POLAND: Santander Sees Further 75bps Hike
Jun-07 15:47
- The signals ahead of this meeting were ambiguous: CPI did not exceed expectations (it was even a notch below our estimate), but this was a matter of high forecasts rather than a calming of the inflation trend.
- Moreover, core inflation played a bigger role in further acceleration of inflation than we had anticipated (and, according to our estimates, set another all-time high), which suggests that fighting the very high CPI dynamics will be even more difficult and may require a stronger monetary policy tightening.
- In our view, the MPC will raise rates again by 75 bps. The market has internalised Adam Glapiński's words that the rate hikes will continue until the MPC becomes convinced that inflation will fall, and seeing the strength of the CPI uptrend, the accumulation of risks on the higher side, and rebounding oil prices, it has started to see the end of rate hikes higher and later (roughly in 6 months at the level of c. 7.5%).
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US TSYS: Yield Curves Bear Steepen, Focus on Fed over Jobs Data
May-06 20:50
Yield curves continued to bear steepen Friday, 2s10s session high of 43.067 back to early March levels as bond yields climbed to 3.2338% high -- last seen early December 2018. Relative calm end to the week for a NFP session.
- Tsy futures bounced higher briefly, scaled back amid steady selling after Apr NFP jobs gained more than estimated +428k vs. +380k est, avg hourly earning little weaker than exp at 0.3% vs. 0.4% est. Total down-revisions to Feb-Mar -39k.
- Fed out of blackout: limited react to essay published by Minneapolis Fed Pres Kashkari: Long-Term Real Rates Are Already Back To Neutral. ""If the economy is in fact in a higher-pressure equilibrium, that might indicate the neutral long-term real rate has increased, which would then require even higher rates to reach a contractionary stance that would bring the economy into balance."
- MNI interview w/ Richmond Fed Barkin: interest rate increases are not on a preset course and he would like to see interest rates on a path to normal that is as fast as feasible, backing this week's historic FOMC decision to raise the fed funds rate 50bps, while not ruling out the potential for a supersized 75bp increase if needed.
US: Late Corporate Credit Update: Back Near 2Y Highs Late
May-06 20:27
Investment-grade corporate credit risk has see-sawed back near new 2Y highs tapped early Friday, closing levels well off midday lows as stocks traded modestly weaker: S&P E-Mini Future down 30.25 points (-0.73%) at 4113.75
- Investment grade risk measured by Markit's CDXIG5 index currently +3.464 at 86.919 vs. new 2Y high of 87.321 around midmorning; CDXHY5 high yield index at 100.813 (-0.837).
- Outperforming credit sectors (tighter or least wide): Financials - subordinated (-0.2) followed by Energy (+0.4).
- Lagging sectors (wider or least narrow): Utilities (+1.4) followed by Technology and Consumer Discretionary (+1.3).
US STOCKS: Late Equity Roundup: Mildly Lower on Week
May-06 20:05
Equity indexes weaker into the close are off session lows, upper half of range SPX emini futures, ESM2 currently -30.25 points (-0.73%) at 4113.75 -- near week opener of 4146.25.
- Earnings cycle past the halfway mark, resumes Monday w/ Duke Energy (DUK), Tyson (TSN) before the open, Trex (TREX), Int Flavor/Fragrances (IFF), Cargurus (CARG) after the close.
- SPX leading/lagging sectors: Energy sector extends earlier gains (+2.91%) O&G consumables outpacing energy and equipment serving names. Utilities sector follows (+0.81%). Laggers: Materials sector holding near lows (-1.40%) w/ construction materials shares lagging; Communications sector (-1.30%).
- Meanwhile, Dow Industrials currently trades -97.15 points (-0.29%) at 32901.08, Nasdaq -173 points (-1.4%) at 12144.66.
- Dow Industrials Leaders/Laggers: United Health outperforms (UNH) +5.10 at 499.82, Chevron (CVX) +4.00 at 170.26. Laggers: Home Depot (HD) continues to sag -4.47 at 294.64, Nike (NKE) -3.62 at 115.01.
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