US STOCKS: US Downgrade See's Risk Open Lower In Asia
May-19 00:21
The ESM5 Overnight range was 5924.75 - 5977.50, Asia is currently trading around 5935. This morning risk is opening up under pressure as the market continues to digest the downgrade by Moody’s late Friday.
- Bloomberg - “Morgan Stanley predicts the US equities comeback will stall due to decelerating revenue growth from mega cap companies and waning earnings momentum. “ It’s hard to justify the numbers”, said Lisa Shalett. ”
- "Companies issued gloomy outlooks in the first quarter due to Trump’s global trade offensive despite better-than-feared results. Big Tech stocks in particular have gone from safe bet to a question mark."(BBG)
- "Walmart should “eat the tariffs” and stop trying to blame them as the reason for raising its prices, Trump wrote in a Truth Social post. Bessent said he spoke to CEO Doug McMillon and that the retailer will absorb some of the costs."(BBG)
- The initial knee-jerk on the downgrade news has been lower, but with Moody’s really only catching up to S&P and Fitch is this news really that significant ?
- The price action last week showed how underweight investors had been and in the short-term you would expect dips to be supported.
- The SPX has had a huge bounce from its lows on 4800 handle, without any pause and has left a generally bearish and underweight market completely wrong-footed.
In the short-term though this move is starting to look a little overdone. Look for demand to materialize once more back towards the 5700 area as momentum funds and corporate buybacks dominate the flow for now.
Fig 1: SPX Daily Chart
Source: MNI - Market News/Bloomberg
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LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
Apr-18 05:18
| Date | Time | Country | Event |
| 25-Apr | 0745 | FR | Manufacturing Sentiment |
| 29-Apr | 0700 | DE | GFK Consumer Climate |
| 29-Apr | 0800 | ES | HICP (p) / GDP |
| 29-Apr | 0900 | EU | M3 / Consumer Expectations Survey |
| 29-Apr | 0900 | IT | ISTAT Confidence Indices |
| 29-Apr | 1000 | EU | Consumer Confidence, Industrial Sentiment |
| 30-Apr | 0630 | FR | GDP (p) / Consumer Spending |
| 30-Apr | 0700 | DE | Import/Export Prices / Retail Sales |
| 30-Apr | 0745 | FR | HICP (p) / PPI |
| 30-Apr | 0855 | DE | Unemployment |
| 30-Apr | 0900 | DE | GDP (p) / State level CPI |
| 30-Apr | 0900 | IT | GDP (p) |
| 30-Apr | 1000 | EU | GDP preliminary flash est. |
| 30-Apr | 1000 | IT | HICP (p) |
| 30-Apr | 1100 | IT | PPI |
| 30-Apr | 1300 | DE | HICP (p) |
JGBS: Twist-Steepener Holds Going Into W/E, BoJ Gov Ueda Reiterates Caution
Apr-18 05:16
JGB futures are stronger, +18 compared to settlement levels, sitting near the middle of the range after a choppy session.
- “Governor Kazuo Ueda reiterates his stance that the central bank will carefully monitor if its economic outlook will be realized, accounting for the effects of US tariff measures, without preconception. The BoJ will raise the benchmark rate if the outlook is realized, Ueda says in response to questions in parliament.” (per BBG)
- “Fukoku Mutual Life Insurance Co. plans to invest in Japan's super-long government bonds this fiscal year after their yields skyrocketed. The company aims to increase domestic government bond holdings by ¥30 billion, with gross purchases potentially reaching ¥300-400 billion.” (per BBG)
- Earlier today, Headline CPI for March showed +3.6% y/y versus +3.7% estimate. Core and Core-Core printed +3.2% y/y and +2.9% y/y, respectively, versus estimates of +3.2% and +2.9% and priors +3.0% and +2.6%.
- Cash US tsys are closed today for the Good Friday holiday.
- Cash JGBs have twist-steepened, pivoting at the 20-year, with yields 2bps lower to 5bps higher.
- Swap rates are 2bps lower to 2bps higher, with a steepening bias.
- On Monday, the local calendar will see Tokyo Condominiums for Sale data.
CHINA: Bond Futures Marginally Up Despite Liquidity Injection.
Apr-18 04:02
- China’s bond market reacted very little to a second day of sizeable liquidity injection.
- China’s 10YR bond future is up just +0.03 at 109.04 and remains firmly above all major moving averages. The nearest being the 20-day EMA at 108.61.
- The 2YR bond future is down -0.02 at 102.46; remaining below all major moving averages – the nearest being the 20 day EMA at 102.52.
- The 10YR CGB is marginally lower in yield at 1.64%
