Financial Markets Morning Commentary
Financial Markets Morning Commentary
Tom Pawlicki
- Interest Rates
Financial Markets Morning Commentary
By: Tom Pawlicki, Senior Specialist, Market Intelligence
Economic
- 10-year futures are +8/32. Yields are -4.00 bps at 4.437%. S&P futures are -14.00. Oil prices are correcting a small portion of yesterday’s rally, after President Trump told ABC news that there could be a deal with Iran to extend the ceasefire “over the next week.” Iran’s IRGC yesterday threatened to close the Bab El Mandeb Strait over Israel’s incursion in Lebanon, resulting in President Trump reportedly holding a heated phone call with Israeli Prime Minister Netanyahu. The IEA is again warning about critically low global oil inventories and ADNOC warned about a tipping point for oil prices if the war persists. President Trump eased some tariffs on steel, aluminum and copper yesterday afternoon.
- Data on Strait of Hormuz transits is not available today.
- JOLTS job openings are due later this morning and Federal Reserve President Beth Hammack is scheduled to speak today. ADP payrolls and ISM non-manufacturing PMI are on Wednesday, weekly jobless claims, Challenger layoffs and revised productivity are on Thursday, and nonfarm payrolls are on Friday.
- The euro zone has a busy week with final May PMIs, consumer inflation expectations, May flash HICP, April PPI, retail sales, and revised Q1 GDP. European Central Bank Governor Christina Lagarde speaks on Thursday.
- (Reuters) ISM manufacturing PMI published yesterday morning was 54.0 vs. 53.0 expected and 52.7 previously. Prices paid were 82.1 vs. 84.6 while employment was 48.6 vs. 46.4.
- (Reuters) President Donald Trump on Monday signed a proclamation amending his Section 232 national security tariffs on some aluminum, steel and copper imports, the White House said. The proclamation lowers tariffs on some steel and aluminum derivative products, including certain types of agricultural machinery and residential heating, air conditioning and ventilation equipment to 15% from 25% previously.
- (Bloomberg) US stocks may be vaulting from one record to the next, but Wall Street analysts covering them are in no rush to keep up. Researchers who follow individual companies and almost always predict shares will go up are slashing their views on S&P 500 Index firms at a faster pace than raising them for the second time since the war in Iran began, data compiled by Bloomberg Intelligence show.
- (Reuters) AI giant Anthropic said on Monday it has confidentially filed for a U.S. initial public offering.
- (Bloomberg) Google parent Alphabet Inc. is raising $80 billion through a package of equity offerings, including an investment deal with Berkshire Hathaway Inc., as the company races to fund its ambitious artificial intelligence spending plans.
- (Reuters) HPE surged about 25% in premarket trading after the AI server maker pulled forward its long-term financial targets by two years.
- (Reuters) Marvell Technology's shares surged more than 27% after Nvidia Chief Executive Officer Jensen Huang called the chipmaker the next "trillion dollar company" at the Computex conference in Taipei. Nvidia invested $2 billion in Marvell in March.
- (Reuters) Microchip Technology added 5.4% after an upbeat data center revenue forecast.
- (Bloomberg) SK Hynix Inc. plans to double its memory chip wafer capacity over the coming half-decade, a major expansion that should help ease a global shortage of an essential component of AI.
- (Bloomberg) Generac is up 9% after the company signed a global agreement to supply backup power generators to a leading hyperscale data center operator.
- (Bloomberg) Intuit is down 5% after Goldman downgraded its rating on the maker of tax-preparation software to sell, the only negative rating among 32 analysts tracked by Bloomberg.
- (Reuters) Euro zone flash inflation rose to an annual rate of 3.2% in May, according to a first estimate from the EU's statistics agency. The inflation figure was in line with expectations.
- (Reuters) A European Parliament committee voted on Tuesday to remove EU import duties on many U.S. goods, a step to comply with the trade deal agreed with the United States last year and avert the return of transatlantic tariff conflict. The legislation still needs to be approved by the full EU assembly in mid-June, but the committee backing on Tuesday gives a strong indication of how that decisive vote will go.
Geopolitical
- (Reuters) President Donald Trump told ABC News on Monday that he thinks there will be a deal with Iran to extend the ceasefire and reopen the Strait of Hormuz "over the next week", according to a post from the outlet on X.
- (Reuters) Iran is reviewing a proposed agreement with the United States to halt the war between the two countries, Iran's Mehr news reported on Tuesday, after U.S. President Donald Trump said talks to reach a deal were continuing.
- (Reuters) The commander of Iran's Revolutionary Guards Quds Force Esmaeil Qaani said on Monday that Israeli operations in Lebanon and Gaza will lead the Resistance Axis, Iran and its allies, to establish a similar traffic situation both in Bab El Mandeb and Hormuz strait, according to state media.
- (Reuters) President Donald Trump reacted by calling Israeli Prime Minister Benjamin Netanyahu and, according to an Axios report, swearing at him as well as accusing him of ingratitude. The US leader said he also spoke to representatives of Hezbollah. Trump said Israel and Hezbollah agreed to stop firing on one another and Israeli forces had backed off on raiding Beirut, Lebanon’s capital.
- (Reuters) Despite the current ceasefire between the United States and Iran, it remains too risky to move the thousands of sailors stuck in the Gulf, the head of the U.N.'s shipping agency said.
- (Reuters) Russia pounded cities across Ukraine with hundreds of drones and dozens of missiles early on Tuesday in attacks that authorities said killed 18 people and wounded more than 100. The attacks on cities including Kyiv and Dnipro followed Russian warnings of "systematic" strikes on the capital after a deadly drone attack on a dormitory in Ukraine's Russian-held region of Luhansk last month which Kyiv denies carrying out. Ukraine's air force said Russia launched 656 drones and 73 missiles, including 33 hard-to-shoot-down ballistic missiles and eight Zircon hypersonic missiles - which appeared to be the largest number of such missiles used during the war.
- (Reuters) The Ilsky oil refinery, in the southern Russian region of Krasnodar, caught fire after a drone attack, local authorities said. Ukraine's military confirmed the strike.
Energy
- WTI is -$1.05/bbl at $91.11/bbl, while Brent is -$1.23/bbl at $93.75/bbl. Natural gas is -$0.044/MMBtu at $3.135/MMBtu.
- (Reuters) Iran has set the official selling price for its light crude oil grade for Asian buyers at $13 a barrel above the Oman/Dubai average for June, according to state-owned National Iranian Oil Company. The May price was set at a premium of $15.40 to Oman/Dubai quotes.
- (Reuters) August could mark a tipping point for much higher oil prices if demand picks up and the Iran war supply crisis persists, and it could take up to a year for energy supply chains to recover even after the reopening of the Strait of Hormuz, an executive from Abu Dhabi's state oil company said on Tuesday. Philippe Khoury, ADNOC's executive vice president for sales and trading, said transit through the strait would remain partial and below pre-war levels as long as uncertainty over peace persists.
- (Bloomberg) Commodities are in a “super-squeeze” that will worsen if the Strait of Hormuz remains effectively shut, according to HSBC Holdings Plc.
- (Reuters) Global oil inventories could hit critical or historically low levels just ahead of the peak summer demand period if stock draws continue at their current pace, the head of the International Energy Agency's oil industry and markets division said on Tuesday. "We're seeing stock draws continuing into the summer, and with the possibility or the likelihood that we reach critical levels or historical low levels just ahead of the peak summer demand," Toril Bosoni said.
- (Reuters) OPEC+ oil-producing countries will likely agree a further hike in their output target for July when they meet on Sunday, three sources said, though the Iran war has so far prevented several from delivering previous increases. In reality, the group's production has collapsed due to export cuts by Gulf members, averaging 33.19 million bpd in April versus 42.77 million in February, according to OPEC figures.
Metals
- Gold is +$50.30/oz, trading at $4,556.60/oz, while silver is +$1.566/oz at $76.82/oz.
- The dollar index is -0.133 points at 99.068.
- (Reuters) Gold rose 1% on Tuesday, buoyed by lower U.S. Treasury yields, while weaker oil prices eased fears of higher inflation and elevated interest rates.
- (Reuters) Barrick Mining is weighing a possible London listing for its African business, with a potential all-share transaction with UK-listed Endeavour Mining seen as one option under consideration, two sources familiar with the matter told Reuters.
- Interest Rates
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Financial Markets Morning Commentary
Financial Markets Morning Commentary
Tom Pawlicki
- Interest Rates
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