Daily Comments

The Japan April trade surplus was narrower than expected. North Korea tested another missile over the weekend. Asian markets were mixed with the Nikkei 225 up +0.45% and the Shanghai Composite down -0.48%. European equities were narrowly mixed. The DAX was off, but only -0.10%.. Yields on the 10-yr. Bund rose again to 0.398%. There were no major economic reports today. The Chicago Fed ‘s national activity index rose to its highest level since March 2014. The only drags on the index were the contribution of personal consumption and the housing category. Even as yields on the 10-Year Note held steady at 2.252%, the US$ Index slid further into the lows for the year. June gold was strong, adding +0.6% to $1,261.40. On its final day of trading, June crude added +0.8% to $50.73. The market was supported by expectations of an extension to the OPEC output deal when OPEC meets later this week. Beginning tomorrow, we’ll be tracking the July crude contract. Equities began the day quietly but soon gave way to bullish enthusiasm. Volume was on the light side but markets are now once again approaching all-time highs. At the close, markets had broad, solid gains.

Asian markets were mixed, but both the Nikkei 225 (+0.19%) and the Shanghai Composite (+0.03%) managed modest gains. German April PPI rose faster than expected reporting the fastest year-on-year increase in over 5 years. European equities were moderately higher. The DAX rose +0.39%. Yields on the 10-yr. Bund recovered from recent losses, rising to 0.374%. There were no major economic reports today. Baker Hughes reported that the U.S. oil-rig count rose by 8 to 720 for the 18th consecutive weekly rise. Yields on the 10-Year note were higher (2.233%), but did not rise at the same pace as equities. The US$ Index tumbled again, coming closer to lows from last November. June gold managed to add $0.80 to $1,253.60. June crude added +2.0% to $50.33 as optimism grows on a possible 9-month extension to the current production deal from OPEC, as well as the possibility that deeper cuts are being considered. A solid open by equities turned into steady buying. Both the DJIA and the S&P 500 retook their 50-day Moving Averages. Some late political turmoil took markets off their highs, but at the close, they still had moderately strong gains.

Japan Q1 GDP was stronger than expected but the deflator fell at the fastest pace in 4 years. Asian markets settled lower following declines in the U.S. The Nikkei 225 fell -1.32% and the Shanghai Composite fell -0.45%. European equities were also impacted by yesterday’s U.S. turmoil. While lower, European markets closed well off their lows. The DAX fell -0.33%. Yields on the 10-yr. Bund fell slightly as well, closing at 0.352%. Initial Claims for the week of 05/12 edged lower to 232K. Unlike the Empire Manufacturing earlier this week, the May Philadelphia Fed was a robust 38.8. April Leading Indicators pointed to future growth, rising +0.3%. Yields on the 10-Year note rebounded a bit to 2.228% and the US$ Index finally firmed after falling for 5 straight days. June gold fell back -0.5% to $1,252.80. June crude held its recent rally and added +0.6% to $49.35. Equities wobbled at the open but quickly found their footing and moved marginally into the black. After trading sideways through the morning, buyers stepped in to push markets higher in the afternoon, erasing a significant part of the previous day’s losses. Finishing well off the highs, though, markets closed with modest gains.