US stocks rallied amid optimism amongst regional banks and debt ceiling talks - Newsquawk Asia-Pac Market Open

US stocks rallied with risk appetite underpinned amid optimism around debt ceiling negotiations and after more promising consumer earnings reports, while regional banks were underpinned after a reassuring update from Western Alliance (WAL) which reported growth in its deposits.
USD was firmer amid the upside in US yields and with some optimism regarding the debt ceiling talks but with advances capped by the heightened risk appetite and mixed buildings approvals and housing starts data.
Looking ahead, highlights include New Zealand PPI & Budget Announcement, Australian Employment Change & Unemployment Rate, Japanese Trade Data.

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Highlights include New Zealand PPI & Budget Announcement, Australian Employment Change & Unemployment Rate, Japanese Trade Data.

US TRADE

US stocks rallied with risk appetite underpinned amid optimism around debt ceiling negotiations and after more promising consumer earnings reports, while regional banks were underpinned after a reassuring update from Western Alliance (WAL) which reported growth in its deposits.
SPX +1.19% at 4,159, NDX +1.22% at 13,589, DJI +1.24% at 33,420, RUT +2.21% at 1,774.
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NOTABLE HEADLINES

US President Biden said he is confident the US will not default and is confident in getting a budget agreement, while he said they are going to come together because there is no alternative and the negotiation is about the outlines of what the budget will look like. Furthermore, Biden said they will not accept work requirements that will affect the medical needs of people but there is a possibility of some work requirements.
US House Speaker McCarthy said he is optimistic about the ability to work together and said a debt ceiling deal by Sunday is doable.
US House Democratic Leader Jeffries said House Democrats will file a 'discharge petition' on raising the debt limit in case it is necessary to avoid default.
Some Senate Democrats are circulating a letter urging President Biden to prepare to invoke the 14th Amendment to lift the debt ceiling and avert a default on his own, without an act of Congress, according to NBC.
US SEC reportedly weighs new intraday margin call powers for clearing houses, according to Bloomberg.

DATA RECAP

US Building Permits: Number (Apr) 1.42M vs. Exp. 1.44M (Prev. 1.43M, Rev. 1.44M)
US Housing Starts Number (Apr) 1.40M vs. Exp. 1.40M (Prev. 1.42M, Rev. 1.37M)

Treasuries bear-flattened as stocks surged on positive regional banking updates and debt ceiling optimism, putting the onus back on the Fed to fight inflation.

USD was firmer amid the upside in US yields and with some optimism regarding the debt ceiling talks but with advances capped by the heightened risk appetite and mixed buildings approvals and housing starts data.
EUR gave up ground to the dollar strength albeit with the losses relatively mild after final EZ HICP inflation data was largely unrevised and in line with expectations, while there were several ECB comments including from de Cos note the ECB is getting near the end of its cycle, while de Guindos said tightening is mostly done but they still have a way to go.
GBP traded flat against the dollar as cyclical currencies rebounded alongside the risk tone, while GBP gained against EUR after productive discussions between UK and EU on changing trading arrangements for car manufacturing.
JPY underperformed amongst its G10 peers due to the lack of haven demand and gains in short-term US yields.

Oil prices were firmer alongside the risk-on sentiment and despite the surprise build in EIA crude stockpiles.
US EIA Weekly Crude Stocks w/e 5.040M vs. Exp. -0.92M (Prev. 2.951M)
Iran's Oil Minister said the market is on track following recent OPEC+ decisions, via Tasnim.
Russian President Putin said Russian actions reducing oil production are aimed at supporting the price environment and the oil situation is stable as a whole.
Russian Deputy PM Novak said Russia reached oil production cuts of 500k BPD in May and the global oil market is balanced. Novak said swap supplies of oil products between Iran and Russia may total 4mln-5mln tonnes per year, while he also stated that the countries are continuing discussions about cooperation at 6 oil fields in Iran and consider the possibility for mutual trade settlements in Yuan.

Turkish President Erdogan announced that the Black Sea grain deal was extended by two months.
Russia and Belarus reaffirmed commitment to the nuclear non-proliferation treaty in a joint statement, according to Reuters citing TASS.

US President Biden said he will be meeting with Chinese President Xi at some point, but not necessarily soon.

BoE Governor Bailey said if there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required and said the MPC will adjust the Bank Rate as necessary to return inflation to the target sustainably in the medium-term, in line with its remit.
UK Chancellor Hunt said that they will make sure they remain competitive with the US Inflation Reduction Act.
ECB's Rehn said they need to see core CPI slow substantially and for core inflation to be clearly and sustainably on a downward trend before they stop tightening monetary policy.
ECB's de Cos said the ECB is getting near the end of its tightening cycle and transmission remains strong.
ECB's de Guindos said higher interest rates boost banks’ net interest income and the benefits could be somewhat smaller than previously anticipated, while he added core inflation is more persistent than expected and that tightening is mostly done but still have a way to go.
EU Commission reportedly proposed the "most ambitious reform of the EU Customs Union" which will lead to simpler customs processes for traders and more e-commerce transparency.

DATA RECAP