S&P -1.2% / S&P -1.5% / CCMP -1.6% / US10yr -6.5pts 4.52 / CRUDE +0.8% $85.66 / GOLD -1.2% $2,344 / VIX +16% $17.30.
US Treasuries were buoyed by German bunds, which had rallied on dovish ECB comments. The rally intensified as amid more reports emerged of an ‘imminent’ Iran attack against Israel. Other safe haven assets were bid with Gold breaking above $2400 for the first time while Brent surged above $92 - the highest since Oct.
Stocks struggled with the Dow down over 550pts; Nasdaq was -1.8%. VIX jumped above 18 for the first time since November. Banks under pressure following earnings miss, JPM -6.5% / CITI -1.7% (GS due tonight, MS tomorrow). The dollar rallied, BBDXY nearing 1260, again the highest since mid-November.
Data had limited impact. April UMich saw sentiment fall to 77.9 vs 79.0 est. 1yr inflation however climbed to 3.1% (2.9% est) while 5-10y rose to 3.0% vs 2.8%est.
Fed speakers: Collins and Schmid repeat resilient economy and still elevated inflation will delay rate cuts; Goolsbee was sounding much less confident on the path of inflation.
There was a large outflow in reverse repo’s ahead of Monday’s mid-month coupon settlements/tax date, RRP volumes fell to $403b – the lowest since May 2021. This could create some tightness at the short end.
Due to Israel's robust defence systems and pre-emptive measures, the impact was largely minimized. This outcome may be attributed to Israel's defensive prowess and Iran's conspicuous signalling of its intentions beforehand. The strike on the Iranian consulate in Damascus, which precipitated the drone attack, was a calculated move by Netanyahu to exert pressure on Khamenei. This morning 1-yrs are opening weaker and Dow Futures are up 100 points.
The week ahead
Retail sales in the US; UK, Japan and NZ inflation reports; and China GDP are the data highlights this week. Also IMF and World Bank spring meetings
US Fedspeak, including Powell in a Q&A with BoC Governor Tiff Macklem on Tuesday, will be a highlight in wake of the stronger than expected March CPI print. On the data front, retail sales, housing starts and building permits.
Europe: final March CPI for Eurozone, industrial production for February.
UK labour market, inflation, retail sales
India: CPI for March, machinery orders and trade data
Australia labour force, NZ CPI
The day ahead
NZ net migration, Feb
Japan machinery orders, Feb.
Eurozone IP, Feb.
US retail sales, March. NAHB housing index, April.