Daily Comments

U.S.-China trade worries were on the rise as global suppliers trimmed relations with Huawei. Asian markets were lower. The Nikkei 225 fell -0.62% and the Shanghai Composite lost -1.36%. Reports have surfaced the British Prime Minister May will resign as early as Friday. European markets closed sharply lower. The DAX lost -1.78%. Yields on 10-yr. Bunds closed at -0.120%. Initial Claims for the week of 05/17 were a benign 211K. April New Home Sales were light at 673K, although March was revised higher. The May PMI Composite FLASH came in well below expectations and even beneath the analysts’ range at 50.9 (manufacturing at 50.6 and services at 50.9). Yields on 10-Year Notes fell to 2.312%, the lowest yield since late 2017. The June US$ Index fell back -0.155 to 97.725. June gold jumped +0.9% to $1,285.40. July crude collapsed, falling -5.7% to $57.91. Another ratcheting up of rhetoric weighed on equities which opened sharply lower and sold off from there. Volume was only moderate. Averages bounced off the lows late in the session, but still finished broadly lower.

With no new news to digest, Asian markets were mixed. The Nikkei 225 eked out a gain of +0.05%. Meanwhile, the Shanghai Composite gave back -0.49%. Opposition to Prime Minister May’s latest Brexit proposal seemed likely to sink it. European markets closed narrowly mixed. The DAX rose +0.21%. Yields on 10-yr. Bunds fell back, closing at -0.078%. Last night’s API report showed a unexpected build in crude inventories for the week of 05/17 of +2.4M barrels. This morning’s EIA report showed an even larger build of +4.7M barrels. Yields on 10-Year Notes are back near the recent lows, closing at 2.387%. The June US$ Index ticked down -0.015 to 97.880. June gold was up +0.1% to $1,274.20. July crude tumbled -2.7% to $61.42. An anti-trust ruling against Qualcomm shook tech shares heading into the U.S. open. Still, markets shook off early concerns and began to recover. Trade was choppy and, while in the red, off the early lows. Volume was moderate. With no momentum building in either direction, averages sank toward the lows in the final hour, closing modestly lower.

While there was a slight easing in tensions between the U.S. and China, there seems little likelihood that the parties can return to the promise of just two weeks ago. Asian markets were mixed. The Nikkei 225 fell -0.14%. The Shanghai Composite rallied +1.23%. Prime Minister May offered a vote on a second referendum on Brexit IF lawmakers approve her withdrawal deal. European markets closed higher. The DAX rose +0.85%. Yields on 10-yr. Bunds moved higher again, closing at -0.059%. April Existing Home Sales disappointed, falling -0.4% to an annual rate of 5.190M. Yields on 10-Year Notes edged up to 2.430%. The June US$ Index rose again, adding +0.130 to 97.895. June gold lost -0.3% to $1,273.20. June crude expired today, falling -0.2% to $62.99. July Crude settled at 63.13. Equities pointed to a higher open after the Commerce Department eased restrictions on suppliers and vendors of Chinese telecom giant Huawei until at least August 1. Although volume was the lightest we’ve seen in some time, averages sustained strong gains throughout the day. At the close, markets were moderately higher and just off the highs for the day.