Market Update – May 28 – US Inflation & Stimulus in focus

Market News Today – Treasuries slumped after news President Biden will offer a $6 tln spending plan on Friday. Gilts led a sell off in EGBs yesterday after hawkish leaning comments from BoE’s Vlieghe hinted at the possibility of an early rate hike. Wall Street was generally firmer on reflation trades and the stimulus news, though the major indexes also lost altitude into the close as the administration also indicated it wanted to make the capital gains tax increase retroactive to April. As for the data, the mixed numbers didn’t provided any clear directional clues. The BoJ is reportedly mulling an extension of the pandemic relief program as Japan prepares to extend its state of emergency. Stock markets at least moved broadly higher across the Asia-Pacific region. JPN225 jumped 2.1%, at 29,127.

Today, stock markets are not really spooked and the GER30 and UK100 are up 0.3% and 0.4% respectively, alongside broad gains in US futures. In the meantime, German import prices were released and jumped 10.3% y/y in April, the highest reading since December 2010 and up from 6.9% y/y in the previous month. Base effects from energy prices remain the main driving factor, with oil prices up nearly 200%, prices for mineral oil products nearly 80% and natural gas up nearly 60%.

In FX markets, NZD eased across the board, while USD and Yen were sought. NZDUSD is at 0.7240 (200-period EMA). Both EUR and GBP moved lower against the Dollar, with EURUSD at 1.2175 and Cable at 1.4105.  USOIL rallied to $67.16. Gold is at $1889.30 ahead of today’s data. 

Today: Local data releases today are likely to support the recovery story, with Eurozone ESI economic confidence, and  key US data in the PM session, i.e. PCE, Michigan Index and Good Trade Balance. The G7 meeting of Finance Ministers and central bankers may also attract some attention.

Biggest Mover @ (07:30 GMT – NZDUSD -0.65%) NZDUSD dipped to 0.7240. In the 1 hour chart, faster MAs remain aligned lower, RSI 31 and still sloping, MACD histogram & signal line turned below zero. H1 ATR 0.0010, Daily ATR 0.0069.

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Andria Pichidi

Market Analyst

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Source: /240320/