Markets Consolidate Ahead of Fresh Data – Nasdaq up 0.7%
US markets consolidated in trading yesterday as investors digested all the recent trade updates and looked ahead to more data today. US stock indices were mixed, the Dow closing down 0.21% on the day, while the S&P and Nasdaq recorded gains of 0.10% and 0.72%, respectively. US Treasury yields pushed higher to multi-month highs, the 2-year up 4.2 basis points to 4.059%, and the 10-year up 4.5 basis points to 4.556%. The dollar edged higher against the majors, the DXY up 0.05% to 101.05. Oil prices fell after recent big gains, Brent off 0.81% to $66.09, and WTI down 0.82% to $63.15 a barrel. Gold prices also resumed their recent decline, closing down 2.15% at $3,177.55 on the day.
US Data Drop to Hit Fed Expectations Today
There is a plethora of US data releases due to hit the market today, all at the same time, and traders will be hoping for some consistency from the results that will help to lock in Fed rate cut expectations and give some direction for the dollar. Fed rate cut expectations have dropped considerably over the last month for any move at the next meeting in June, with only a 10% chance now being priced in, despite a slightly weaker CPI print earlier in the week. If today’s data aligns to show that the US economy is alive and well, then expect that number to decrease further and the dollar to gain more ground. Any significantly weaker prints could start to change the market’s mind and see losses for the greenback as rate cut calls increase.
Data in Focus Today Across All Sessions
Investor focus will switch back to economic data today, with some key updates due across all three of the major trading sessions, and a big US data dump coming towards the end of the day. The focus in the Asian session will be on Australian markets again, with key employment data due out. The headline employment change number is expected to show a 21k gain in April, with the Unemployment Rate remaining steady at 4.1%. The European session will see UK markets in focus again as well, with the latest GDP number (exp 0.0% m/m, 0.6% q/q) the highlight of a number of data releases. We then have a big US data drop early in the New York day, with the latest PPI (exp 0.3% m/m), Retail Sales (exp 0.0% m/m), and Weekly Unemployment Claims (exp 229k) numbers all out alongside the Philly Fed (exp -9.9) and Empire State Manufacturing Index (exp -7.9) updates. Then, there will only be a 10-minute gap for traders to digest before we hear from Fed Chair Jerome Powell, which could have an even bigger influence on the market.
