US stocks edged higher in catalyst-light trade as markets await FOMC Minutes and Nvidia earnings - Newsquawk Asia-Pac Market Open

• US stocks finished mostly in the green in which the S&P 500 and Nasdaq 100 posted fresh record closes although the major indices were relatively little changed and sectors were mixed as markets continued to lack any major catalysts heading into the FOMC Minutes and Nvidia's earnings on Wednesday. Nonetheless, the attention was on central bank speakers with comments from Fed's Waller the main highlight as he stuck to his line that "several more months of good inflation data" are still needed to support an easing in policy despite the recent CPI data and noted further increases in the policy rate are probably unnecessary.
• USD traded flat in a quiet day as participants await the pivotal risk events on Wednesday, while comments from Fed's Waller were arguably the highlight in which he repeated his view from March that he needs to see several more months of good inflation data before being comfortable to support an easing in policy but also suggested that further hikes are unnecessary.
• Looking ahead, highlights include Japanese Trade Data & Machinery Orders, RBNZ Rate Decision & Press Conference, Supply from Australia & Japan, Holiday Closures in Singapore, Malaysia & Thailand.

More Newsquawk in 2 steps:

1. Subscribe to the free premarket movers reports

2. Trial Newsquawk’s premium real-time audio news squawk box for 7 days

LOOKING AHEAD

• Highlights include Japanese Trade Data & Machinery Orders, RBNZ Rate Decision & Press Conference, Supply from Australia & Japan, Holiday Closures in Singapore, Malaysia & Thailand.
• Click here for the Newsquawk Week Ahead.

US TRADE

• US stocks finished mostly in the green in which the S&P 500 and Nasdaq 100 posted fresh record closes although the major indices were relatively little changed and sectors were mixed as markets continued to lack any major catalysts heading into the FOMC Minutes and Nvidia's earnings on Wednesday. Nonetheless, the attention was on central bank speakers with comments from Fed's Waller the main highlight as he stuck to his line that "several more months of good inflation data" are still needed to support an easing in policy despite the recent CPI data and noted further increases in the policy rate are probably unnecessary.
• SPX +0.25% at 5,321, NDX +0.21% at 18,713, DJIA +0.17% at 39,873, RUT -0.20% at 2,098.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Barr (voter) said the economy is quite strong overall but still need to finish the job on inflation and sit tighter for longer than we previously thought, while he added that interest-rate risk will continue and needs to be managed.
• Fed's Bostic (voter) said businesses are confident in the underlying strength of the economy and next year or two should forecast continued solid performance. Bostic said policy is having an impact on rate-sensitive sectors and delaying investment, while he added the efficacy of monetary policy may be weaker than in the past, but that doesn't mean it is having no impact at all and the Fed's highest priority is to get inflation back to 2%.
• Fed's Waller (voter) said he needs to see several more months of good inflation data before being comfortable to support an easing in policy and that wage growth is still a bit higher than desired but not that high, while he added that further increases in the policy rate are probably unnecessary. Waller also stated the probability of a recession seems to have disappeared and the 10-year Treasury rate has risen which is where you see the potential effects of tightening. Furthermore, Waller reiterated he does not think the Fed will need to raise rates, while rate cuts depend on the data and the Fed needs to be confident on inflation first.

DATA RECAP

• US Philadelphia Fed Non-Manufacturing Activity May: -0.6 (prev. -12.4)

FX

• USD traded flat in a quiet day as participants await the pivotal risk events on Wednesday, while comments from Fed's Waller were arguably the highlight in which he repeated his view from March that he needs to see several more months of good inflation data before being comfortable to support an easing in policy but also suggested that further hikes are unnecessary.
• EUR was little changed and traded on both sides of 1.0850 as the latest ECB rhetoric provided little incrementally.
• GBP remained within tight parameters and reverted to around the 1.2700 level with traders awaiting UK inflation.
• JPY price action was choppy and ultimately returned to flat territory at the 156.00 handle.
• Canadian CPI Inflation MM (Apr) 0.5% vs. Exp. 0.6% (Prev. 0.6%)
• Canadian CPI Inflation YY (Apr) 2.7% vs. Exp. 2.7% (Prev. 2.9%)

FIXED INCOME

• Treasuries were slightly firmer in choppy trade and initially saw some spillover strength from Canadian CPI before two-way action following comments from Fed’s Waller.

COMMODITIES

• Oil prices were mildly lower amid light newsflow and little geopolitical escalation.
• US Private Energy Inventory Data (bbls): Crude +2.5mln (exp. -2.5mln), Cushing +1.8mln, Gasoline +2.1mln (exp. -0.7mln), Distillate -0.3mln (exp. -0.4mln).
• US DoE said it will sell nearly 1mln bbls of gasoline from its northeast gasoline supply reserve with bids due on May 28th and fuel is to be sold in quantities of 100k bbls.

GEOPOLITICAL

MIDDLE EAST

• Israeli War Council will meet tomorrow to discuss new ideas on the exchange deal, according to Al Arabiya.
• Israeli media noted a source said US National Security Advisor Sullivan felt there was no strategy to end the war after meeting with Israeli PM Netanyahu, according to Al Arabiya.

OTHER

• Russian Defence Ministry said Russia has started the first phase of tactical nuclear weapons drills and will arm Kinzhal missiles with special warheads during the drills, according to IFX.

CRYPTO

• US SEC on Monday asked Nasdaq and CBOE to tweak spot Ether ETF filings, while the request signals the regulator may be poised to approve filings, according to Reuters sources.

ASIA-PAC

NOTABLE HEADLINES

• Chinese Vice Premier He said they will comprehensively control intertwined risks in the property sector, local government debts and small local financial institutions.
• China is considering hiking the temporary tariff rate on imported cars with large engines in a bid to cut emissions, while such a move could impact auto imports from Europe and also affect those from the US, according to Global Times.
• US Treasury Secretary Yellen said the US and Europe must respond in a strategic and united way to China's industrial policy, while she repeated the US is not seeking to decouple from China, but is to diversify its supply chains. Furthermore, she stated that China's excess industrial capacity threatens the viability of firms in the US and Europe, as well as industrial development in emerging markets.
• RBI Bulletin noted growing optimism that India is on the cusp of a long-awaited economic take-off and April inflation confirmed expectation that an uneven and lagged pace of alignment with the target is underway. RBI Bulletin also noted that non-food spending is being pushed up by green shoots of rural spending recovery and recent indicators are pointing to a quickening of momentum of aggregate demand.

EU/UK

NOTABLE HEADLINES

• BoE Governor Bailey said for financial stability reasons, he thinks the central bank balance sheet will remain larger than before the financial crisis though not as large as today and a range of GBP 345bln-490bln is not a bad starting point. Bailey also commented that he expects quite a drop in April inflation data and thinks the next move on rates will be a cut.
• ECB President Lagarde said she is confident that they have inflation under control.
• ECB's Nagel said a June rate cut does not mean the ECB will cut in subsequent meetings, while he added that wage developments are heading in the right direction and there is no sign of a wage-price spiral.

DATA RECAP

• German Producer Prices MM (Apr) 0.2% vs. Exp. 0.3% (Prev. 0.2%)
• German Producer Prices YY (Apr) -3.3% vs. Exp. -3.1% (Prev. -2.9%)
• Eurozone Labour Costs Prelim Y/Y (Q1) 4.9% (Prev. 3.4%)