Daily Comments

China’s exports for March fell even more than expected. Japanese officials continue to jawbone against the weakening yen but have yet to intervene. The Nikkei 225 rose +0.21% while the Shanghai Composite slipped -0.49%. European markets were mixed. The DAX Index slipped -0.13%. 10-year bunds yield 2.361%. For 04/06 Baker Hughes reported that the U.S. rig count was up 2 to 758. March Import Prices rose +0.4% vs. +0.3% estimated, and Export Prices climbed +0.3% as expected (both rising at fastest pace in a year). Prelim April UMich Consumer Sentiment fell to 77.9, and Year-ahead Inflation Expectations went from +2.9% in March to +3.1%. 10-Year Note yields fell to 4.514% (as investors bought fled to safety). The June US$ Index leapt +0.73% to end at a cycle high of 105.830. May Crude Oil soared early but settled only +0.8% higher at $85.66. Early today, June Gold spiked to a record high of $2,448.80 (on the heels of central bank…Chinese…buying) but quickly reversed to end lower by -0.56% at $2,359.20. Geopolitical turmoil re Israel/Iran continues to escalate, with the US restricting diplomatic travel in Israel in anticipation of an Iranian attack. JPM earnings/outlook disappointed, with shares off -6.5%. China wants its telecom industry to stop buying foreign (US) chips. US stocks were negative early, weakened further and ended deeply red.

China’s consumer inflation for March came in up +0.1%, much cooler than expected, with producer prices down -2.8% year on year. The Nikkei 225 was down -0.35% while the Shanghai Composite managed to gain +0.23%. The ECB kept interest rates at a record 4% for the 5th consecutive meeting. European markets closed lower. The DAX Index fell -0.79%. 10-year bunds yield 2.468%. For 04/06 Initial Claims were a modest 211K vs. 215K consensus. The March Producer Price Index was up +0.2%, slightly lower than +0.3% expected. On a YoY basis, the headline PPI was projected at +2.2% and printed at +2.1%, the highest reading since April of 2023, and up from a prior reading of +1.6%. Core CPI (ex-food and energy) gained +0.2% MoM and +2.4% YoY vs. +2.3% estimated. 10-Year Notes yield 4.576% (avg. 30yr mtge rate jumped to 7.30%). The June US$ Index was quiet at 105.030. May Crude Oil fell -1.4% to $85.02. June Gold gained +1.4% to $2,381.20. NY Fed. Pres. Williams said he’s not caught up by monthly inflation reports, that yesterday’s CPI was part of “bumps along the way” on inflation trending down to the Fed’s 2% target. Today’s $22B 30-yr T-Bond auction was weak, with a high yield of 4.671% vs. 4.331% in March. APPL AI headlines coincided with a surge higher in the broader indexes, with stocks ending strong.

Asian markets were quietly lower ahead of today’s closely watched U.S. inflation data. The Nikkei 225 fell back -0.48% and the Shanghai Composite lost -0.70%. European markets were mixed. The DAX Index added +0.11%. 10-year bunds yield 2.435%. For 04/06 the MBA Mortgage Apps Index ticked up +0.1% on strength in refinancings and EIA Crude Inventories are 5.8M bbls. Prelim Feb. Wholesale Inventories met est. of +0.5%. For the 4th month in a row CPI was hot, up in Mar. by +0.4% vs. +0.3% est. (ex-food/energy also +0.4% vs. +0.3% est.). YoY the CPI is +3.5% vs. +3.5% est. (ex-food/energy up +3.8% YoY vs. +3.7% est.). The Mar. Treasury Statement printed at $-236.5B vs. $-340B est. FOMC minutes from 03/20 seem quite outdated vs. what markets are now telling us about sticky inflation, timing and inevitability of rate cuts. 10-Year Note yields surged +0.1900 bp to 4.559% (the 2-Yr soared, nearing 5.0% again). The June US$ Index soared +1.0% at 104.960. May Crude Oil slid -0.1% to $85.11. June Gold lost -0.5% to $2,350.00. After the hot inflation print, the ES plunged almost 90 pts. June rate cuts now seem off the table, but Pres. Biden said there will be a cut before year-end. The $39B 10Y T-Note auction went poorly and stocks fell to new intraday lows. Indexes could not recover, ending firmly red.