US STOCKS: Late Equity Roundup: Holding Highs for Week
Stocks look to finish out the week strong, SPX eminis near 5% higher for the week as risk appetite improved following Wed's May FOMC minutes release that showed a flexible Fed and no discussion of larger rate hikes. SPX emini futures currently +71.55 (1.76%) at 4127.5 -- makes it +4.86% for the week.
- Technicals for SPX emini: ESM2 through 20-day EMA of 4047.83 as well as May 9 high of 4099.0 w/ focus on 4191.98 50-day EMA.
- SPX leading/lagging sectors: Information Technology sector extends gains (+2.57%) as hardware and semiconductor shares rally for second day. Real Estate (+2.59%) outpaces Consumer Discretionary sector (+2.33%) as autos remain strong (Tesla +6.23% at 751.80). Laggers: Consumer Staples (+0.55%) as food/beverage and tobacco underperform. Followed by Utilities (+0.80%) and Financials (+0.83%).
- DJIA +351.13 (1.08%) at 32988.66; Nasdaq +303.4 (2.6%) at 12043.95.
- Dow Industrials Leaders/Laggers: Microsoft (MSFT) +54.92 at 270.82, Apple (AAPL) +4.41 at 148.63 and Boeing (BA) +3.18 at 130.91. Note: United Health Care (UNH) rallied from -4.62 earlier to +0.93 at 503.16. Laggers: JNJ -0.08 at 179.38, Merck (MRK) +0.03 at 92.34.
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STIR FUTURES: Fed Hike Expectations Gradually Trimmed
- Hikes implied by Fed Funds futures continue to fluctuate but remain on a slow downward trend this week.
- There is still 50bps fully priced for May but expectations are shifting nearer to it being followed by a 50bp hike in June (104.5bp priced), back roughly where it was when Powell said he was putting a 50bp hike on the table for May.
- Hikes to year-end soften slightly to 233bps.
Source: Bloomberg
EURGBP TECHS: Fades Off Highs
- RES 4: 0.8553 High Dec 14 2020
- RES 3: 0.8512 High Mar 31 and a key resistance
- RES 2: 0.8501 2.0% 10-dma envelope
- RES 1: 0.8468 High Apr 26
- PRICE: 0.8407 @ 17:09 BST Apr 27
- SUP 1: 0.8393/8363 Low Apr 26 / 50-day EMA
- SUP 2: 0.8313 Low Apr 22
- SUP 3: 0.8250 Low Apr 14 and key short-term support
- SUP 4: 0.8203 Low Mar 7 and the bear trigger
EURGBP maintains a firmer tone, but faded off session highs through the Wednesday session. Recent strong gains have resulted in a break of resistance at 0.8405, the Apr 11 high, which marked a key short-term resistance. The break of this level highlighted a bullish development and has also resulted in a break above 0.8435, the Apr 4 high. An extension would open 0.8512. Initial firm support lies at 0.8363, the 50-day EMA.
US TSYS: Inflation Breakeven Unchanged As Real Yields Drive Sell-Off
- 10Y real yields continue to move higher today, accounting for nearly all the rise in nominal yields (+7bps) on a day that mortgage rates were shown to hit new highs since 2009 as the impact on the real economy continues.
- This goes against the past three sessions where Treasuries rallied amidst large declines in inflation breakeven rates.
- Instead, the 10Y and 5Y5Y breakevens are unchanged at 2.88% and 2.45%, elevated but down almost 20bps from Fri highs.
