Citi
European Open
The easing of restrictions in Beijing was the main story over the weekend, with little activity as several countries were out on holiday today. The easing of restrictions brought Chinese equities higher, and US equities received modest support as well, following last Friday’s decline. G10 FX stuck to a tight range around the dollar. However, we note that JPY saw some strength early in Asia on the back of buying flows from corporates and fast money. THB saw CPI prints running hot today, raising the possibilities of a live central bank decision on Wednesday. Elsewhere, we flag that British Prime Minister Boris Johnson may be on the verge of facing a no confidence vote, with Bloomberg reporting that he may see rebel Tory MPs triggering a vote as soon as this week, citing sources close to the premier.
We note that a lack of key events lined up today, in addition to NZD, NOK, SEK, CHF, HUF, MYR & KRW observing local holidays, today may be quite quiet. However, we welcome our UK colleagues back after a long weekend, and note that this week brings several rate decisions that will be watched closely.
What happened in markets?
Equities tipped modestly higher following last Friday’s decline, supported by the easing of restrictions in Beijing. Chinese equities led the rise, with CSI 300 and HSI up over 1%. Nasdaq100 futures and S&P eminis were up 0.73% and 0.55% respectively.
FX markets remained tight against the dollar, with JPY the only notable mover. JPY had ticked higher in the Asian session by 0.3% on the back of USDJPY selling flows from fast money and corporates.
Rates markets saw USTs higher by 1bp across the curve. Our UST trader Hideyuki Liu writes that it has been a tepid start to the week in treasuries with the Tokyo session largely muted; yields are modestly higher across the curve with curve marginally bear-flatter. Flows today were muted, though block buyer of +5,000 FVU2 @ 112-10.25 had the market briefly elevated before trading back to the lows into the London open with equities trading positively. Traded volumes in cash UST are significantly below 2022 averages.
US Data:
–May employment data revealed a still very strong labor market with 390k jobs added, but with limited signs of further tightening just yet as the unemployment rate remained unchanged at 3.6% and average hourly earnings rose a somewhat more modest 0.3%. While this could theoretically mean a somewhat more dovish Fed, the consistently strong state of the labor market suggests little reason for the Fed to be uncomfortable yet with the hawkish stance of policy.
Elsewhere
GBP: Prime Minister Boris Johnson may be facing a no confidence vote as Tory MPs seeking to oust him seem to be on the verge of securing sufficient signatures to force a vote, says Bloomberg. Johnson has stated that he does not intend to resign.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.