Last week, data released showcased a 0.9% m/m rise in US industrial production, exceeding the 0.3% estimate, thanks to a general increase in factory output. However, retail sales only slightly increased by 0.1% m/m, falling short of the 0.3% estimate, with previous months also revised downwards. Later in the week, economic data strengthened as initial claims dropped by 5k to 238k, though higher than the expected: 235k, easing worries about last week's significant increase and reinforcing the idea that recent volatility may be partly due to seasonal adjustments related to holidays and school vacations. May housing starts surprisingly reduced 5.5%, below the estimated 0.7% increase, as expectations of short-term rate cuts retreated. Elevated financing costs and continuous demand pressures ar
Last week’s FOMC meeting saw rates being held constant, with 2024 projections indicating a single cut and Chair Powell's stance being less dovish than recent meetings. The median 2024 projection showed one cut for this year, down from three in March. However, projections for 2025 and 2026 each indicate four cuts, up from three in March, maintaining a total of nine cuts over the next two and a half years, but with a delayed start and quicker catch-up after year-end. This is despite lower-than-expected May CPI where monthly increase in core CPI was 0.16% (expected: 0.3%), the lowest since August 2021, reducing the year-on-year rate from 3.6% to 3.4%. Headline PPI also dropped 0.2% in May (consensus: 0.1%), and the core index remained constant (consensus: 0.3%). Initial jobless claims unexpec
Last week’s economic data was mixed with most of the week indicating cooler labor market. However, last Friday, US jobs report came out strong, causing investors to reassess probability of future rate cuts. Job openings decreased by 296k in April to 8.06 million, nearing the pre-pandemic ratio of job openings-to-unemployed ratio at 1.24, close to February 2020's 1.22. Initial jobless claims for the week ending June 1 increased by 8k to 229k, exceeding the consensus estimate of 220k, though this upside surprise could be a result of seasonal adjustments. ADP employment report indicated a slower growth pace with a 152k rise in private payrolls in May, below the expected 175k. However, service surveys showed strength and return to expansion, with the May ISM services PMI survey reaching its hi
CSOP Regional Market Morning Report 20240604| Japan implements largest foreign exchange intervention; Demand for Aramco's secondary offering offsets market woes
Market News 【Japan】Japan confirmed that it implements foreign exchange intervention. Japanese Finance Minister Shunichi Suzuki says the government intervened in the currency market a little over a month ago to counter excessive currency moves driven by speculative trading, offering the first official acknowledgment of the actions after the ministry disclosed data Friday indicating it spent ¥9.8 trillion ($62.7 billion) to prop up the yen. On May 31, Japan’s Ministry of Finance announced the actual situation of foreign exchange intervention from April 26 to May 29. The total amount of intervention is 9.7885 trillion yen. This reflects the suspected intervention measures of buying yen and selling US dollars implemented on April 29 and May 2, which is another intervention since October 202
•Last week, US 1Q24 real GDP growth was revised downwards from 1.6% to 1.3% saar, matching consensus predictions, while the core PCE QoQ was revised from 3.7% to 3.6%. •Initial jobless claims also rose to 219k (vs 215k prior). Given that the latest Beige Book mentioned firms are retreating hiring expectations on weaker demand and uncertain macro environment, unemployment rate could increase. •Core PCE deflator probably moderated in April to the slowest monthly pace this year driven by sharp drop in airfares. •The slowdown in consumption and prices, coupled with the labor market slowdown, are strengthening the argument for the Fed to initiate rate cuts this year, though last mile inflation (due to major services categories depending on minimum-wage labor are feeling the effects of catch-up
Over the past week, a series of secondary economic releases were scheduled, most of which reported lower-than-expected results compared to the market consensus. Despite this, treasury bond yields experienced a significant increase throughout the week, primarily driven by short-duration bonds. This surge can be attributed to a reversal in the sharp rally observed following the recent CPI report and Federal Reserve minutes released on May 22. This fluctuation may persist in the bond market in the near term. That being said, short-term maturities are nearing their recent peaks following the sell-off, presenting an appealing opportunity for a tactical bullish perspective. Thus, we expect CSOPUMM to continue to deliver stable yield in the near term. As of 20240524, the fund has gross yield of 5
•Last week, PPI data came in robust than expected as core PPI rose 0.5% in April (consensus: 0.2%). •Headline CPI increased by 0.3% m/m in April, slightly below expectations, while the core CPI matched predictions with a 0.3% rise. •Headline retail sales were flat in April (vs a downwardly revised 0.6% prior) which was lower than anticipated, suggested a potential weakening in the robust consumer demand that has been supporting the economy. •Last Friday, import price inflation was stronger-than-anticipated, with the headline index rising 0.9% in April, surpassing the 0.3% consensus. With that, 3 Fed officials advocated for maintaining high borrowing costs while waiting for signs of easing inflation, indicating no hurry to reduce interest rates. •As a result, despite swaps traders anticipat