Analysts at ANZ explained that the markets settled down following the prior night’s sharp risk-off move.
"The VIX was broadly stable, while the S&P 500 was up 0.6%, boosted late in the session. Bond markets and safe-haven FX gave back some of their gains, with the USD benefitting from a decline in EM currencies amidst Brazil’s turmoil. Market sentiment is still very jittery and vulnerable to any new twists in the unfolding Trump saga."
"Pricing for a June hike stabilised at 15bps (60%) and key to watch will be the tone of senior Fed officials on recent developments. US data was better and helped with the stabilisation tone. European bourses retraced some of their losses as the afternoon progressed but still finished lower (DAX -0.3%, CAC 40 -0.5% and FTSE 100 -0.9%). The yield on the US 10-yr note nudged up to 2.23%, while 10-year yields in France and Germany fell 3-4bps. Oil prices were up slightly."
"The US Philadelphia Fed index rose strongly to 38.8 in May versus 22.0 in April and consensus expectations of 18.5. Some of the sub- components didn't tell as strong a story though were still respectable. US initial claims fell to 232k in the latest week. That hints at another decent non- farm payrolls report. The UK reported bumper retail sales data in April with headline sales rising 2.3% m/m vs March's 1.4% drop."