European stock markets are now mostly lower, with peripherals underperforming after a marked upward revision to Eurozone Q1 GDP data-fueled tapering concerns. Peripherals had initially outperformed as yields corrected, but as of 11:32GMT MIB and IBEX were down -0.5% and -0.6% respectively, while the DAX had corrected -0.2%. The FTSE 100 meanwhile was hanging on to a modest 0.1% gain, while U.S. futures were narrowly mixed, with the NASDAQ outperforming and up 0.1%.
Key Market Drivers
- U.S. calendar has April JOLTS job openings, April trade report, 3-year sale
- Canada calendar has April trade report – deficit seen widening to -C$1.5 bln
- Dollar firmer, recouping losses seen Monday; focus on upcoming data, events
- Treasuries led EGBs higher, Eurozone bonds underperformed, stocks struggled
- Eurozone Q1 GDP growth revised higher, to -0.3% q/q from -0.6% q/q
- German Jun ZEW investor confidence dipped, but current conditions rebounded
- German Apr industrial production unexpectedly contracted 1.0% m/m
Web outages, including at the New York Times and Amazon Web Services and traders were watching developments to gauge if and to what extent it will hit tech companies.
Indexes remain near record highs and investors will be waiting for U.S. inflation data and the ECB announcement. Asian markets closed mostly lower, with Topix and Nikkei up 0.1% and down -0.2% respectively at the close. The Hang Seng lost -0.2%, the CSI 300 -0.9%, while the ASX managed to lift 0.2%. The front-end WTI future meanwhile is off session highs and trading at USD 68.71 per barrel.
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Trading is likely to remain lackluster as the markets rehash the various crosscurrents in the markets, most important of which are monetary policy developments, alongside growth and inflation dynamics. After bond shorts were crunched on Friday, bond bears look to remain sidelined, at least until the upcoming CPI report, and/or next week’s FOMC. That should leave yields near current levels, although this week’s supply could keep rates slightly elevated
Today’s $58 bln 3-year sale should be fairly easily digested. Today’s calendar also has the April JOLTS job openings report. It will be of interest after the disappointingly modest payroll gains in May. The April trade report is also due where the deficit should narrow to -$67.5 bln from the all-time wide of -$74.4 bln.