Trading Tuesday
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Market Data
Local
Global
*Data as of 4pm WAT
Market News
Local
Global
Market Commentary:
Currencies/Macro:
The U.S. dollar index experienced a 0.5% increase today, reaching a five-month peak, buoyed by a surprisingly robust March ISM report. Additional momentum came over the Easter long weekend when February core PCE showed a 0.3% rise, personal spending in February exceeded expectations with a 0.8% increase, and Federal Reserve Chair Powell emphasized the central bank's patience.
The Euro dropped from 1.0790 to 1.0731 overnight, marking a six-week low. Meanwhile, USD/JPY climbed from 151.40 to 151.77, as market participants remained cautious of potential Bank of Japan intervention to curb excessive yen weakness.
The U.S. ISM manufacturing survey index outperformed expectations, registering at 50.3, which is an 18-month high compared to the anticipated 48.3 and previous 47.8, with a notable increase in prices paid.
Additionally, the Atlanta Federal Reserve's GDPNow model for Q1 GDP was revised upwards to 2.82% from 2.33%.
Interest Rates:
The U.S. 2-year Treasury yield increased from 4.59% to 4.72%, and the 10-year Treasury yield went up from 4.19% to 4.33%. This rise was propelled by stronger-than-anticipated ISM data and a substantial pipeline of corporate issuances. Market expectations for the Federal Reserve's funds rate, which currently stands at a midpoint of 5.375%, are to remain unchanged at the upcoming meeting on May 2, with a 55% likelihood of a rate cut by June.
In line with broader market movements, credit indices saw CDX widen by half a basis point to 52, while U.S. IG cash spreads remained relatively stable despite a vigorous start to the week for the U.S. primary markets. The session saw seven issuers price USD 8.4 billion, kicking off a week that was initially expected to see around USD 20 billion in supply.
Commodities:
Crude markets have recently reached their highest levels since October of the previous year, driven by a combination of tightening crude supplies, geopolitical tensions, and specific national strategies affecting oil supply. Notably, an Israeli attack on an Iranian embassy in Syria and reports of Mexico's state-owned petroleum company, Pemex, cancelling contracts to supply its flagship Maya crude oil to the US, Europe, and Asia have contributed to this uptick in sentiment.
The May West Texas Intermediate (WTI) contract saw a 0.9% increase to $83.93, while the June Brent contract rose by 0.7% to $87.63. Pemex's decision is reportedly part of a strategy to boost domestic production of gasoline and diesel, aligning with efforts to reach higher refinery operation rates, which in February were near the highest in over six years. This move precedes the Mexican Presidential election scheduled for June 2 and comes ahead of an OPEC Ministerial Meeting, which is expected to focus on members' compliance with agreed output restrictions. The Israeli military action in Damascus, which reportedly resulted in the deaths of three senior members of the Islamic Revolutionary Guard Corps (IRGC), including a top military commander, according to Iranian media, further escalates regional tensions.
Investment Tip of The Day
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