ECONOMY
On Thursday, In early trade Asian market steadied on news that U.S. President Donald Trump is planning to delay tariffs on auto imports, providing much needed relief to markets hit by a flare-up in trade tensions and on weak U.S. and and Chinese economic data.
The Aussie unemployment rate ticked higher to 5.2%, while full-time jobs dropped in April.The labor data released today may boost expectations of an RBA rate cut in June.
On Wednesday, Wall Street shares extended their rebound, with the S&P 500 gaining 0.58% and the MSCI’s broadest gauge of world stocks bouncing back from a two-month low hit on Tuesday. The uptick came after three administration officials told Reuters on Wednesday that Trump is expected to delay a decision on tariffs on imported cars and parts by up to six months.
U.S. Treasury Secretary Steven Mnuchin said he will likely travel to Beijing soon to continue negotiations with Chinese counterparts.The positive trade developments lifted risk sentiment that had been dampened earlier in the session by weak economic data.
China reported surprisingly weaker growth in retail sales and industrial output for April, with overall retail sales posting the slowest increase since May 2003.
USA retail sales unexpectedly fell in April as households cut back on purchases of motor vehicles and a range of other goods, while industrial production fell 0.5% in April, the third drop this year.
The Atlanta Federal Reserve’s GDP Now forecast model to cut the second-quarter growth estimate to 1.1% from 1.6% estimated on May 9.
BONDS
Fed funds rate futures are fully pricing in a rate cut by the end of this year and more than a 50 percent chance of a move by September. The markets are inching step by step in pricing in a rate cut. That is a sea change from a year ago when the consensus was three to four rate hikes a year.
Weak data underpinned U.S. bond prices, pushing down their yields further. The 10-year U.S. Treasuries yield eased to 2.37%, near its 15-month low of 2.34% touched on March 28.
The two-year notes yield hit a 15-month low of 2.139% on Wednesday and last stood at 2.155%.
Australia’s 10-year bond yield hits record low.
CURRENCY
The dollar index against a basket of six major currencies was nearly flat at 97.542 after posting modest gains the previous day.
EUR/USD: The euro was 0.05% higher at $1.1207, having bounced overnight from a one-week low of $1.1178. Nearby resistance-line tests buyers inside ascending triangle
GBP/USD seesaws around 1.2850 as political plays at UK remain dominant
USD/JPY's correction stalls and price trickles back below the hourly cloud
AUD/USD slips below 0.69 as Aussie jobless rate rises to 5.2%
COMMODITY
Oil prices edged up on the prospect of mounting tensions in the Middle East hitting global supplies despite an unexpected build in U.S. crude inventories. Brent crude rose 0.7% to $72.25 a barrel, while U.S. West Texas Intermediate crude fetched $62.45 a barrel, up 0.7%.
Analysts said oil was drawing support from heightened tensions in the Middle East, with helicopters carrying U.S. staff from the American embassy in Baghdad on Wednesday out of apparent concern about perceived threats from Iran.
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