Treasury prices dropped along with gold, and the USD/JPY has rebounded

US Session Highlights

- (US) DOE CRUDE: -1.0M V -1ME; GASOLINE: +1.5M V -2ME; DISTILLATE: -2.0M V -1ME

- (BR) Brazil Apr IGP-M Inflation (2nd Preview): -1.0% v -0.7%e

- (US) MBA MORTGAGE APPLICATIONS W/E APR 14TH: -1.8% V 1.5% PRIOR

- US equities opened the morning higher, though trading remained somewhat muted ahead of the weekend French election and a continued dearth of news out of DC. Risk-on flows largely returned to global markets, as Treasury prices dropped along with gold, and the USD/JPY has rebounded. As the session wore on, stocks weakened modestly and crude sold off after a smaller-than-expected inventory draw, but healthcare and industrials held onto tepid gains, while energy, consumer staples, and utilities declined.

US markets on close: Dow -0.6%, S&P500 -0.2%, Nasdaq +0.2%

- Best Sector in S&P500: Healthcare

- Worst Sector in S&P500: Energy

- Biggest gainers: LRCX +6.9%; ISRG +6.4%; WRK +4.5%

- Biggest losers: IBM -4.9%; MRO -4.3%; NFX -3.5%

- At the close: VIX 14.9 (+0.5pts); Treasuries: 2-yr 1.18% (+1bps), 10-yr 2.22% (flat), 30-yr 2.87% (+3bps)

US movers afterhours

- SCSS Reports Q1 $0.56 v $0.46e, R$393.3M v $370Me; Raises FY17 Rev $1.25-1.50 v $1.31e; +13.2% afterhours

- QCOM Reports Q2 $1.34 v $1.20e, R$6.0B v $5.88Be; Guides Q3 $0.90-1.15 v $1.09e; +2.4% afterhours

- CSX Reports Q1 $0.51 v $0.43e, R$2.87B v $2.73Be; +2.7% afterhours

- EBAY Reports Q1 $0.49 v $0.48e, R$2.22B v $2.21Be; Guides Q2 $0.43-0.45 v $0.48e; R$2.28-2.32B v $2.32Be; Non-GAAP op margin 30.0% v 33.4% y/y; -1.9% afterhours

- URI Reports Q1 $1.63 v $1.57e, R$1.36B v $1.34Be; Adj EBITDA margin 43.6% v 44.6% y/y; -6.3% afterhours

Key economic data

- (NZ) NEW ZEALAND Q1 CPI Q/Q: 1.0% (1-year high) V 0.8%E; Y/Y: 2.2% (highest since Q3 of 2011) V 2.0%E

- (AU) AUSTRALIA Q1 NAB BUSINESS CONFIDENCE: 6 V 5 PRIOR

- (JP) JAPAN MAR TRADE BALANCE: ¥614.7B V ¥608BE; ADJ TRADE BALANCE: ¥172.2B V ¥172BE

- (CN) China Mar FX Net Client Settlements (CNY): -48.3B v -69.2B prior

Asia Session Notable Observations, Speakers and Press

- Asia indices trading mixed tracking heavy tone on Wall St, where slumping oil prices weighed on the Energy sector while low-beta Utilities/Staples also stumbled. Traders are starting to square positions going into the French elections this weekend, though there is little evidence of continued momentum behind the wild-card Melenchon in the first round after a recent surge. New Zealand Q1 CPI was the most notable datapoint of the session, rising to 5-year high annualized where Tradable prices increased 1.6%, while prices for non-tradables increased 2.5%, prompting some analysts to adjust their RBNZ tightening outlook forward. NZD/USD spiked some 40pips on the result and held its gains. Japan Trade numbers were also notable but less market moving, with surplus just above consensus, imports growth at a 3-year high, and exports at a 2-year high.

China

- (CN) China State Administration of Foreign Exchange (SAFE) spokesperson: Pressure on capital outflows eased significantly in Q1 - press

- (CN) China state planner NDRC said to release a 2nd batch of public-private projects - Chinese press

- (CN) Former China State Administration of Foreign Exchange (SAFE) Official Guan Tao: Non-financial institutions and other participants should be allowed into the bank-dominated onshore yuan market to boost liquidity and price discovery

Australia

- (AU) According to the latest property industry survey by ANZ and the Property Council of Australia, property firms and investors are most optimistic about outlook for property prices since 2014 - AFR

- (AU) CBA: Australia inflation is skewed much lower because land prices are not included in the CPI basket - AFR

Asian Equity Indices/Futures (00:00ET)

- Nikkei +0.2%, Hang Seng +0.4%, Shanghai Composite -0.1%, ASX200 +0.2%, Kospi +0.4%

- Equity Futures: S&P500 +0.1%; Nasdaq +0.1%, Dax +0.2%, FTSE100 +0.2%

FX ranges/Commodities/Fixed Income (00:00ET)

- EUR 1.0707-1.0721; JPY 108.80-109.10; AUD 0.7490-0.7510; NZD 0.7000-0.7045

- June Gold -0.2% at 1,281/oz; June Crude Oil +0.6% at $51.14/brl; May Copper -0.6% at $2.51/lb

- SPDR Gold Trust ETF daily holdings rise 11.8 tonnes to 860.8 tonnes; 4th straight increase; highest since Dec 7th

- iShares Silver Trust ETF daily holdings fall to 10,149 tonnes from 10,178 tonnes prior

- (JP) Japan's MoF sells ¥0.9T in 0.7% (0.7% prior) 20-year JGBs; Avg yield: 0.562% v 0.673% prior; bid-to-cover: 4.06x (highest since 2014) v 3.78x prior

- (CN) PBOC to inject combined CNY100B v CNY80B prior in 7-day, 14-day and 28-day reverse repos

- (CN) PBOC SETS YUAN MID POINT AT 6.8792 V 6.8664 PRIOR; biggest margin of weakness in 3 weeks

- (NZ) New Zealand sells NZ$150M in 2.75% 2025 bonds; avg yield 2.889%

Asia equities/Notables /movers by sector

Australia:

- Rio Tinto (RIO) +0.3%; Q1 production

- Iluka (ILU) +11.0%; Q1 results

- Santos (STO) -2.9%: Q1 results

- Woodside Petroleum (WPL) -1.5%; Q1 results

Hong Kong:

- Ajisen (538) +0.3%; Q1 SSS

- Qingdao Port International (6198) +0.7%; FY16 results

- Yanzhou Coal Mining -0.2%; Guides Q1

- CNOOC and PetroChina -1.0% on lower oil prices

Japan:

- Toshiba (6502) +4.7%; Hon Hai/Amazon or Dell joint bid for chip unit speculation

- Canon (7751) +3.1%; Q1 results speculation

- Sumitomo Heavy (6302) +1.0%; FY17 results speculation