DXY fell last night:
The Australian dollar rocket re-ignited:
Gold jumped:
Oil fell:
Dirt rallied:
Miners too:
EM stocks yawned:
And junk:
Bonds were smartly bid:
Stocks took off. Nasdaq is at new highs:
Westpac has the wrap:
Event Wrap
COVID-19 update: The global case count, according to the latest data from John Hopkins University, indicates 93k new confirmed cases worldwide on 6 May, vs 80k the previous day and vs 102k at the peak on 24 April. Whereas in March daily cases accelerated, in April they have trended sideways.
The BoE policy rate and asset purchase program were left unchanged, but there was dissent voiced by known doves Saunders and Haskel who called for an increase in QE of at least GBP100bn. The accompanying Monetary Policy Report provided a decidedly negative scenario for the economy, a contraction of 14% GDP but then an expansionary rebound of 15%. Governor Bailey stressed the MPC’s preparedness to provide further liquidity and the downside implications and risks around their scenario.
US weekly jobless claims rose another 3.2m (close to median estimate of 3.0m). Continuing claims are now up to 22.7m (vs est. 19.8m).
Fed comments came from Bostic – the Fed will deploy its full arsenal and not hurry to reverse emergency measures, Kashkari – the jobs reports are likely to understate true job losses, Barkin – negative rates are not worth trying in the US, and Daly – positive economic growth is not expected until 2021.
Event Outlook
Australia: The RBA will publish its May Statement on Monetary Policy. Of most interest will be the updated forecasts, which will outline the Bank’s expectations for the profile of the coronavirus shock and recovery.
Japan: March household spending is expected to contract by 6.5% as precautionary savings rein in consumption.
China: The Q1 current account balance will be released, including the full detail on trade for the volatile quarter.
US: April payrolls are due, the median expectation being a decline in jobs of 21.7m (Westpac at -23.0m). The unemployment rate is expected to jump from 4.4% to 16.0%. Wages growth is expected to remain at 0.4%, but weakness will emerge in the months to come.
The Australian dollar got a triple shove from better than expected Chinese exports, the blowout trade surplus (which was nothing more than monthly noise) and this:
U.S. Secretary of State Mike Pompeo on Thursday left the door open for more trade talks with China, after President Donald Trump said he was planning a progress report on the phase-one trade deal between the two nations.
“If they want to engage in the world, if they want to protect property rights, if they want to conduct fair and reciprocal trade, if they’re interested in that — which they tell us they are — then yeah, I think there’s a path forward to do that,” Pompeo said in an interview on CNBC when asked about further negotiations amid a rift between Washington and Beijing over the coronavirus pandemic.
Pompeo added, “if they choose a different path, if they choose a path where they continue to operate in the way they’ve operated for the last 25 years, President Trump is just going to say ‘nope, that doesn’t work for the American people and the American worker,’ and we’re going to head down a different path.”
Also see:Trade deal with China faces threat. What investors should be worried about.
Pompeo’s comments came after Trump said on Wednesday he would “report on” the fulfillment of the phase-one trade deal at the end of next week.
“Hopefully, they’re going to keep the deal. We’ll see. They may, they may not. We’re going to find out,” Trump said during comments in the Oval Office with the governor of Iowa.
They are not meeting the deal and cannot. Nowhere near it:
But at least they are talking, I guess. This is a market that exaggerates all good news and discounts the bad.
For now.
