RockCreek Daily Market Update

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GLOBAL MARKET SNAPSHOT 

Equity Markets:  
Risk sentiment seesawed back on Wednesday as markets rose across Asia, Europe and the Americas. In the U.S., like Monday’s price action, it was small cap value leading while energy (+3.8%) and health care (+0.1%) served as bookends on a sector basis. Retail names were among the laggards despite better than expected first quarter results reported by Target (-3.3%) and Lowe’s (+0.2%). Chinese companies listed in the U.S. experienced some midday selling pressure after the U.S. Senate passed a bill that could force some Chinese companies to delist from U.S. exchanges. 

Bond Markets:
Treasury yields finished marginally lower along the curve. The Treasury issued its first 20-year bond since 1986 – the $20 billion auction was well received relative to expectations as some feared supply and demand for the issue was out of line. The U.K. sold negative yielding debt for the first time, selling £3.8 billion of 3-year Gilts at a yield of -0.003%.

Currency Markets:  
The U.S. dollar index decreased -0.2%. British pound was the laggard among G10 as weak inflation numbers give the BoE more latitude to expand its bond buying program, and BoE governor Andrew Bailey refused to rule out negative rate policy in testimony to the Commons Treasury select committee.

Commodity Markets:
The Bloomberg Commodity Index increased +0.6%. WTI (+4.9%) continued its climb as the EIA reported another surprise inventory decline with a net -5.0 million barrel draw last week.

MACRO OVERVIEW

Thailand’s central bank cuts its headline rate by 25 bps to a record low of 0.50% in a 4-3 vote. The three dissenting votes preferred to hold policy unchanged. According to the release, “… the Committee assessed that the Thai economy would contract in 2020 more than the previous assessment due to the more-than-expected contraction of the global economy along with the containment measures worldwide. Headline inflation would be more negative than previously assessed. Financial stability would be more vulnerable given the economic outlook. Most members viewed that more accommodative monetary policy would alleviate the negative impacts as well as reinforce the previously announced fiscal, financial, and credit measures.”

U.K. consumer price inflation slowed to the lowest level in four years as prices declined -0.2% in April. The year-over-year change slowed to 0.8% from 1.5% in March. Both were one-tenth lower than expected. The largest contributor to the change this month was falling fuel prices – core CPI slowed to just 1.4%.

Consumer confidence in the Eurozone improved in May according to a survey conducted by the European Commission. The indicator increased 3.2 points to -18.8 for the euro area but remained well below the long-term average of -11.1.

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