US STOCKS: Midday Equities Roundup: Off Tariff-Talk Lows, Tech Lagging
May-23 16:24
- Stocks are trading weaker but off Friday morning lows at midday, covering shorts ahead of the extended Memorial Day holiday weekend. 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 since - partially due to Tsy Sec Bessent claiming 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." Says that the deals are "moving quickly".
- Currently, the DIA trades down 273.79 points (-0.65%) at 41585, S&P E-Minis down 44.5 points (-0.76%) at 5812, Nasdaq down 188.2 points (-1%) at 18736.69.
- Information Technology and Consumer Discretionary sectors underperformed in the first half, the former weighed by Super Micro Computer -5.11%, Microchip Technology -4.96%, Texas Instruments -3.04% and EPAM Systems -3.03%. Notably, Apple traded -2.58% at midday, off lows.
- Concerns over tariffs weighed on outlooks as Deckers Outdoor dropped 19.77%, Ross Stores -13.25%, Lululemon Athletica -2.91% and TJX Cos -2.46%.
- On the positive side, Utilities and Consumer Staples sectors outperformed, the former buoyed by Constellation Energy +1.79%, Public Service Enterprise +0.94% and AES Corp +0.73%. Staples were supported by Philip Morris +1.32%, Kroger +1.24%, Colgate-Palmolive +0.92% and Coca-Cola +0.77%.
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US TSYS/SUPPLY: Preview 5Y Auction: 11Bp Rich to Last Month Tail
Apr-23 16:22
Tsy futures are well off mid-morning highs (TYM5 currently -.5 at 110-25 vs. 111-18.5 high) ahead of the $70B 5Y note auction (91282CMZ1) at 1300ET, WI is currently running at 3.990%, 11bp rich to last month's tail.
- March auction recap: Tsys reacted slightly negative, with FVM5 down a tick at 107-20+ after the latest 5Y sale broke a 4-auction streak of trade-throughs, with a 0.5bp tail on a 4.10% high yield vs 4.095% when-issued.
- The peripheral statistics were on the weak side of recent results: the bid-cover ratio was 2.33x, the lowest in 9 auctions. Dealers took down 13.2% of competitive (5-auction high) / directs 11.0% (5-auction low) / indirects 75.8% (also 5-auction low).
SECURITY: Trump & Vance Take Hard Line On Zelenskyy In Statements On Ukraine War
Apr-23 16:22
US President Donald Trump has issued a lengthy statement on Truth Social suggesting that Ukrainian President Volodymyr Zelenskyy’s refusal to discuss Russian sovereignty over Crimea is “harmful” to peace negotiations.
- Trump said, referring to this WSJ article, in which Zelenskyy said Kyiv would never recognize Russian control of Crimea: “This statement is very harmful to the Peace Negotiations with Russia in that Crimea was lost years ago under the auspices of President Barack Hussein Obama, and is not even a point of discussion.”
- Trump continued: “The situation for Ukraine is dire — He can have Peace or, he can fight for another three years before losing the whole Country.”
- Trump concluded: “We are very close to a Deal, but the man with “no cards to play” should now, finally, GET IT DONE. I look forward to being able to help Ukraine, and Russia, get out of this Complete and Total MESS…”
- Trump’s statement came after US Vice President JD Vance outlined “an American peace proposal that closely mirrors longstanding Russian demands, including a “freeze” of territorial lines in the three-year war, acceptance of the annexation of Crimea by Russia and a prohibition on Ukraine becoming part of the NATO alliance,” per NYT.
- Vance told reporters in India: “We’ve issued a very explicit proposal to both the Russians and the Ukrainians, and it’s time for them to either say yes or for the United States to walk away from this process,”
JPY: Bessent Won't Seek FX Target in Trade Talks With Japan
Apr-23 16:17
- Nikkei Newswire cites comments to press in reporting that the US Treasury Secretary Bessent will not seek a currency target in trade talks with Japan.
- USD/JPY sees brief strength on the headline, touching 142.94, before quickly reversing to prevailing levels. Non-tariff barriers including VAT, currency manipulation and indirect taxes had been a sore point for the US and trade partners, but seemingly currency is not an issue in ongoing negotiations with Japan, which are seen as among the most advanced since the initial unveiling of tariffs a few weeks ago.
