China will not set a GDP target for 2020 and appears ready to impose a new security law on Hong Kong. The Hang Seng index plunged -5.6%, the most in 5 years, as China imposes a national security law on Hong Kong, with their intelligence agencies setting up shop there. Asian markets were broadly lower. The Nikkei 225 fell -0.80% while the Shanghai Composite tumbled -1.89%. The FTSE slid -0.37% to 5,993, the DAX gained +0.07% to 11,073, the Stoxx 600 lost -0.03% to 340. 10-yr Bunds yield -0.491%. Baker-Hughes reported that the U.S. oil rig count for 05/15 down by -21 to 318. Yields on 10-Year Notes are 0.657%. The June US$ Index gained +0.38% to 99.780. June gold gained +0.71% to $1,734.20. July crude fell -1.59% to $33.38. The ES settled higher from a week ago, as hopes of further fiscal and/or monetary stimulus are functioning like a long put. States are beginning to reopen in some form or another, but mostly very, very slowly and cautiously. More people have lost their jobs in 2 months than all the jobs created since 2010. Massive job losses and hits to GDP won’t be resolved overnight, but the Fed and Congress are throwing all they have at it.

Japan April exports plunged -21.9%, but that was better than expectations. Asian markets were mostly lower. The Nikkei 225 fell back -0.21% and the Shanghai Composite lost -0.55%. The FTSE slid -0.86% to 6,015, the DAX fell -1.41% to 11,065, the Stoxx 600 lost -0.75% to 340. 10-yr Bunds yield -0.488%. Initial Claims for 05/15 fell to a still extreme 2,438K, vs 2,400K expected, and claims for 05.08 were revised lower. The 9-week total is 38.64M, the highest level ever. April Existing Home Sales fell to a 9-year lows, down -17.8% MoM at 4.33mm vs 4.22mm expected. The median home prices was up +7.4% YoY, to $286,800. Inventory fell -19.7% from a year ago, to 1.47M units, a 4.1 mo supply, representing a tight market. The May Philadelphia Fed Business Outlook Survey was -43.1 and the PMI Composite FLASH rebounded to a still weak 36.4 (mfg 39.8, services 36.9). The June US$ Index gained +0.33% to 99.460. June gold lost -1.50% to $1,726.00. July crude gained +1.58% to $34.02. After stocks initially rallied after the employment data, the broader markets couldn’t find their footing today and the bears pressed the bulls modestly, with prices ending in the red.

Despite concerns about growth during the pandemic, China held loan rates steady. The Nikkei 225 finished higher, up +0.7% while the Shanghai Composite fell -0.51%. The FTSE gained +1.08% to 6,067, the DAX jumped +1.34% to 11,223, the Stoxx 600 gained +0.98% to 342. 10-yr Bunds yield -0.473%. The MBA Mortgage Applications Index for 05/15 fell -2.6% as a rise in purchases was more than offset by a fall in refinances. The EIA reported that crude inventories for 05/15 fell by 5M barrels to 526.5M, vs expectations for a 1.2M barrel rise. 10-year Notes yield 0.685%. The June US$ Index slid to 99.180. June gold added +0.33% to $1,751.40. June crude rallied to $33.63. Ahead of Memorial Day this Monday, most states have lifted some restrictions on personal and business activity, and this is perhaps contributing to today’s optimistic tone in the markets. The much-anticipated Fed Minutes from their April 28-29 meeting were released at 2 pm ET with no major surprises. A lot has happened in the 3 weeks since the meeting, such as states re-opening, and Fed purchases of high-yield corporate bond ETF’s. Equities were strong all day.