1% prior.

- 08:30 (CA) Canada Mar Manufacturing Sales M/M: -2.8%e v +0.7% prior.

- 09:00 (RU) Russia Mar Trade Balance: No est v $7.7B prior; Exports: No est v $30.3B prior; Imports: No est v $22.6B prior.

- 09:00 (CA) Canada Apr Existing Home Sales M/M: No est v 0.5% prior.

- 10:00 (US) May NAHB Housing Market Index: 51e v 51 prior.

- 10:00 (US) Mar Business Inventories: -0.1%e v +0.4% prior.

- 10:00 (UK) Former Fed Chief Bernake testifies in UK Parliament.

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

- 11:00 (PE) Peru Mar Economic Activity Index (Monthly GDP) Y/Y: 0.8%e v 2.8% prior (revised from 2.9%).

- 11:30 (IL) Israel Apr CPI M/M: 0.6%e v 0.6% prior; Y/Y: 2.5%e v 2.7% prior.

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

- 12:00 (RU) Russia Q1 Advance GDP (1st of 3 readings) Y/Y: 5.1%e v 4.9% prior.

- 12:00 (CO) Colombia Q1 GDP Q/Q: 2.1%e v 0.0% prior; Y/Y: 0.8%e v 0.3% prior.

- 12:00 (US) Fed’s Kashkari.

- 16:00 (US) Mar Net Long-term TIC Flows: No est v $71.5B prior; Total Net TIC Flows: No est v $51.6B prior.

- 19:40 (AU) RBA's Hunter.

- 19:50 (JP) Japan Q1 Preliminary GDP Q/Q: -0.3%e v +0.1% prior; Annualized GDP Q/Q: -1.2%e v +0.4% prior; Nominal GDP Q/Q: 0.2%e v 0.5% prior; GDP Deflator Y/Y: 3.3%e v 3.9% prior.

- 19:50 (JP) Japan Q1 Preliminary Private Consumption Q/Q: -0.2%e v -0.3% prior; Business Spending Q/Q: -0.5%e v +2.0% prior; Inventory Contribution % GDP: +0.1%e v -0.1% prior; Net Exports Contribution % GDP: -0.3%e v +0.2% prior.

- 21:30 (AU) Australia Apr Employment Change: +23.7Ke v -6.6K prior; Unemployment Rate: 3.9 v 3.8% prior; Full Time Employment Change: No est v +27.9K prior; Part Time Employment Change: No est v -34.5K prior; Participation Rate:66.6%e v 66.6% prior.

- 22:00 (NZ) New Zealand to sell combined NZ$500M in 2031 and 2034 bonds.

- 23:00 (KR) South Korea Mar M2 Money Supply M/M: No est v 0.1% prior; ‘L’ Money Supply M/M: No est v 0.3% prior.

- 23:00 (NZ) New Zealand Apr Non Resident Bond Holdings: No est v 62.9% prior.

- 23:30 (JP) Japan to sell 12-Month Bills.

- 23:35 (JP) Japan to sell 20-Year JGB Bonds.

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