Daily Comments

The central bank of Korea became the latest to hold rates steady. Asian markets were mostly lower except the Nikkei 225 jumped +1.26%. The Shanghai Composite tumbled -1.33%. European markets were mixed. The DAX Index inched up +0.06%. 10-year bunds yield 2.60%. For 05/18 Initial Claims printed at 215K compared to 220K consensus. April New Home Sales fell to 634K vs. 675K est. The May flash Composite PMI bounced to 54.4 (manufacturing 50.9 vs. 50.1 est., services 54.8 vs. 51.4 est.). The Chicago Fed National Activity Index printed at -0.23 from a prior revised level of -0.04. The KC Fed Mfg. Index improved from -8 to -2. 10-Year Note yields jumped to 4.482%. Today’s $16B 10-yr TIPS auction was uneventful. The June US$ Index was up +0.15% to 104.990. July Crude Oil retreated -90% to $76.87. June Gold sank -2.4% to $2,335.40. Bitcoin lost -4.2% to $66,823. On the coattails of NVDA’s earnings report (beating est., 10:1 stock split, increased dividend) large cap indexes surged overnight to all-time highs (NVDA now 3rd largest co. in the world). After the open, the ES slipped into the red and the NQ pared gains. Stocks then rode a rollercoaster, repeatedly flipping between positive/negative. At midday prices reversed and went firmly red. It seems the only positive stock was NVDA, with the equal weight SP 500 (RSP) down -1.4%.

In Japan, machinery orders for April rose, imports and exports both grew, the trade deficit widened, and May business sentiment improved. The Nikkei 225 fell -0.85% while the Shanghai Composite eked out a gain of +0.02%. European markets weakened. UK April CPI was +2.3% vs. +2.1% est. The DAX Index fell -0.25%. 10-year bunds yield 2.539%. For 05/18 the MBA Mortgage Apps Index rose +1.9% and EIA Crude Inventories rose to 1.8M bbls. April Existing Home Sales fell by -1.9%, a big miss vs. +0.8% exp., and now down -1.9% YoY. March was revised from -4.3% MoM to -3.7%. The April median sales price was up +5.7% YoY to $407,600, the highest April print since 1999. The FOMC Minutes from 05/01 revealed many members were still considering rate hikes (see Looking Ahead). 10-Year Notes yield 4.435%. The $16B 20-yr bond auction had a high yield of 4.635% vs. 4.818% last month, and found good demand. The June US$ Index added +0.27% to 104.840. July Crude Oil fell -0.8% to $78.01. June Gold sank -1.8% to $2,382.50. TGT missed quarterly sales estimates, shares lost -8% pre-market. TSLA reported European sales at a 15-mo low, shares fell -3.0%. Stocks were quiet but after the Fed Minutes they sold off. After the close NVDA earnings beat est., with its stock up +2.4% after-hours.

Asian markets were lower, taking a pause from their recent strong run. The Nikkei 225 fell -0.31% and the Shanghai Composite lost -0.42%. European markets were red. The DAX Index slipped -0.22%. 10-year bunds yield 2.503%. There were no economic reports on the calendar for today. 10-Year Notes yield 4.417%. The June US$ Index inched up +0.06% to 104.525. July Crude Oil faded -0.88% to $78.60. June Gold dipped -0.44% to $2,427.70. July Silver is near a 9-yr high, but was down -0.42% to $32.29. Bitcoin was off -0.7% to $69,452. Looking at the CNN Fear & Greed Index, it’s hovering in the mid-60 area at 65, which is in the middle of the “Greed” range. There was a full schedule of Fed speakers today, in chronological order we heard from Waller, Barkin, Williams, Bostic, Barr, then a panel with Mester, Bostic and Collins. Waller said that it’ll be several months before rates should ease, provided there’s a string of accommodative monthly inflation data. In the overnight session stock index futures were at first weaker, then reversed to near unchanged, but by the open of the day session the ES was weaker. Prices then immediately began to claw upwards, going positive early in the day, then they went to unchanged, only to rally by the close.