Wealth Wednesday
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Market Data
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Global
*Data as of 4pm WAT
Market News
Local
Global
Trump sues Truth Social co-founders, says they're not entitled to stock shares
Tesla quarterly deliveries decline for the first time in nearly four years
Regulator Probes BlackRock and Vanguard Over Huge Stakes in U.S. Banks
Red Sea shipping crisis raises pressure on UAE's non-oil businesses
Seven dead, hundreds injured in most powerful Taiwan quake in 25 years
Market Commentary:
Currencies/Macro:
The US dollar index experienced a slight decrease, down by 0.2%, which came as a surprise given the backdrop of rising US yields, higher crude oil prices, and a rare downturn in risk appetite overnight, with the S&P 500 falling by 0.7%. The euro appreciated from 1.0725, a six-week low, to 1.0779, buoyed by stronger than anticipated final manufacturing PMI figures for March from the Eurozone, aiding in stabilizing sentiment. The USD/JPY pair declined from 151.80 to 151.47.
In the US, job openings in February were reported higher than expected at 8,756,000 (est. 8,730,000, prior revised from 8,863,000 to 8,748,000). Factory orders in February also surpassed expectations, increasing by 1.4% (est. 1.0%, prior -3.8%), with the ex-transport measure also exceeding forecasts.
FOMC member Mester commented on the recent inflation data, indicating that it affirms the uneven nature of the disinflation process, expecting inflation to continue towards the Fed's 2% target albeit at a slower rate than the previous year. However, she emphasized the need for more data to boost confidence in the disinflation trajectory. Daly echoed the sentiment reflected in the dot plot indicating three rate cuts, stating it as a reasonable baseline but highlighted the absence of urgency to adjust rates due to strong growth.
In the Eurozone, the manufacturing PMI for March was finalized higher at 46.1 (est. 45.7, prior 45.7). German CPI for March showed a monthly increase of 0.4% and an annual rate of 2.2% (est. 0.5% m/m and 2.2% y/y), with the EU harmonized figure at 2.3% y/y (prior 2.7%).
The UK's manufacturing PMI for March was also adjusted upwards to 50.3 (est. 49.9, prior 49.9), indicating a better-than-expected performance in manufacturing activity.
Interest Rates:
The US 2-year Treasury yield experienced a roundtrip, starting at 4.69%, reaching 4.73%, and then returning to 4.69%, while the 10-year yield increased from 4.30% to 4.40%, currently at 4.36%. Market pricing indicates that the Federal Reserve's funds rate, currently at a midpoint of 5.375%, is expected to remain unchanged at the upcoming meeting on May 2, with a 60% probability of a rate cut by June.
Reflecting the risk-off mood in the market, credit spreads widened, with Main expanding by 2 basis points to 56, marking the widest point for the new series. In contrast, CDX widened by half a basis point to 52.5, with US investment-grade cash spreads showing little change.
Commodities:
WTI traded above $85 for the first time since October, influenced by Mexican production cuts, escalating tensions in the Middle East, and expectations that the OPEC meeting would concentrate on ensuring member compliance with agreed production limits. The May WTI contract saw a 1.6% increase to $85.08, while the June Brent contract rose 1.7% to $88.91. The May/June prompt calendar spread for WTI exceeded $1 for the first time since February, and the equivalent Brent spread closed at $1.01, indicating a tightening physical market. This situation is the highest outside of expiring contracts since last October.
Iran has promised retaliation against Israel, blaming it for an airstrike on its embassy in Damascus that reportedly resulted in the deaths of three senior members of the IRGC, including a top military commander. According to a Bloomberg poll, OPEC's crude production has remained stable, though Iraq, the UAE, and Gabon have been producing significantly over their quotas.
Investment Tip of The Day
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