US STOCKS: Late Equities Roundup: Off Early Lows, Utilities, Staples Leading
May-23 18:17
- Stocks continued to drift in negative territory late Friday, off early session lows as markets apparently took Tsy Sec Bessent's comments on tariffs as placative. Currently, the DIA trades down down 86 points (-0.21%) at 41774.33, S&P E-Minis down 15.75 points (-0.27%) at 5841, Nasdaq down 91.5 points (-0.5%) at 18834.32.
- Tariff-tied headline risk spurred strong risk-off flows ahead of the NY open: Treasuries gapped higher while stocks sold off/extended lows after Pres Trump initially threatened Apple with a 25% tariff if iPhones weren't made in the US. Risk-off moves surged even more a few minutes later after Pres Trump stated he wants to impose 50% tariffs on the EU is in response to the Union's slow pace in talks.
- Stocks gradually moved off lows after Tsy Sec Bessent claimed that the "US is far along in trade talks with India and other Asian countries...most countries are negotiating in good faith except the EU," adding that the deals are "moving quickly".
- Information Technology and Consumer Discretionary sectors continued to underperform in late trade, the former weighed by Workday -11.75%, Super Micro Computer -3.78%, Microchip Technology -3.40%, Apple -2.64% and ON Semiconductor -2.34%.
- Concerns over tariffs weighed on outlooks as Deckers Outdoor dropped -19.53%, Ross Stores -10.87%, Lululemon Athletica -2.53% and Tapestry -2.42%.
- On the positive side, Utilities and Consumer Staples sectors continued to lead, the former buoyed by Constellation Energy +3.02%, AES Corp +2.96% and Vistra Corp +2.62%. Staples were supported by Philip Morris +1.71%, Colgate-Palmolive +1.61%, Kroger +1.37% and Kenvue +1.11%
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US TSYS: Post-Beige Book React
Apr-23 18:06
Treasury futures have retreated to session lows -- nearing early overnight levels, on latest downbeat Beige Book data.
- Jun'25 10Y currently -5.5 at 110-20 after climbing to intraday high of 111-18.5 on WSJ China tariff story this morning. Curves retain flatter profiles, but off lows: 2s10s -5.517 at 52.448 (46.527 low), 5s30s -7.023 at 77.371.
- Cross asset: BBG US$ index climbing +6.62 at 1228.24; stocks firmer but off highs: S&P eminis +110.25 at 5425.0
EURGBP TECHS: MA Studies Continue To Highlight An Uptrend
Apr-23 18:00
- RES 4: 0.8800 Round number resistance
- RES 3: 0.8781 2.236 proj of the Mar 3 - 11 - 28 price swing
- RES 2: 0.8768 High Nov 20 ‘23
- RES 1: 0.8624/0.8738 High Apr 21/ High Apr 11 and the bull trigger
- PRICE: 0.8554 @ 16:05 BST Apr 23
- SUP 1: 0.8531/24 Low Apr 23 / 20-day EMA
- SUP 2: 0.8477 61.8% retracement of the Mar 28 - Apr 11 rally
- SUP 3: 0.8442 50-day EMA
- SUP 4: 0.8415 76.4% retracement of the Mar 28 - Apr 11 rally
Recent weakness in EURGBP appears corrective and the retracement has allowed an overbought trend condition to unwind. Support to watch lies at 0.8524, the 20-day EMA. Below this level, support at the 50-day EMA is at 0.8447. The area between these two averages represents a key support zone. For bulls, a resumption of gains would refocus attention on 0.8738, the Apr 11 high and bull trigger. First resistance is 0.8624, the Apr 21 high.
BONDS: EGBs-GILTS CASH CLOSE: Curves Flatten On Back-And-Forth US Tariff News
Apr-23 17:58
European curves flattened Wednesday, with Bunds underperforming Gilts.
- Bunds were steadily weakening with Gilts a little stronger on the day when an WSJ afternoon sources article pointed toward potential for the US relaxing tariffs on China sent core FI sharply lower. While this was later talked down by US Tsy Sec Bessent, Bunds and Gilts largely held their losses.
- The Eurozone-wide services PMI was on the soft sign of expectations, with weaker-than-expected French and German data appearing to be offset by stronger performances elsewhere in the Eurozone.
- Meanwhile in the UK, public sector net borrowing was higher than expected, though like the Eurozone, Services PMI disappointed. BoE Gov Bailey's speaking appearance was not market-moving.
- While the German and UK curves moved in parallel across the short-end/belly, Gilts outperformed in the segments beyond that with the UK curve twist flattening (vs German bear flattening).
- EGB periphery/semi-core spreads closed tighter amid equity gains and the Bund sell-off, with BTPs and OATs outperforming.
- German IFO leads Thursday's data docket, while we get multiple ECB speakers including Lane.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 8.5bps at 1.746%, 5-Yr is up 6.6bps at 2.048%, 10-Yr is up 5.4bps at 2.497%, and 30-Yr is up 5.2bps at 2.911%.
- UK: The 2-Yr yield is up 8.6bps at 3.916%, 5-Yr is up 5.9bps at 4.039%, 10-Yr is up 0.7bps at 4.552%, and 30-Yr is down 5.9bps at 5.309%.
- Italian BTP spread down 3.3bps at 113.3bps / French OAT down 3.7bps at 73.8bps
