Forex - Rates Highlights - 19 May 2017


 05:12 (GMT) 19 May

  [Forex Highlights]

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Rates Highlights - 19 May 2017 (0100-PBFS-C01)

T. Bonds: USTs charge to target levels, making the easy yards, and then pare. EM risk hit might need to take over if safehaven charge is to push on from here.

Bunds and Gilts: Bunds make it to 162 tops and then roll back. However, every chance of an eventual French election gap fill in due course, even if pullback along way.

JGB: Prices likely to trade within a range of 150.40-75 during the session.

DJIA and S&P: Pre-weekend caution is likely to set in towards the close, though there may be some better levels to sell before then.

US Overview:

The Trump story had another burst of life in early Europe but in the end, covering was the main action later in the day, as risk pared losses and bonds pulled back early gains. In FX, the USD picked up somewhat, even erasing a Cable bounce that followed strong UK retail sales data.

US Highlights:

- US May Philadelphia Fed Survey 38.8 from 22.0 vs Mkt 18.5

- US 13-May Initial Claims 232k from 236 vs Mkt 240

- Brazil assets hit by political scandal threatening president

- ECB minutes: stress need for caution, concern that even incremental communication change could have strong impact. Some see risks as balanced.

- Fed's Mester said further rate hikes needed if economy evolves as expected, comfortable changing balance sheet policy this year.

Asia-Pacific Highlights:

- BIA: Iron ore spot markets remain choppy, falling modestly on Thursday after ripping higher on Wednesday.

- CNN: President Donald Trump said Thursday he did not ask FBI Director James Comey to end his investigation into Russia's involvement in the 2016 election and possible collusion with the Trump campaign.

- Central banks of the China and New Zealand signed pact to keep currency swap size at 25 billion Yuan / NZ$5 billion, the People's Bank of China says.

- With stocks and bonds in retreat amid anxiety over Beijing's deleveraging campaign, officials have been guiding the yuan higher against the dollar in a move that's caught market watchers by surprise.

- Brent Oil: $52.51, +$0.30; Asia: $52.86, +$0.35

- T. Notes: 126.281, unchanged

- Treasuries: After briefly settling down overnight to take a breather as an official investigator appointed, wire headlines on undeclared Trump campaign - Russia calls (together with negative EM trade) helped fuel the bid again. However, once the US data came in firm, Philly Fed especially, and USTs were held by price resistance / yield support levels, there was a degree of later paring, with the curve a little flatter. Strong 10yr TIPs sale, with record high indirect take, low dealer take. 2s +2.0bps @ 1.27%, 5s +2.1bps @ 1.78%, 10s +0.9bps @ 2.23%, 30s -0.9bps @ 2.91%.

- Equities: The early stretch was to 2352 on the S&P future before the next round of covering kicked in - back to just under the MA support turned resistance. Car crash incident in New York saw minor wobble before it was concluded terrorism was not the cause. Recovery gained momentum, with some attempts to talk up hopes for tax reform.

- Europe: Another lively day as EU bourses took on the risk-off baton during morning, most indices off well over 1% at the day lows. Further Trump headlines accelerated the core bid later in morning, bunds tagging 162 before easing back as p.m. trade saw an element of calm restored with over-bought conditions and the test of recent range extremes allowing sizeable intraday pullbacks to set in.

- Australia: Aussie bonds initially drifted higher at the start of the overnight session but the gains were soon pared as the session came to an end. However, prices continued to struggle for direction on Friday as no major data or events were due during the period. 3s opened at 98.200 and bounced between 98.200-230 during the day while 10s opened at 97.475 and traded within a range of 97.475-500.

Japan: JGB futures opened at 150.54 and briefly spiked up to 150.61 but soon slipped to 150.47 before recovering to wobble around the opening level once again.

Rates Highlights - 19 May 2017 (0100-PBFR-C01)

Data:

NZ: External Migration (sa) (Apr) 5780 net people (Prev: 6130R)

NL: Consumer Confidence Index (May) 23 (Prev: 26)

NL: Consumer Spending (Mar) 1.6% y/y (Prev: 0.8)

Still To Be Released -

Data:

06:00 GMT - DE: PPI (Apr) % m/m (Mkt: 0.2 Prev: 0)

06:00 GMT - DE: PPI (Apr) % y/y (Mkt: 3.2 Prev: 3.1)

08:00 GMT - EU: Current Account (nsa) (Mar) EUR bn (Prev: 27.9)

08:00 GMT - EU: Current Account (sa) (Mar) EUR bn (Prev: 37.9)

08:30 GMT - IT: Current Account (Mar) EUR mn (Prev: 1193)

10:00 GMT - UK: CBI Industrial Trends (May) % bal (Mkt: 4 Prev: 4)

12:30 GMT - CA: CPI (Apr) 4cast: 0.3% m/m (Mkt: 0.5 Prev: 0.2)

12:30 GMT - CA: CPI (Apr) 4cast: 1.6% y/y (Mkt: 1.7 Prev: 1.6)

12:30 GMT - CA: Retail Sales (Mar) % m/m (Mkt: 0.3 Prev: -0.6)

12:30 GMT - CA: Retail Sales (ex Auto) (Mar) % m/m (Mkt: 0.2 Prev: -0.1)

13:00 GMT - BE: BNB Consumer Confidence (May) (Prev: 0)

14:00 GMT - EU: Consumer Sentiment (May P) (Mkt: -3 Prev: -3.6)

Events & Auctions:

08:00 GMT - EU: EU's Dombrovskis Speaks in Brussels

09:00 GMT - EU: ECB's Praet Speaks in Brussels

10:00 GMT - UK: Bills auction

11:00 GMT - EU: ECB's Coeure Speaks in Geneva

12:00 GMT - EU: ECB's Constancio Speaks in Brussels

13:15 GMT - US: Fed's Bullard Speaks in St. Louis

14:15 GMT - EU: EU's Guersen Speaks in Brussels