Short recap
Asia in red on risk off as plenty of things going on this week
Europe opening lower
US election scandal going more public with DoJ accusing contractor about leaking top-secret documents
PIMCO neutral on Italy after offloading Italian bonds
Italy not leaving EZ but probability of things going wrong is high
UK readying for elections on Thursday amid security issues
China suggesting qualified firms to issue Panda bonds (denominated in CNY, issued by non-China issuer but sold in China)
China looking at expanding futures trading to foreigners
Equities
Lufthansa seeing higher traffic from US and Asia
Knock, knock…Siri from Apple coming to you home via HomePod speaker
GM-Greenlight Capital stock battle keeps going
Blackstone likes Scandinavia and wants to buy Finnish real estate Sponda (USD 2 bln)
GTCR and Carlyle working on buying Albany Molecular Research
Apple and Amazon to join Foxconn to buy chip business from Toshiba
In general, Europe and Japan still look attractive (valuation & flow)
Insurers like Swiss Life, followed by banks can benefit from hiking cycle
Bonds
10-yr Trys yield at 2.17%
10-yr Bund yield at 0.28%
DXY
Higher liquidity support the increase in FX reserves
Rising USD liquidity and excess of USD funding well supporting move to yielding assets despite Fed gradual tightening
Support at 96.44 (38.2% Fibo)
EURUSD
US yields not supporting USD
Market keeps respecting 1.1300
But bids weakening towards 1.1284
Support at 1.1180 (23.6% Fibo)
USDJPY
Below 110.00 and 200 DMA (if we close below, the 108.12 is next)
Support 109.50-60 range (76.4% Fibo)
USD 1.3 bln options sitting between 108.90-109.00
In general, Japanese corporates find the range of 108.00-110.00 as a budget rate zone
What may add additional strength to JPY
Upcoming Data/Events
June 8 – ECB meeting – Draghi being alone but inflation data from US and JP suggesting ECB to carry on with ultra-loose stimulus
ECB likely to adjust the risk to economy wording but no change to asset purchases
June 8 – UK elections including Scotland, if SNP/Sturgeon wins the independence referendum likely to follow
June 8 - Former FBI director James Comey to testify before Senate
June 11/18 – French Legislative (Parliamentary) elections(a big question mark for Macron to gain majority)
June 13/14 – FOMC meeting – Jun hike probability at 95%, Sep at 28% and Dec at 40%. After Friday’s NFPs Sep hike may be skipped if data doesn’t come strong.
June 15/16 – EcoFin meeting to discuss Greece
Should you have any questions feel free to contact me anytime.
Good luck Champs!
Mr Hawk
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