Daily Comments

Japan March industrial production was weaker than expected. There are concerns in Asia over the Trump administration’s trade policies and tensions on the Korean peninsula. Markets there were mixed. The Nikkei 225 fell -0.29% while the Shanghai Composite rose +0.08%. Eurozone April CPI rose more than expected with the core rate showing the biggest increase in 3-3/4 years. European equities sagged to finish narrowly lower with the DAX down -0.05%. Yields on the 10-yr. Bund jumped to 0.327%. Advance Q1 GDP was a disappointing +0.7%, the GDP Deflator was above expectations at +2.3%, and the Employment Cost Index was +0.8%. April Chicago PMI was strong at 58.3 and Consumer Sentiment was “weak” at 97. Baker Hughes reported the U.S. oil rig count rose again by 9 to 697, now up 15 weeks in a row. Yields on the 10-Year Note were flat at 2.284%. The US$ Index was soft. June gold inched up +0.2% at $1,268.30. June crude also added +0.7% to $49.33. Equities started on a firm note then slowly sank through the morning. Even an agreement by Congress to extend funding for the government (by 1 week) couldn’t get stocks moving higher. Markets closed modestly lower

China March industrial profits were up by the most in 3-1/2 years. The BOJ left monetary policy unchanged. Asian markets were mixed. The Nikkei 225 fell -0.19% while the Shanghai Composite rose +0.37%. Eurozone April economic confidence rose more than expected to a 9-1/2 year high. The ECB also left its monetary policy unchanged. European equities finally paused from their recent runup with the DAX down -0.23%. Yields on the 10-yr. Bund fell back to 0.302%. Initial Claims for the week of 04/21 rose to 257K. March Durable orders rose +0.7% (ex-transportation -0.2%). The March International Trade in Goods was in line with expectations at -$64.8B. March Pending Home Sales fell -0.8%. With uncertainty over government funding, yields on the 10-Year Note held steady at 2.298%. The US$ Index was steady as well. The lack of volatility spilled over to gold, with June gold edging up +0.1% to $1,265.90. June oil stayed under pressure, falling -1.3% to $48.97. Equities began the day quietly and had modest swings in both directions, but technology stocks were strong all day, moving the NASDAQ 100 to new all-time highs. At the close, other markets were narrowly higher.

The global rally in equities kept moving forward in Asia. Markets there settled higher, with the Nikkei 225 up +1.10% and the Shanghai Composite adding +0.20%. European equities were quiet ahead of tomorrow’s ECB meeting. After a late rally, the DAX was able to add +0.05%. Yields on the 10-yr. Bund moderated slightly to 0.355%. Last night, the API reported a surprise build of +900K barrels in U.S. crude inventory and a large build in gasoline stockpiles. This morning, the EIA officially reported a more market friendly crude draw of -3.6MM barrels. Late in the session, yields on the 10-Year Note fell back to close at 2.305%. Regardless, the US$ Index managed to show gains. June gold, which closed before the pullback in yields, was off -0.2% to $1,264.20. After an up and down session, and despite the relief of a drawdown in inventories, June oil could only manage to finish up +$.06 at $49.62. Equities began the day quietly but soon moved higher. After that, volatility set in with markets swinging in both direction. A rally ensued immediately after the tax plan presentation, but in the last hour, markets gave back all their gains to finish narrowly lower.