MNI: UK JUL GFK CONSUMER CONFIDENCE INDEX -13

• MNI: UK MAR-MAY MEDIAN PAY AWARDS +4.6% :Brightmine

In local morning trade, NZGBs are dealing little changed after the Q1 Current Account Deficit showed NZ$4.359bn versus expectations of NZ$4.650bn. The deficit was 6.8% of GDP in 12 months to March versus 6.9% prior.

• Overnight, a weaker-than-expected US retail sales report and a strong 20Y bond auction supported US tsys, with the 10-year yield finishing 6bps lower at 4.22%.
• US retail sales for May printed weaker than expected, with a rise of just 0.1% for the headline and ex-auto and gas measures. There were also downward revisions to March and April.
• Tuesday’s rally in US tsys came despite some Fed speakers pushing back on dovish expectations: Boston Fed Collins: "shouldn't overreact to a month or two of good inflation data"; StL Fed Musalem "could be 'quarters' before the first rate cut".
• Swap rates are 1-2bps lower on the day, with the 2s10s curve flatter.
• RBNZ dated OIS pricing is little changed. A cumulative 29bps of easing is priced by year-end.
• The local calendar will see Q1 GDP tomorrow.
• Tomorrow, the NZ Treasury plans to sell NZ$250mn of the 1.5% May-31 bond, NZ$200mn of the 4.25% May-34 bond and NZ$50mn of the 5.0% May-54 bond.

Oil prices rose for a second consecutive day by around 1.5% as positive risk appetite supported commodities in general. Equities also rallied as softer-than-expected US retail data improved the rate cut outlook. The weaker US dollar also provided support with the USD index down 0.2%.

• WTI rose 1.5% to $81.57/bbl, after a high of $81.67. It has started today slightly lower at $81.49. The benchmark broke above resistance at $80.93 opening up $82.93. The bull trigger is at $86.16. Initial support is at $79.32, June 7 low.
• Brent broke above $85 and is up 1.3% to $85.35/bbl, the highest since late April. Its prompt spread is also its widest since April, signalling a tight market. The benchmark broke key resistance at $84.72 and if sustained undermines the recent bearish theme. The move has opened up $87.04. Initial support is at $81.95, 20-day EMA, and a break would be seen as an early reversal signal.
• Bloomberg reported that US crude inventories rose 2.26mn barrels last week, according to people familiar with the API data. But gasoline stocks fell 1.08mn while distillate rose 538k. Prices have looked through the data. The official EIA data is delayed one day due to today’s US holiday and will be released on Thursday.