US STOCKS: Late Equities Roundup: Mid-East Tension Buoys Oil&Gas, Defense Stocks

European yields rose Wednesday for the third session this week, with periphery EGB spreads narrowing.

• Core FI as well as periphery EGBs turned lower in the afternoon session after a mixed morning, despite relatively limited macro and news flow.
• US Treasuries set the tone, trading heavily throughout the day, while also potentially weighing was US President Trump's hint at potential news on the Russia-Ukraine conflict at some point today.
• BoE hawkish dissenter Mann pointed to a more resilient labour market than had been expected, along with concerns that inflation expectations have increased.
• Though Mann's commentary didn't move markets, Gilts underperformed on the day as the UK curve bear flattened; the German curve bear steepened.
• Periphery EGBs' early outperformance faded, with the 10-year BTP/Bund spread briefly moving below 100bp handle for the first time since September 2021, but closing above that mark. GGBs outperformed overall.
• Thursday's calendar includes preliminary Q1 UK GDP data.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 0.4bps at 1.94%, 5-Yr is up 2.4bps at 2.269%, 10-Yr is up 1.9bps at 2.699%, and 30-Yr is up 2bps at 3.146%.
• UK: The 2-Yr yield is up 4.4bps at 4.024%, 5-Yr is up 5.3bps at 4.184%, 10-Yr is up 4.3bps at 4.713%, and 30-Yr is up 4.2bps at 5.469%.
• Italian BTP spread down 0.6bps at 101.2bps /Greek down 2.3bps at 76.5bps
   

• Spot gold has fallen by 2.2% to $3,178/oz today as the moderation in US/China trade tensions continues to support global risk sentiment, weighing on the yellow metal.
• The move breaches initial support at $3,202.0, the May 1 low, signalling scope for a deeper retracement towards $3,164.3, 61.8% of the Apr 7 - Apr 22 upleg.
• The 50-day EMA, another key support, is also at $3,164.9. A breach of both would undermine a short-term bullish theme, opening round number support at $3,100.0. Initial resistance is $3,267.9, the 20-day EMA.
• Silver is also weaker today, with the precious metal currently 2.3% lower on the session at $32.2/oz.
• The gold/silver ratio thus remains stable around 98.7, off from last month’s multi-year highs of 107. Initial support is the April 4 low at 97.4.
• Meanwhile, crude is softer on the day with an unexpected US crude stock build adding pressure.
• WTI Jun 25 is down by 0.7% at $63.2/bbl.
• Expectations are growing that a further increase in OPEC+ supply for July is to be announced at the June 1 meeting.
• A downtrend in WTI futures remains intact, with initial support seen at $54.67, the Apr 9 low and bear trigger.
• On the upside, a clear break of key resistance at $63.55, the 50-day EMA, would highlight a stronger reversal, opening $66.41, the Apr 4 high.

• RES 4: 151.21 High Mar 28 and a key resistance    
• RES 3: 150.49 High Apr 2
• RES 2: 149.28 High Apr 3
• RES 1: 148.54/65 76.4% of Mar 28 - Apr 22 bear leg / High May 12
• PRICE: 146.31 @ 15:54 BST May 14
• SUP 1: 146.32/144.93 50- and 20-day EMA   
• SUP 2: 142.36 Low May 6 
• SUP 3: 141.97 Low Apr 29  
• SUP 4: 139.89 Low Apr 22 and a bear trigger

USDJPY reversed the Monday rally into the Wednesday close, playing into the bearish primary trend condition. This underpins the view that gains since Apr 22 appear corrective, and a further reversal lower would refocus attention on 142.36, May 6 low. Price is operating either side of former resistance at the 50-day EMA, and a clear break back above this level would slow any downside bias.