OVERNIGHT NEWS
* Euro stalls, yields retreat after Austria, the Netherlands, Denmark and Sweden plan rival EU aid proposal with economic reform
* Day ahead: Euro, UK, US prelim PMIs for May; US weekly claims; SARB f/cast to drop rates by 50bp, CBRT to cut 100bp
* FOMC minutes: discussed cap on short-term yields, limited risk of IOER falling below target range; concern over of considerable downside risks to economic outlook and threat to financial stability
* US Senate passes bill to delist US-listed Chinese firms unless they certify “they are not under foreign government control”
* S. Korea: decline in exports slows to -20.3% yoy from -26.9% in 20 days through May; imports -16.9% vs prev -18.6%
* Nikkei -0.2%, EUR 10y IRS -2bp at -0.145%, Brent crude +1.8% at $36.39/b, highest since 11 March
South Africa – SARB forecast to cut rates today by another 50bp to 3.75%
Risk generally trades on the back foot this morning with U.S. stock-index futures indicating lower after a weaker performance from global indices across Asia and thus far in Europe. Elsewhere, however, WTI futures are on track for its sixth consecutive session of gains while U.S. Treasuries and the greenback gained on the day. Gold trades in the red along with much of the base metals complex, with the exception of nickel and tin.
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- The blame game between the US and China continues as President Trump is blaming Xi Jinping for being behind a disinformation and propaganda attack on the U.S. and Europe. The two countries have continued barbs back and for now on the virus, supply chains and visas and now Taiwan after a long dispute on trade.
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- Coronavirus cases around the globe have now increased to over 5 million with over 328k deaths. Some regions across the globe are beginning to ease restrictions on lockdowns as some begin to take control of the virus. However, new hotspots, such as Brazil are just starting to feel the effects of the virus.
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- AstraZeneca is on the hunt to find a vaccine and was given over $1 billion from the US government in funding to develop a vaccine from Oxford University. They also were able to come to terms on supply agreements for 400 million doses of a vaccine and have the capacity to make 1 billion doses.
Markets are trading lower this morning on worries about escalation of trade tensions. The US
Senate passed a bill that puts some Chinese listings in the US at risk (companies would have
to comply to US accounting rules for the past 3 years). The bills has to passed by the House
of Representatives now. US equity futures are 0.615% lower with tech heavy stocks
continuing to outperform (NQM0 : -0.55%). Europe stocks are down 1.22% led lower by
Financials (-1.70%) and Energy stocks (-1.60%). US 10y yields are 2bp lower this morning.
So far, there has been no retaliation coming from China.
Yesterday, we have published our weekly Markets Call, where we analyse post-lockdown
progress and fiscal initiatives, as well as their impact on markets. Click here to listen to the
webcast. Don’t hesitate to contact us if you have any questions.