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Futures Flat In Quiet Session As Attention Turns To Company Earnings

Tyler Durden's Photo
by Tyler Durden
Monday, Apr 17, 2023 - 12:00 PM

US stock futures are off to a muted start to the week as investor focus turns to first-quarter earnings for clues on the health of corporate America amid the Fed's own admission it is hoping to trigger a recession in the coming months. Futures on the Nasdaq 100 and the S&P 500 were both up a modest 0.1% following Friday's drop despite better-than-expected quarterly reports from the big banks as markets were unnerved by Fed Governor Christopher Waller’s hawkish comments favoring further policy tightening. His views caused investors to ramp up bets on another rate rise in June, following one in May, and also to scale back expectations for rate cuts later in the year.  In Europe too, the Stoxx 600 Index erased an earlier gain.

Among notable premarket movers, Chinese EV maker XPeng soared after the firm unveiled a plan to cut manufacturing costs at the Shanghai International Auto Show. Other US-listed Chinese stocks also rise, rebounding from last week’s slump. Prometheus Biosciences shares surged as much 71% in US premarket trading after Merck struck a deal to buy the biotech company for around $10.8 billion, though traded slightly below the $200/share offer. Analysts were positive on the deal despite its 75% premium to Prometheus’s closing price last Friday, saying that it will help Merck to diversify away from its traditional focus on oncology, while brokers saw no obstacles to the transaction going through. Here are the most notable pre-market movers:

  • Alphabet fell as much as 2% in premarket trading on Monday after a report said Microsoft’s Bing might replace Alphabet’s Google as the default search service on Samsung Electronics devices.
  • Cryptocurrency-exposed stocks fall in US premarket trading as Bitcoin dips below the $30,000 mark, with the digital token remaining in a range after breaching the closely watched level. Cipher Mining -3.8%, Riot Platforms -5.2%.

US stocks have swung around in a tight range in April after a strong rally in the first quarter as investors veered between worries about a recession and bets that cooling inflation would prompt the Federal Reserve to stop rate hikes soon. Corporate earnings will provide the next clue about the impact of slowing growth, with analysts expecting the biggest year-on-year decline since 2020.

Richard Hunter, head of markets at Interactive Investor, said market participants have remained cautious despite the strong showing from the big banks as economic data suggest the Fed could hike rates again at its next meeting.  Recent data points to inflation and employment markets steadily softening, encouraging some equity bulls. First-quarter earnings from JPMorgan and Citigroup also outpaced expectations on Friday.

“After the data last week, there is a less pressing need to hike rates, plus there is an apparent easing in banking tensions,” said Peter Kinsella, head of FX strategy at Swiss asset manager UBP. “If we get a Fed rate hike in May, I think it will be one and done.”

Despite this, Kinsella predicts headwinds for equity markets from share valuations that remain expensive, especially in relation to a slowing economy. Investors are preferring to park their cash in money-market funds, he noted.

“The current season’s earnings profile is rather opaque,” Kinsella added. “The banks last week did better than expected, but we have to see what the reporting season will be like from everyone else. But the S&P is expensive at current levels so you have to ask yourself if there is really much material upside from here.”

Meanwhile, Morgan Stanley strategist Michael Wilson once again - and for the 6th month running - said profit expectations were still too high even as that has been long factored into prices. The strategist also warned - as per usual -  that the S&P 500 was at risk of further declines as the percentage of stocks outperforming the index on a three-month rolling basis was at a record low. Wilson sees the biggest risk to the rally in technology stocks if bond yields rise. The tech-heavy Nasdaq 100’s so-called MACD momentum — which shows the relationship between two moving averages of a security’s price — is now weakening, Bloomberg noted while Goldman's Prime Brokerage notes that "franchise flows have shifted to local selling of tech this week and Nasdaq is only up in two of the past ten sessions (also note that it stands exactly where it stood in ... the spring of 2021)."

European stocks are on course to extend their winning streak to six sessions as investors turn their attention to earnings season starting later this week. The Stoxx 600 is up 0.1% while the FTSE 100 outperforms its regional peers with a gain of 0.5%.

Earlier in the session, Asian stocks advanced as investors bet on a faster-than-expected recovery in China ahead of key economic data releases, offsetting losses in technology names. The MSCI Asia Pacific Index rose as much as 0.3%, with Hong Kong and China benchmarks leading gains in the region. GDP and retail sales data due Tuesday will probably show the economy picked up in the first quarter after Covid Zero ended. The housing market also showed signs of stabilization, with home prices increasing for a second consecutive month in March.

The optimism about China countered weakness in tech, with shares of Indian IT services firm Infosys slumping the most in three years after disappointing earnings guidance and a wave of brokerage downgrades. Taiwan’s MediaTek also contributed to the sector’s losses on profit concerns. Investors grappled with expectations of elevated inflation, with most seeing at least one more interest rate increase from the Federal Reserve this year. Still, a raft of strong earnings from US banks including JPMorgan and Citigroup have helped calm concerns around lenders’ stability.

“Asian equities registered positive returns amid the limited spill-over effects on Asian financials and overall regional indices in Asia from the US and European banking crises,” said Marty Dropkin, head of equities Asia Pacific at Fidelity International. He added that China’s reopening is “providing a significant boost for equities within the broader market.”

Japanese stocks climbed for a seventh day, with the Topix completing its longest winning streak in 13 months, as strong earnings from JPMorgan Chase and Citigroup helped calm concerns around US bank stability.  The Topix rose 0.4% to 2,026.97 as of the market close in Tokyo, while the Nikkei 225 advanced 0.1% to 28,514.78. Both gauges reached their highest level in a month. Toyota Motor contributed the most to the Topix’s gain, increasing 1.4%. Bank stocks such as Mitsubishi UFJ, Sumitomo Mitsui and Mizuho were also among major contributors.  “The biggest driver is that the financial instability in the US has subsided considerably,” said Takeru Ogihara, chief strategist at Asset Management One.“However, Japanese equities are now hovering at the upper end of the range, a level that at which further rallies could trigger a selloff.”

Australian stocks rose to an eight-week high, boosted by banks; the S&P/ASX 200 index rose 0.3% to close at 7,381.50, rising for a second session to the highest level since Feb. 16. The benchmark was boosted by gains in banks and real estate stocks.  US and European futures made small gains along with Asian stocks Monday as investors weighed the prospects for more rate hikes and an economic slowdown.  In New Zealand, the S&P/NZX 50 index rose 0.5% to 11,936.15.

India stocks gauge snapped its longest run of advances in more than two years as cautious outlook and lackluster earnings by technology bellwether Infosys weighed on investor sentiment. The S&P BSE Sensex fell 0.9% to 59,910.75 in Mumbai on Monday, while the NSE Nifty 50 Index declined 0.7%. The gauges had risen for nine consecutive sessions through Thursday. Trading in India was shut due to a local holiday on Friday. BSE’s gauges of small- and mid-sized firms however extended the rebound, stretching gains to the 10th consecutive day as they trim yearly losses to less than 3%.   Infosys contributed the most to the index decline, decreasing 9.4%, its biggest single-day plunge since March 2020. Out of 30 shares in the Sensex index, 16 rose, while 14 fell

In FX, the Bloomberg Dollar Spot Index is up 0.2%. The British pound is the weakest of the G-10 currencies, falling 0.3% versus the greenback.

In rates, treasuries slightly cheaper across the curve with front-end underperforming, two-year yields rising 2bps to 4.12% after jumping 13bps on Friday, and extending Friday’s flattening move as 5s30s spread briefly drops below 10bp. 10-year yields around 3.54% are cheaper by 2.5bp vs Friday’s close with bunds lagging slightly in the sector and gilts outperforming. Odds of an additional 25bp rate hike for May meeting firm, while some small amount of hike premium is also priced into the June Fed OIS. German two-year yields are flat at 2.89% while the UK equivalent drops 3bps to 3.59%.

In commodities, crude futures are in the red with WTI losing 0.4% to trade near $82.20. Spot gold add 0.4% to around $2,011.

Bitcoin is softer in otherwise limited trade, back below the $30k mark and shy of the recent USD 31k peak; the current pullback keeps BTC well above last week's $28k trough.

It's a slow start to the week with just the April Empire Manufacturing index on deck (est. -18.0, prior -24.6) and the April NAHB Housing Market Index (consensus expects it to rise from 44 to 45. After the close we get the latest TIC flow data. Investors are awaiting reports on Monday from Charles Schwab and State Street. The former will be in particular focus after a 40% share price plunge year-to-date, caused by rising interest rates. Later in the week, Bank of America Corp. and Goldman Sachs Group Inc. are due to deliver results along with Netflix Inc. and Tesla Inc.

Market Snapshot

  • S&P 500 futures up 0.1% to 4,168.75
  • STOXX Europe 600 up 0.1% to 467.46
  • MXAP up 0.2% to 163.58
  • MXAPJ up 0.2% to 529.36
  • Nikkei little changed at 28,514.78
  • Topix up 0.4% to 2,026.97
  • Hang Seng Index up 1.7% to 20,782.45
  • Shanghai Composite up 1.4% to 3,385.61
  • Sensex down 1.0% to 59,832.23
  • Australia S&P/ASX 200 up 0.3% to 7,381.52
  • Kospi up 0.2% to 2,575.91
  • German 10Y yield little changed at 2.43%
  • Euro down 0.2% to $1.0975
  • Brent Futures down 0.5% to $85.92/bbl
  • Gold spot up 0.3% to $2,010.24
  • U.S. Dollar Index up 0.17% to 101.73

Top Overnight News

  • China is refusing to schedule a trip for US Sec of State Blinken to visit the country due to concerns about the FBI releasing a report into the spy balloon recently shot down by the Pentagon. FT
  • Prices of new homes in China rose at the fastest pace in 21 months in March, in the latest sign of green shoots for the world’s second-biggest economy as it recovers from three years of pandemic restrictions and Beijing eases up a crackdown on the debt-laden property sector. New home prices rose 0.5 per cent on the previous month, according to official data, following a 0.3 per cent increase in February. FT
  • China is starting to target western interests in the country after five years of snowballing trade and technology restrictions spearheaded by the US under presidents Donald Trump and Joe Biden. Over the past two months, Chinese officials have slapped new sanctions on US weapons companies Lockheed Martin and Raytheon, launched an investigation into US chipmaker Micron, raided US due diligence firm Mintz and apprehended local staff, detained a senior executive from Japan’s Astellas Pharma group and hit London-headquartered Deloitte with a record fine. FT
  • India’s wholesale price index for Mar collapses to just +1.34% Y/Y, down from +3.85% in Feb and below the St’s +1.6% forecast. RTRS
  • Regional banks are set to face more stringent global regulations as the Basel Committee on Banking Supervision considers steps to prevent the types of runs that felled Silicon Valley in March. FT
  • Yellen thinks tightening lending standards at US banks, a function of the March regional bank turmoil, will eliminate the need for additional Fed hikes. CNBC
  • As Russia scours the globe for buyers of its energy products, it is finding eager trade partners in an unlikely place: The oil-rich petrostates of the Persian Gulf. Since Western sanctions over the war in Ukraine cut off Russia from many of its established trading partners, state companies from Saudi Arabia and the United Arab Emirates have stepped in to take advantage of discounted prices for Russian products, according to oil executives and industry analysts. WSJ
  • Merck & Co. will buy Prometheus for $10.8 billion in cash to boost its immunology drugs pipeline as it braces for patent expirations. The offer was 75% higher than Friday's close. More M&A: CVC and Francisco Partners are in talks to buy payments firm Network for about $2.6 billion. And Apollo's busy. THG said it got preliminary offer from the firm and engineering company John Wood said it will engage with Apollo after a $2 billion approach. BBG
  • Google's employees were shocked when they learned in March that the South Korean consumer electronics giant Samsung was considering replacing Google with Microsoft’s Bing as the default search engine on its devices. The tech giant is sprinting to protect its core business with a flurry of projects, including updates to its search engine and plans for an all-new one. NYT

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly higher albeit with gains capped in the absence of any major macro catalysts from over the weekend and as participants brace for upcoming economic releases from China including GDP data. ASX 200 was positive as gains in tech and financials atoned for the losses in the commodity-related sectors. Nikkei 225 was indecisive around the 28,500 level with some of the biggest movers driven by their outlooks. Hang Seng and were underpinned after the PBoC vowed to make prudent monetary policyShanghai Comp precise and forceful, as well as increase support to expand domestic demand and keep liquidity ample

Top Asian News

  • PBoC conducted CNY 170bln (vs. CNY 150bln maturing) in 1-year MLF lending with the rate kept at 2.75%, while it injected CNY 20bln via 7-day reverse repos with the rate kept at 2.00%.
  • PBoC Governor Yi suggested that history shows that central bank interventions in the FX market will sooner or later be defeated by markets and said that during times of market stability, they can phase out currency intervention by gradually reducing the amount and frequency of intervention. Yi also said in guiding monetary policy, they try to make the real interest rate slightly below the potential growth rate, according to Reuters. Furthermore, Yi called for collective action and “fair burden sharing” to address debt according to Caixin Global.issues of developing countries,
  • China’s Mofcom said China resolutely opposes US sanctions on some Chinese firms and that the move affects the security and stability of global supply chains, while it called for the US to immediately correct its wrongdoing and stop unreasonable suppression of Chinese companies. Furthermore, it said that China will firmly safeguard the legitimate rights and interests of Chinese companies, according to Reuters.
  • China is beginning a surgical retaliation against foreign companies after the US-led tech blockade, according to FT.
  • China has refused to permit US Secretary of State Blinken to travel to China due to concerns about a pending FBI report on the investigation of the downed Chinese spy balloon, according to FT.
  • Chinese top diplomat Wang Yi said during a meeting with German Foreign Minister Baerbock that Taiwan’s return to China was an important component of the post-World War II international order and hopes that Germany will support China’s peaceful reunification cause, while Wang added that China is willing to strengthen exchanges and communication with Germany, enhance mutual understanding and prepare for a new round of Sino-German consultations.
  • China successfully launched a rocket carrying a weather satellite on Sunday, while Taiwan’s defence ministry said some rocket debris from China’s satellite launch fell into the “warning zone” in the sea north of Taiwan but did not affect the safety of Taiwan’s territory, according to Reuters.
  • Japanese police arrested one suspect after a smoke bomb incident during an outdoor speech by PM Kishida, according to Kyodo.
  • BoJ is reportedly mulling CPI projections for FY25 between 1.6-1.9%, according to reports citing JiJi news.

European bourses are mixed after initial tentative upside, with newsflow limited and specific catalysts light currently. Sectors feature Tech names as the laggard, with chip names pressured amid FT reports that Musk intends an AI start-up to rival OpenAI and has purchased Nvidia (NVDA) processors. Stateside, futures have been pivoting the unchanged mark throughout the APAC session and European morning ahead of earnings. Apple's (AAPL) sales in India reportedly rose to almost USD 6bln (prev. USD 4.1bln) in the past year, according to Bloomberg sources. ChatGPT and other advance AI are reportedly facing a new regulatory push in Europe, according to WSJ.

Top European News

  • BoE is considering urgent reform of the deposit guarantee scheme in the wake of the SVB collapse, according to FT.
  • BoE's Tenreyro said on Friday that they need to be patient over the impact of past rate rises on inflation and that they are yet to see most of the impact.
  • UK PM Sunak is considering reducing the UK’s inheritance tax ahead of the next general election, according to people familiar with the matter cited by Bloomberg. It was separately reported that UK PM Sunak according to AFP.cancelled the building of new ‘smart motorways’ amid concerns about safety and costs, UK Chancellor Hunt is reportedly 'wary' of new subsidies as companies look to the US for government support, according to Sky News.
  • UK Royal Mail and the Communication Workers Union reached a negotiators’ agreement in principle over pay and employment terms, according to a joint statement.
  • Barclays (BARC LN) is to cut more than 100 investment banking jobs, according to Sky News
  • ECB’s Lagarde said during a CBS interview that she can’t imagine the US defaulting on debt and said US-China bipolarisation of the world could crimp growth.
  • ECB's Centeno says for the ECB's May decision, either zero or 25 "are the numbers that are feasible" when it comes to rates, according to Bloomberg.
  • ECB's Kazaks says they have the option for a 25bp or 50bp move in May, via Leta news.
  • European Commission said it is aware of Poland and Hungary’s announcement to ban imports of grain and other agricultural products from Ukraine to protect their local agricultural sectors, while a spokesperson said that trade policy is of EU exclusive competence and unilateral actions are not acceptable, according to Reuters.

Commodities

  • WTI and Brent futures have tilted lower after trading horizontally since the reopening of futures amid a lack of pertinent catalysts overnight and with participants awaiting key data releases.
  • G7 ministers agreed to speed up the phaseout of fossil fuels and shift towards renewable energy, according to FT.
  • Saudi Arabia boosted its sovereign wealth fund with the transfer of an almost USD 80bln stake in Saudi Aramco to the PIF, according to FT.
  • QatarEnergy signed an MOU with Namibia to enhance energy cooperation which includes exploring
  • further investment opportunities in Namibia, according to Reuters.
  • Norsk Hydro announced employees at Hydro Karmøy and Hydro Ardal will commence strike action this Monday, while corporate employees in the accounting department at Sunndalsøra will also go on strike, according to Reuters.
  • EU representatives are poised to discuss grain export issues this week, according to EU officials cited by Reuters.
  • Base metals are predominantly lower after mostly firmer APAC trade, overnight focus was on trade within marked upside attributed to reports that Wa State intends to suspend operations from August

Fixed Income

  • Bonds remain bearish and prone to further downside, as lose 134.00+ status, probe 102.00 andBunds Gilts T-slips to fresh 114-22+ overnight low.note
  • 10 year benchmark yields extend rebounds towards 2.5%, 3.7% and 3.55% in Germany, the UK and US respectively ahead of busy PM agenda including House speaker on the US debt ceiling.

Geopolitics

  • Russian President Putin held a working meeting with Chinese Defence Minister Li Shangfu in Moscow on Sunday, according to Tass citing Kremlin spokesman Peskov. It was also reported that Russian President Putin praised ties between the Russian and Chinese militaries, while Chinese Defence Minister Li said China is willing to work with Russia to have close communications between their militaries and China is according to Bloomberg andwilling to strengthen multilateral coordination and cooperation with Russia, Reuters.
  • Russia said Wagner Group fighters continued to advance in Bakhmut and captured two more areas of the city, according to RIA. It was also reported that Wagner Group chief Prigozhin said the Ukrainian counteroffensive could succeed because of the ‘lazy Kremlin elite’ and wants to negotiate an end to the war, according to The Telegraph.
  • Ukrainian Finance Minister Marchenko said the IMF-led USD 115bln support package boosted confidence that Ukraine can prevail in the war against Russia and that G7 finance officials underscored commitment to continue supporting Ukraine as long as needed, while he is confident the US Congress will maintain bipartisan consensus backing support for Ukraine, according to euters.
  • G7 Sapporo Communique stated that they condemn Russia’s illegal, unjustifiable and unprovoked war of aggression against Ukraine and they stand ready to support a sustainable, resilient recovery and green reconstruction of Ukraine, according to Reuters.
  • EU foreign policy chief Borrell said the only answer for the Ukraine crisis is to do more, faster for Ukraine and that they need to continue support for Ukraine and defend its territory  gainst Russian invasion.
  • Borrell said that China should talk to Ukraine and refrain from military assistance with Russia, while he noted the EU has an interest in peace and stability in the Taiwan Strait and that changing the status quo unilaterally according to Reuters.will be unacceptable, Arab Gulf foreign ministers discussed the Syrian crisis and Damascus’s potential return to the Arab League although no decision was made, according to the Saudi Foreign Ministry cited by Reuters.
  • Sudan's army conducted strikes on paramilitary bases amid a deadly power struggle, according to Reuters.
  • US Navy said a US warship sailed through the Taiwan Strait on Sunday, while China's military also stated that it followed and monitored a US destroyer which sailed through the Taiwan Strait, according to Reuters.
  • South Korea, US and Japan are to hold missile defence drills to counter North Korea, according to Reuters.
  • It was also reported that a South Korean navy vessel fired warning shots after a North Korean patrol boat crossed the maritime border, according to Yonhap
  • Russian President Putin met with Defence Minister Shoigu; Shoigu reported on the drills of the Russian Pacific fleet.

US Event Calendar

  • 08:30: April Empire Manufacturing, est. -18.0, prior -24.6
  • 10:00: April NAHB Housing Market Index, est. 45, prior 44
  • 16:00: Feb. Total Net TIC Flows, prior $183.1b

DB's Henry Allen concludes the overnight wrap

Since our last edition on Friday, there’s been no doubt that markets are continuing to shrug off the financial turmoil that brought such volatile conditions only a month ago. In fact by the end of last week, the VIX index of volatility had closed at just 17.07pts, which is its lowest level since 4th January 2022, on the same day that the S&P 500 hit its record intraday high. Other measures are painting a similar picture as well, with the MOVE index of Treasury volatility beneath its pre-SVB levels again, whilst Bloomberg’s index of US financial conditions has now erased more than 80% of the tightening seen last month. So for all the fears that we might have been on the verge of another financial crisis, for the time being at least we’ve seen a remarkable decline in volatility.

With growing signs that markets have stabilised, there’ve also been growing expectations that the Fed are set to deliver another hike at their next meeting on May 3. That was ramped up on Friday by several factors. One was a speech by Fed Governor Waller, who explicitly said that “monetary policy needs to be tightened further.” Second was the University of Michigan’s survey of inflation expectations in April, where the 1yr measure bounced up to 4.6%. That was a full point higher than the previous month, as well as the biggest monthly jump in nearly two years. And third, measures of core retail sales were a bit stronger than expected in March, with the measure excluding autos and gas stations only down by -0.3% (vs. -0.6% expected).

With all that in mind, futures took the chances of a rate hike in May up to 81% by the close on Friday, where it remains this morning. That’s the highest it’s been since the SVB collapse, and further out the curve we’ve seen much the same picture. For instance, the rate expected by the December meeting is now up to 4.50% this morning, having closed as low as 3.75% at the height of the turmoil in mid-March. Remember that the decision is now only two weeks on Wednesday, and this week is the last time we’ll be able to hear from Fed speakers before their blackout period begins on Saturday.

This morning in Asia, equity markets have put in a mixed performance. Chinese equities have outperformed, with the Shanghai Composite (+0.98%) leading gains, followed by the CSI 300 (+0.86%) and the Hang Seng (+0.54%). That’s come in spite of the fact that the People’s Bank of China only made a net injection of 20bn yuan in April to banks through the medium-term lending facility, which is the lowest since November. They also left the 1yr medium-term lending facility rate at 2.75%. Elsewhere in Asia, the Nikkei (-0.03%) and the KOSPI (-0.12%) are trading slightly lower. And looking forward, futures for the S&P 500 (+0.14%) are pointing to mild gains.

Turning to the week ahead now, today will likely see the US debt ceiling rise up the agenda again, since House Speaker Kevin McCarthy is giving a speech at the New York Stock Exchange that’s expected to cover the Republicans’ position on the issue. As a reminder, the US is expected to come up against the debt ceiling again this summer, and the Republicans have said they want concessions like spending cuts in return for passing an increase. Since the Republicans now have a majority in the House of Representatives, at least some of them will need to be on board to pass an increase. The situation has several echoes to the last major fight over the debt ceiling in 2011, when there was also a Democratic president negotiating with a Republican majority in the House. Although an agreement was eventually reached, that episode coincided with a noticeable slump in the S&P 500 alongside a sharp decline in consumer confidence.

In the meantime, there are a few highlights ahead on the data side. Tomorrow sees the release of China’s Q1 GDP growth, where our economists are expecting an above-consensus print of +4.5% year-on-year. Then on Friday we’ll get the April flash PMIs from around the world, which will offer an initial indication of how the global economy has been performing into Q2. Otherwise, inflation will remain in the spotlight, with this week seeing the March CPI releases from Japan and the UK. In Japan, our economist expects core-core inflation excluding fresh food and energy to tick up slightly to 3.6%, up from 3.5% the previous month. And in the UK, we’re anticipating a decline to 9.7%, down from 10.4% in February.

The final big highlight this week will be earnings season, which is increasingly ramping up now as 59 companies in the S&P 500 will be reporting. Some of the financials will be of particular interest given the market turmoil last month, and we’ll get results from Bank of America, Morgan Stanley, Goldman Sachs and Charles Schwab this week. Elsewhere, some of the highlights will include Tesla, Netflix, IBM and Johnson & Johnson.

Recapping last week now, those US data releases mentioned above led to a cross-asset selloff on Friday. In fixed income, the more policy-sensitive 2yr Treasury yield climbed +13.1bps on Friday, and +11.8bps on the week, reaching its highest level since the mid-March banking strains. 10yr Treasury yields similarly advanced, climbing +12.2bps last week (+6.8bps on Friday), whilst 10yr bund yields were up +25.5bps (+6.7bps on Friday) in their largest weekly rise since September. With a May rate hike now firmly on the table, as well as the upside surprise to core measures of US retail sales, the US dollar index jumped +0.54% on Friday, although it was still down -0.53% in weekly terms. That also followed on from strong earnings posted by US banks Friday morning, with first quarter revenue results from the likes of Wells Fargo and JPMorgan beating expectations despite the banking turmoil.

The selloff in fixed income was echoed in US equity markets, as the S&P 500 modestly retreated -0.21% on Friday. But in weekly terms, the index was up +0.79%, aided by the soft inflation prints earlier in the week. Back in Europe, we saw the STOXX 600 outperform on a relative basis, advancing +1.74% week-on-week (and +0.58% on Friday).

In commodity markets, oil secured its fourth consecutive week of gains as Brent crude advanced +1.40% last week (and +0.26% on Friday) to $86.31/bbl. WTI crude was likewise up +2.26% in weekly terms (+0.44% on Friday). And that’s increasingly being felt in the real economy too, with average US gasoline prices hitting a post-November high of $3.669/gallon on Saturday. In the meantime, gold ended the week at $2004/oz after retreating -1.77% on Friday, and -0.19% on the week.

Finally, it was a big week for cryptocurrencies, as Bitcoin broke through the $30,000 mark to reach its highest level since June 2022, up +8.21% on the week (+0.61% on Friday). The second largest cryptocurrency in terms of market capitalisation, Ethereum, outpaced Bitcoin however, advancing +14.58% (+4.90% on Friday) on the week after a major upgrade on Wednesday.

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