All the major markets are up this morning before the bell and even the dollar extended its post-Fed decline before rebounding some. The DXY dollar index posted a two-month low at 90.42 before recouping to around 90.70, while EUR-USD pegged a two-month high at 1.2150 before ebbing back towards 1.2100.
The lack of even a hint of a possible tapering by the Fed yesterday saw the 10-year T-note yield press back under 1.62% at the lows earlier, though the yield subsequently lifted back to 1.66% with markets anticipating a solid 5.8% y/y print on today’s U.S. Q1 GDP release, alongside a spike in chain prices and an expected 84k drop in continuing claims data.
S&P E-mini and Nasdaq 100 futures racked up gains of over 0.7% on Globex following stellar earnings reports from Apple and Facebook. Samsung followed-up with an earnings beat, and there were a raft of strong corporate “show and tells” out of Europe, too. In the absence of Japanese markets, which were closed for a holiday, most Asian stock markets gained, led by Chinese and Hong Kong indices, and most European equity markets also rallied.
Base metals rallied, with copper and aluminum prices, for instance, hitting respective 10- and three-year highs. Front-month WTI oil price futures rose over 1% in making a six-week high at $64.85. Data releases revealed perky price pressures, with German import prices for March lifting to a rate of 6.9% y/y while Australian export prices rose to a 11.2% q/q clip in Q1. The April Eurozone ESI economic confidence survey came in much stronger than forecast, and while German April unemployment unexpectedly lifted slightly, the accelerating vaccine rollout in Germany and other employment data showed that the labour market is improving there.
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The dollar bloc and other cyclical currencies rallied against the risk-on backdrop. AUD-USD and AUD-JPY both ascended into respective six-week high terrain, while USD-CAD tumbled to a three-year low, at 1.2285. CAD-JPY rose above its Q1 highs on route to printing 30-month highs.
Treasuries recovered from small losses and rallied after the FOMC assured policy was on hold and would remain accommodative for a long time into the future. There had been some suspicion of a possible hawkish hint given the strength in the recovery and the trillions of fiscal stimulus on board.
The 2-year yields fell nearly 2 bps to 0.164% after testing 0.18%. The 10-year rallied to 1.609%. Wall Street ended with small losses, with weakness in Microsoft and Boeing weighing on the Dow, which fell -0.48%. The S&P 500 was fractionally lower.
The markets will quickly turn their attention back to earnings and data after the uneventful FOMC.
Stocks To Watch Today
Today’s earnings calendar features reports from Amazon, Mastercard, Merck, Thermo Fisher, McDonald’s, Shell, Bristol-Myers Squibb, Caterpillar, American Tower, S&P Global, Altria, Southern Company, ConocoPhillips, ICE, NIO, Northrup Grumman, Newmont, KLA, Keurig Dr Pepper, Kraft Heinz, Baxter International, BCE, Parker-Hannifin, Lloyds, T. Rowe Price, DexCom, Xcel Energy, Carrier Global, Hershey, Fortinet, Skyworks Solutions, ResMed, PG&E, Fortive, Hartford Financial, Nokia, International Paper, Church & Dwight, Western Digital, Teleflex, Generac, Cheniere Energy, Bio-Rad Labs, CMS Energy, Citrix Systems, Zendesk, Eastman Chemical, ABIOMED, Domino’s Pizza, BioMarin Pharmaceuticals, Fortune Brands, Mohawk Industries, Textron, Tapestry, Molson Coors, and Five9.
For data, the Q1 advance GDP report is due, where we expect a 5.8% growth clip, versus 4.3% in Q4. Q1 chain prices are set to rise to 3.8% from 2.0% previously.
Weekly jobless claims are due, with initial claims seen rising 53k to 600k, and continuing claims expected to fall 84k to 3.590 mln. The March pending home sales index is forecast to jump to 113.6 from 110.3.