US stocks finished mixed amid higher yields following soft auctions - Newsquawk Asia-Pac Market Open

US stocks were mixed on return from the long weekend as participants digested several data releases including firm US Consumer Confidence metrics and with yields edging higher following soft US 2-year and 5-year auctions, while the latest Fed rhetoric failed to add anything incremental to the narrative although Kashkari once again warned that if inflation does not progress lower, then rate hikes could be on the agenda. Nonetheless, the Nasdaq-100 was supported by continued upside in NVDA post-earnings, while the S&P 500 was flat and the DJIA underperformed.
USD was little changed on the day and the DXY remained within a tight parameter between 104.33-104.64 with initial weakness reversed amid upside in yields and after a firmer-than-expected Consumer Confidence report which also saw the 12mth inflation expectations move higher to 5.4% from 5.3%.
Looking ahead, highlights include Australian Monthly CPI & Leading Index, New Zealand ANZ Business Survey, Vietnam CPI, Comments from BoJ's Adachi, Supply from Australia.

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Highlights include Australian Monthly CPI & Leading Index, New Zealand ANZ Business Survey, Vietnam CPI, Comments from BoJ's Adachi, Supply from Australia.
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US TRADE

US stocks were mixed on return from the long weekend as participants digested several data releases including firm US Consumer Confidence metrics and with yields edging higher following soft US 2-year and 5-year auctions, while the latest Fed rhetoric failed to add anything incremental to the narrative although Kashkari once again warned that if inflation does not progress lower, then rate hikes could be on the agenda. Nonetheless, the Nasdaq-100 was supported by continued upside in NVDA post-earnings, while the S&P 500 was flat and the DJIA underperformed.
SPX +0.03% at 5,306, NDX +0.32% at 18,869, DJIA -0.55% at 38,853, RUT -0.14% at 2,067.
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NOTABLE HEADLINES/EARNINGS

Fed's Daly (voter) said new technologies often reallocate labour with a 'painful gap' for some workers.
Fed's Kashkari (non-voter) said he doesn't think anyone has taken rate increases off the table and if surprised by the data, the Fed will do what it needs to do, while he added the short-run neutral rate may have gone up temporarily. Kashkari said they could stay on hold for an indefinite period of time and he would not pencil in more than two interest rate cuts this year.

DATA RECAP

US Consumer Confidence (May) 102.0 vs. Exp. 95.9 (Prev. 97.0)
US Dallas Fed Manufacturing Business Index (May) -19.4 (Prev. -14.5)
US CaseShiller 20 MM SA (Mar) 0.3% vs. Exp. 0.3% (Prev. 0.6%)
US CaseShiller 20 YY NSA (Mar) 7.4% vs. Exp. 7.3% (Prev. 7.3%)
US Monthly Home Price YY (Mar) 6.7% (Prev. 7.0%, Rev. 7.1%)

USD was little changed on the day and the DXY remained within a tight parameter between 104.33-104.64 with initial weakness reversed amid upside in yields and after a firmer-than-expected Consumer Confidence report which also saw the 12mth inflation expectations move higher to 5.4% from 5.3%.
EUR traded flat against the greenback ahead of key risk events later in the week and as ECB officials continued to echo views of an approaching rate cut in June, while the ECB Consumer Expectations Survey showed a slight reduction in the 12-month and 3-year ahead inflation views.
GBP slightly softened on the day after the initial upward momentum stalled at resistance around 1.2800 level before pulling back.
JPY marginally weakened and USD/JPY reclaimed the 157.00 handle alongside widening US-Japan yield differentials post-US auctions.

Treasuries bear steepened with pressure observed in the wake of hot consumer confidence, rising inflation expectations and weak 2-yr and 5-yr auctions.

Oil prices were bid amid heightened geopolitical tensions following Israel's recent strikes on Rafah although crude ultimately settled off highs as the dollar pared losses alongside upside in yields.
Iraq’s oil ministry called for a meeting with Kurdish authorities to reach a deal on resuming oil exports through Turkey's port of Ceyhan.
Algeria's Sonatrach set June Saharan blend Crude oil OSP at a USD 0.15 premium to dated Brent (prev. 0.25 premium in May), according to Reuters citing a trade source.
Nigeria is to export five cargoes of Qua Iboe and four cargoes of Bonny Light in July, according to a preliminary programme.

MIDDLE EAST

Israel delivered its proposal to recommence truce negotiations to mediators.
Israeli tanks have reached Rafah city centre, according to Reuters witnesses.
Hamas is reportedly withdrawing from ceasefire talks after the attack on displaced persons camp resulted in 45 deaths, according to sources cited by MiddleEastEye.

OTHER

White House's Singh said the US and partners are prepared to use sanctions and export controls to prevent China-Russia trade that threatens their collective security, while the US and its partners could take further action to increase costs of Russia using a shadow fleet to evade the G7 oil price cap.

NOTABLE HEADLINES

Chinese President Xi urged promoting high-quality and sufficient employment. It was also reported that China’s Politburo said China will promote the coordination and linkage of fiscal, monetary, investment, consumption, industrial, regional and other policies with employment policies, according to state media.
China's Shenzhen lowered the minimum down payment ratio for first home buyers to no less than 20% from 30% and lowered the minimum down payment ratio for second home buyers to no less than 30% from 40%, while it cut the lower limit for interest rates on first home mortgages to LPR minus 45bps and cut the lower limit for interest rates on second home mortgage to LPR minus 5bps. It was also reported that China's city of Guangzhou lowered the minimum down payment ratio for first-home buyers to no less than 15% and lowered the minimum down payment ratio for second-home buyers to no less than 25%.

NOTABLE HEADLINES

UK PM Sunak and opposition Labour Party leader Starmer agreed to a head-to-head TV debate on ITV during the first week of June and will debate on LBC on Friday 7th June.
ECB's Centeno said inflation is under control and the interest rate reduction process is about to begin.
ECB's Holzmann said he would support a 25bp rate cut in June, while every step thereafter needs its own justification and new information will be available in September and December, according to Econostream.
ECB's Knot said policy rates will slowly but gradually move to less restrictive levels and projection around meetings will be the key for interest rate decisions, while he added that based on the March projections, optimal policy would have been broadly in line with 3-4 rate cuts this year. Furthermore, Knot said the risk of a hard landing in the Euro Zone is receding quite rapidly and productivity growth will determine room for the ECB to cut rates.
ECB Consumer Expectations Survey (Apr) showed the 12-month inflation view at 2.9% (prev. 3.0%) and the 3-year ahead view at 2.4% (prev. 2.5%), while it was noted that the growth outlook is less negative and the labour market is seen as stable.