EU mid-market update: NVDA in spotlight; UK inflation tempers but market wanted more; FOMC minutes to be released.

Notes/observations

- NVIDIA to report after the US market close. Market sentiment hinges on guidance and commentary about demand, after continually beating estimates in previous quarters. Some analysts seeing US stocks as 'frothy' in general.

- UK Apr CPI numbers fell from Mar, but came in above consensus, causing a dialing back of rate cut expectations for BOE in 2024 (from two cuts down to ~38bps). GBP/USD (cable) is higher post data. Headline CPI now sits just three tenths above target, but services and core components remain resilient.

- EU automobile sector is weaker after China hinted at up to 25% tariff on imported cars with large engines. For M&A, BHP Group has until 12:00 ET (16:00 GMT) to launch a fresh bid for Anglo American.

- New Zealand and Indonesia Central Banks left rates unchanged, as expected. NZ dollar firmer is against US dollar.

- Asia closed mixed with Nikkei225 underperforming -0.9%. EU indices are -0.3% to -0.6%. US futures are -0.1%. Gold -0.2%, DXY +0.1%; Commodity: Brent -1.1%, WTI -1.2%; Crypto: BTC -1.5%, ETH +2.4%.

Asia

- Reserve Bank of New Zealand (RBNZ) left the Official Cash Rate (OCR) unchanged at 5.50% (as expected). Decided current policy level should return CPI to target. Did discuss the possibility of hiking. Stressed that a restrictive path was necessary to ensure inflation returned to target within a reasonable time frame. Staff Projections raised the rate path outlook (Mar 2025 OCR from 5.47% to 5.62%; Jun 2025 OCR from 5.33% to 5.54%.

- RBNZ Gov Orr post rate decision press conference was confident the annual CPI would return to target band of.01-3.0% by end-2024. Raising rates was a real consideration.

- Japan Apr Trade Balance: -¥462.5B v -¥297.0Be; Exports Y/Y: 8.3% v 11.0%e; Imports Y/Y: 8.3% v 8.8%e.

- Japan Mar Core Machine Orders M/M: +2.9% v -2.0%e; Y/Y: 2.7% v 1.4%e.

- South Korea Apr PPI Y/Y: 1.8% v 1.6% prior.

- South Korea Jun Business Manufacturing Survey: 76 v 74 prior; Non-Manufacturing Survey: 72 v 71 prior.

- South Korea Q1 Short-Term External Debt $141.0B v $140.7B prior.

Europe

- ECB Chief Lagarde: Confident that ECB has inflation under control.

- ECB’s Nagel (Germany) reiterated view that a June rate cut did not mean the ECB would cut at subsequent meetings; Rates should not be cut hastily. Did see wages headed in the right direction.

Americas

- Fed's Goolsbee (non-voter for 2024): Must take a longer look at inflation data, be patient.

- Fed's Mester (voter) stated that the Apr CPI report was good news but too soon to tell what path inflation was on. Previously expected three rate cuts during 2024 but no longer think that was still appropriate.

- Fed’s Collins stated that would take longer to see the progress needed to adjust rates.

- Fed’s Bostic stated that the economy had been incredibly resilient. Would take a longer time for rates to 'drive decisions'.

- Fed's Waller (voter, hawk) stated that could consider rate cut at the end of 2024 if the data was warranted. Monetary policy was tight enough; Data was not looking like we'll need to raise rates.

Energy

- Weekly API Crude Oil Inventories: +2.5M v -3.1M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.6% at 521, FTSE -0.3% at 8,393, DAX -0.3% at 18,676, CAC-40 -0.6% at 8,094, IBEX-35 -0.2% at 11,308, FTSE MIB -0.4% at 3,382, SMI -0.2% at 11,980, S&P 500 Futures -0.1%].

Market focal points/key themes: European indices opened modestly in the red and trended lower through the early part of the session; risk-off attitude attributed to “higher for longer” interest rate narrative; among sectors trending higher are communication services and industrials; sectors leading the way lower include energy and materials; oil & gas subsector under pressure after Brent dipped below $82/bbl; automotive subsector weighed down by rumors China considering tariffs on large engine EU vehicles; Schneider Electric confirms will not acquire Bentley Systems; focus on release of FOMC minutes later in the day; earnings expected in the upcoming US session include Target, Vipshop, TJX and WIlliams-Sonoma.

Equities

- Consumer discretionary: Marks & Spencer [MKS.UK] +9.0% (FY results); Mercedes [MBG.DE] -2.0%, BMW [BWM.DE] -2.0%, Volkswagen [VOW3.DE] -1.5% (potential Chinese tariffs).

- Energy: GALP [GALP.PT] +1.5% (to sell its 10% stake in Area 4 Mozambique to ADNOC for $650).

- Financials: Swiss Life [SLHN.CH] -2.0% (Q1 trading update).

- Industrials: Schneider Electric [SU.FR] +0.5% (end talks with Bentley Systems).

Speakers

- Russia said not to have plans to adjust the borders in the Baltic's (**Note: Reports circulated that Russian government had decided to unilaterally "change" the country's maritime borders with Lithuania and Finland in the Baltic Sea).

- Indonesia Central Bank (BI) Gov Warjiyo pre-rate decision press conference noted that global market uncertainty was still higher from stronger US outlook.

- Indonesia Central Bank Policy Statement noted that the decision to keep policy steady was consistent with its pro-stability stance and inflation goal. (Refered to ensuring that inflation stayed within target and ensured capital flows and FX stability).

- China PBoC said to be guiding banks to accelerate the pace of lending in the month of May.

Currencies/fixed income

- USD was steady for the most part against the majors with focus on the upcoming release of the FOMC May Minutes. Fed officials have been consistent in dialing back market expectations of any near-term rate cut.

- GBP popped higher after UK Apr CPI came in above expectation as inflation fell less than expected last month. The data fueled doubt about when the Bank of England could start cutting interest rates. Dealers noted that BOE would likely now hold off until late summer—or even longer to move into easing mode. Gilt yields popped higher by 10bps to test 4.23%as the inflation data lowered the chance of a BOE rate cut in June.

- EUR/USD was steady around 1.0850 in quiet trade.

- NZD currency was former after RBNZ provided a ‘hawkish’ hold on its policy. Various market bank analyst pushed back calls for the 1st potential RBNZ rate cut.

Economic data

- (FI) Finland Apr Unemployment Rate: 9.2 v 9.0% prior.

- (EU) EU27 Apr New Car Registrations: +13.7% v -5.2% prior.

- (UK) Apr CPI M/M: 0.3% v 0.1%e; Y/Y: 2.3% v 2.1%e; CPI Core Y/Y: 3.9% v 3.6%e; CPI Services Y/Y: 5.9% v 5.4%e; CPIH Y/Y: 3.0% v 2.8%e.

- (UK) Apr RPI M/M: 0.5% v 0.5%e; Y/Y: 3.3% v 3.3%e; RPI-X (ex-mortgage interest payments) Y/Y: 2.3% v 3.3% prior; Retail Price Index: 385.0 v 385.2est.

- (UK) Apr PPI Input M/M: 0.6% v 0.4%e; Y/Y: -1.6% v -1.5%e.

- (UK) Apr PPI Output M/M: 0.2% v 0.4%e; Y/Y: 1.1% v 1.1%e.

- (UK) Apr Public Finances (PSNCR): -£5.2 v +£21.7B prior; PSNB (ex-banking groups): £20.5B v £19.3Be; Net Borrowing: £19.6B v £18.5Be; Central Govt NCR: £18.3B v £11.9B prior.

- (SE) Sweden Apr Unemployment Rate: 8.9% v 9.2% prior; Unemployment Rate (seasonally adj): 8.5% v 8.4%e; Trend Unemployment Rate: 8.4% v 8.4% prior.

- (ID) Indonesia Central Bank (BI) left the BI Rate unchanged at 6.25% (as expected).

- (ZA) South Africa Apr CPI M/M: 0.3% v 0.4%e; Y/Y: 5.2% v 5.3%e.

- (ZA) South Africa Apr CPI Core M/M:0.2 % v 0.3%e; Y/Y: 4.6% v 4.7%e.

- (PL) Poland Apr Sold Industrial Output M/M: -2.2% v -2.9%e; Y/Y: 7.9% v 5.1%e.

- (PL) Poland May Consumer Confidence: -13.8 v -11.2e.

- (PL) Poland Apr Employment M/M: 0.0% v 0.0%e; Y/Y: -0.4% v -0.3%e.

- (PL) Poland Apr Average Gross Wages M/M: -1.6% v -0.5%e; Y/Y: 11.3% v 12.5%e.

- (PL) Poland Apr PPI M/M: 0.2% v 0.2%e; Y/Y: -8.6% v -8.2%e.

- (TW) Taiwan Apr Unemployment Rate: 3.4% v 3.4%e.

Fixed income issuance

- (FR) France Debt Agency (AFT) opened book to sell inflation-linked July 2043 bonds (Oatei) via syndicate; guidance seen +9bps to 2040 Oatei.

- (PT) Portugal Debt Agency (IGCP) opened book to sell EUR-denominated 30-year OT bond via syndicate; guidance seen +118bps to mid-swaps.

- (AT) Austria Debt Agency (AFFA) opened book to sell EUR-denominated 15-year RAGB bond via syndicate; guidance seen +41bps to mid-swaps.

- (IN) India sold total INR120B vs. INR270B indicated in 3-month, 6-month and 12-month bills (**Note: size reduced from prior auctions).

- (DK) Denmark sold total DKK3.16B in 2026 and 2033 DGE Bonds.

- (SE) Sweden sold total SEK3.5B vs. SEK3.5B indicated in 2029 and 2035 Bonds.

- (UK) DMO sold £4.0B in 4.125% July 2029 Gilts; Avg Yield: 4.199% v 4.251% prior; bid-to-cover: 3.20x v 3.21x prior; Tail: 0.6bps v 0.8bps prior.

- (GR) Greece Debt Agency (PDMA) sold €M vs. €250M indicated in 3.38% Jun 2034 GGB Bonds; Avg Yield: %; bid-to-cover: x.

Looking ahead

- (AR) Argentina Apr Leading Indicator: No est v 0.9% prior.

- (CO) Colombia Apr Retail Confidence: No est v 14.1 prior; Industrial Confidence: No est v -2.6 prior.

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

- 05:30 (DE) Germany to sell €4.0B in 2.2% Feb 2034 Bunds.

- 06:00 (IE) Ireland Apr PPI M/M: No est v -0.9% prior; Y/Y: No est v 2.0% prior.

- 06:00 (EU) EU Commission to sell combined €3.0B in 3-month and 6-month Bills.

- 06:00 (CZ) Czech to sell CZK1..0B in variable Aug 2043 Bonds.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 07:00 (US) MBA Mortgage Applications w/e May 17th: No est v 0.5% prior.

- 08:00 (MX) Mexico Mar Gold Production: No est v 7.6K kg prior; Silver Production: No est v 323.0K kg prior; Copper Production: No est v 40.0K tons prior.

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

- 08:45 (UK) BOE’s Breeden.

- 09:40 (US) Fed’s Gooslbee.

- 10:00 (US) Apr Existing Home Sales: 4.22Me v 4.19M prior.

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

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

- 12:00 (RU) Russia Apr PPI M/M: No est v 2.4% prior; Y/Y: No est v 19.1% prior.

- 12:00 (CA) Canada to sell 10 Year Bonds.

- 13:00 (US) Treasury to sell 20-Year Bonds.

- 13:30 (SE) Sweden Central Bank (Riksbank) Gov Thedeen.

- 14:00 (US) FOMC May Minutes.

- 15:00 (AR) Argentina Mar Economic Activity Index (Monthly GDP) M/M: No est v -0.2% prior; Y/Y: -7.3%e v -3.2% prior.

- 18:45 (NZ) New Zealand Q1 Retail Sales (ex-inflation) Q/Q: -0.3%e v -1.9% prior.

- 19:00 (AU) Australia May Preliminary PMI Manufacturing: No est v 49.6 prior; PMI Services: No est v 53.6 prior; PMI Composite: No est v 53.0 prior.

- 20:00 (SG) Singapore Q1 Final GDP Q/Q: -0.3%e v +0.1% advance; Y/Y: 2.5%e v 2.7% advance.

- 20:30 (JP) Japan May Preliminary PMI Manufacturing: No est v 49.6 prior; PMI Services: No est v 54.3 prior; PMI Composite: No est v 52.3 prior.

- 21:00 (KR) Bank of Korea (BOK) Interest Rate Decision: Expected to leave 7-day Repo Rate unchanged at 3.50%.

- 21:00 (AU) Australia May Consumer Inflation Expectation Survey: No est v 4.6% prior.

- 21:00 (CN) China Apr Swift Global Payments (CNY): No est v 4.7% prior.

- 21:00 (NZ) RBNZ Gov Orr in Parliament.

- 22:00 (NZ) New Zealand to sell combined NZ$500M in 2029, 2032 and 2041 bonds.

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