April 26, 2018

Time (GMT) Currency Event Previous Forecast
12:45 EUR Minimum Bid Rate 0.00% 0.00%
13:30 EUR ECB Press Conference
13:30 USD Core Durable Goods Orders m/m 1.0% 0.5%
13:30 USD Durable Goods Orders m/m 3.0% 1.6%
13:30 USD Unemployment Claims 232K 230K
13:30 USD Prelim Wholesale Inventories m/m 1.0% 0.6%

 

Global Commentary

Asian markets opened in the red Wednesday in response to overnight losses on Wall Street, with several markets down more than 1% at the open. Losses were pared in afternoon trade, but it was still a sea of red by the close as investors across Asia worry about how fast interest rates are likely to rise now that the 10-year U.S. Treasury bond is threatening to cross above the 3% level. Tech stocks also remained under pressure, leading to losses in Taiwan, South Korea and Hong Kong, where the Hang Seng was lower by 1.01% to underperform the region. South Korea saw the Kospi paring a more than 1% loss to finish off by 0.62%. In Japan, investors shrugged off the weaker Yen, and the Nikkei fell 0.28%. Losses were also modest on mainland China, where the Shanghai Composite dropped 0.35%. Markets in Australia were closed for a public holiday.

European investors shoved equities lower as the selloff on Wall Street, higher bond yields, and a mixed bag of earnings results spooked investors. The pan-European Stoxx Europe 600 ended the day with a 0.77% loss, under heavy pressure as Germany’s DAX fell 1.02% and the CAC 40 in France lost 0.57%. Losses came even as the Euro weakened and German Bund yields remained stable. Some caution was also evident as investors await the Thursday monetary policy decision and reading on growth from the European Central Bank. In London, the FTSE snapped a six session winning streak, falling 0.62% off an eleven week high as rising bond yields spooked U.K. investors as well.

U.S. markets had a roller-coaster day, opening to gains, falling mid-session, and then recovering late in the day to end mixed. The Dow Industrials managed to snap a five session losing streak, propelled higher by gains from Boeing after the aircraft manufacturer handily beat earnings estimates and raised guidance for the remainder of the year. At the close the Dow Industrials were 0.25% higher, while the S&P 500 gained 0.18%, but the Nasdaq fell 0.05% as technology shares paused ahead of earnings from some of the biggest tech names after the bell, including Facebook, which beat estimates and surged 5% higher within 15 minutes of its earnings release.

 

Cryptocurrencies

After a five session winning streak, cryptocurrencies took it on the chin Wednesday, falling broadly. The good news is that the $9,000 level held as support for Bitcoin, even if the granddaddy of crypto was down 4% on the day. Other major altcoins suffered worse fates, with Ripple falling 12.1% and Ethereum down 9.9%. Litecoin and Bitcoin Cash didn’t avoid the downdraft either as they finished the session off by 10.2% and 9.5% respectively. While today is gloomy, investors should still be cheered, knowing Bitcoin is still up by more than 10% over the past week, while Bitcoin Cash has a stunning 49% gain over the past 7 days.

 

FOREX

USD/JPY – The pair continued its climb higher Wednesday, breaking through the 109.00 level and showing little signs of slowing at this time. We like to remember that Japanese interest rates remain negative, while U.S. rates are rising, and could top 2% by the end of this year. U.S. Treasury yields have already topped 3% and traders are reacting by selling Yen and buying USD, especially in the absence of any severe geopolitical issues that could cause safe haven demand. If the geopolitical scene remains quiet we could soon see this pair trading back to levels last seen at the end of 2017 around the 113.00 handle.

GBP/USD – The pair reversed the gains made in the previous session completely on Wednesday, as the 1.4000 level presented far too much resistance in the face of the soaring U.S. dollar and rising U.S. Treasury yields. We are fully expecting a test of the 1.3750 support level in coming days, and whether or not it can hold is a compelling question given recent developments in interest rates, currencies, and even equities.

 

Commodities

Metals – Precious metals gave back previous session gains, with gold settling at a five week low as persistently higher Treasury yields and a stronger U.S. dollar have weighed on the metals. June gold fell $10.20, or 0.8%, to settle at $1,322.80 an ounce, while May silver fell $0.201, or 1.2%, to $16.502 an ounce. Elsewhere in the metals market, May copper fell 0.2% to $3.135 a pound, while July platinum fell 2.4%, to $912.70 an ounce, and June palladium shed 0.4% to $967.50 an ounce.

Oil – Crude fell early Wednesday in response to data showing an unexpectedly larger rise in U.S. crude inventory levels, but later rebounded to finish the day with gains. June West Texas Intermediate crude rose $0.35, or 0.5%, to settle at $68.05 a barrel, but Global benchmark June Brent lost $0.48, or 0.7%, closing at $73.38 a barrel as markets in London closed before the rebound began.

 

Indices

Dow Industrials – After trading down by 0.5% early in the day the Dow rebounded, ending the session 0.25% higher and snapping a five session losing streak. Most of the gains came solely from Boeing, whose 4.19% gain added nearly 100 points to the Dow. Offsetting the gain from Boeing was a 4.29% drop in shares of General Electric, which continues to underperform after its better than expected earnings were called out as a one-time tax break related gain.

DAX – Germany’s DAX led European markets lower Wednesday, falling 1.02% as investors worry that rising bond yields will lead to higher borrowing costs for companies, and a move out of equities by investors. Investors have also continued to punish companies following good earnings results, as the picture for the rest of 2018 is becoming increasingly gloomy. One good example of this on Wednesday was Osram Licht AG, whose stock tumbled 17% after the German lighting maker late Tuesday cut its full-year target on earnings before interest, taxes, depreciation and amortization.

Hang Seng – Hong Kong’s benchmark equity index led decliners in the Asian region Wednesday, falling 1.01% on broad based selling. Technology led the way lower for the index, as investors remain worried about weak smartphone sales reports and the impact of the U.S. ban of companies exporting goods to the Chinese telecommunications firm ZTE. Also weighing was a 9.1% loss from WH Group, a Chinese pork producer and owner of Smithfield Foods, which reported weaker than expected first quarter sales and earnings.


Stocks

Boeing – Shares of the aircraft maker nearly single-handedly fueled a rebound in the Dow on Wednesday, with Boeing shares gaining 4.19% after reporting better than expected earnings earlier in the day. The gain added more than 110 points to the Dow, or 0.5%, sending the index back into positive territory in what was a roller-coaster day. Boeing not only beat earnings estimates, it trounced them, and then added to investor optimism by raising guidance for the rest of the year, and announcing plans to buy back $15 billion worth of stock over the next two years. Shares of Boeing are up 16.5% year-to-date, while the Dow is nearly 3% lower over the same time-frame.

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