Today’s Market – Empire State of Mind

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Rise in US Treasury yields continued overnight, supporting US dollar but not stocks

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Podcast of the day

  • U.S. Treasury yields continue to rise, supporting the U.S. dollar but not hurting equities.
  • Empire (NY) Big jump in one culprit in manufacturing investigation.
  • As with incoming bank results, not worse than expected – Burr State Street.
  • Netflix, BofA, Goldman Sachs and J&J are Tuesday’s earnings callers.
  • China Q1 GDP, today’s highlights of March activity data.

In New York, the concrete jungle where dreams are made, there’s nothing you can’t do – Jay-Z

Charles Schwab and local bank M&T have seen stocks rise in the absence of scary stories about deposit outflows in the first quarter (not as bad as expected), while State Street’s shares have fallen to 10% after reporting. % is down. His 5% deposit outflow this quarter took him to $224 billion, with another $4-5 billion expected to flow out this quarter. The financial subsector of the S&P 500 is up 1.1% for him than the overall market gain of 0.3%. This is a bit more supportive of the recent US Treasury yield backup, but with a much bigger kicker from the Empire (NY) manufacturing survey, which is much stronger than expected. This was the first of April’s regional manufacturing PMIs, jumping from -24.6 to 10.8 to the expected -18.0. AUD/USD is currently holding steady near Monday’s local close at 0.6702, while USD extended Friday’s gains with a +0.4-0.5% index.

The Financial Times now runs a headline that reads, “Depositors are withdrawing nearly $60 billion from three U.S. banks as Apple ramps up pressure.” 5% (Charles Schwab) 3% (M&T Bank) and 5% (State Street) Note that Apple and Goldman Sachs announced Monday the opening of new savings accounts in the US that will pay a market-leading 4.15% annual interest rate (which will likely affect net interest margins). Goldman reports tonight before the New York Stock Exchange opens.

The focus of hundreds of regional banks to be reported in the coming days will be deposit outflows compared to street expectations before the Fed’s senior loan officers turn to system-wide lending standards/credit conditions in early May. Suffice it to say that you will have a firm focus on the degree. The polls (SLOOS) will be released (not until after his Fed decision on May 3, but perhaps his FOMC members will know in advance).

data and empire state survey The investigation period is the first after the failure of SVB Bank. This has shown no ill effects on either the headline business conditions reading between -24.6 and 10.8, or the key sub-indices where both new orders and shipments hit their highest levels in 12 months. The six-month business investment intentions index, which rose 3.2 points to 16.5, may be the noise after April’s 7.2 point decline. The Financial Times headline that caught our eye yesterday read: “U.S. Manufacturing Commitment Doubles After Biden Subsidy Starts.” The report notes that the company has poured more than $200 billion of his money into US manufacturing projects since Congress passed the Inflation Reduction Act last August. According to data compiled by the Financial Times, investment in semiconductors and cleantech will be almost double the commitments made in the same sector over 2021 and nearly 20 times the amount in 2019. It remains to be seen if New York State has any of these benefits.

Separately, NAHB homebuilder sentiment The index climbed from 44 to 45 for the fourth month in a row and, as expected, remains low after a deep recession (although the index has risen from a low of around 30 in the early stages of the pandemic and last December). credit conditions are tight, but there is no evidence that pressure on the local banking system has worsened lending conditions for builders and developers, according to the Commentary. It says.

Overnight central bank speakers included Richmond Fed President Thomas Birkin Some say they want more evidence that inflation is returning to the Fed’s 2% targetRemember that “the economy works fine at this level of interest rates”. ECB President Christine Lagarde also spoke at the Council on Foreign Relations event in New York, where she said: In the short term, about 1% in the long term. Commenting on the potential shift to a more multipolar currency environment, which is currently being talked about, Lagarde said: Natural. “

In the market The S&P 500, Nasdaq and Dow Jones all closed 0.3% higher. The former was followed by a 2.2% rise in real estate followed by the aforementioned 1.1% rise in finance.Communications services (-1.3%) and energy (also -1.3%) lag behind, with energy both WTI and Brent crude are about $1.50 cheaperDispatch points to a stronger dollar as one of the culprits, as well as short-term overbought technical conditions (including last week’s failure to break out of the 200-day moving average). Gold is down about 0.5% or $9 to $1,995 while non-ferrous base metals and iron ore are in the mix.

bonds The U.S. Treasury yield curve has leveled off considerably (4.19% in 2s +9bps, +8bps to 3.60% in 10s), ending the day in New York after European 10-year benchmarks rose 1-3bps. I’m here. in FX, US dollar recovery continues after flirting with new 1-year lows in DXY index terms last Friday morning, with Treasury yields rising DXY +0.5% and broader BBDXY +0.4% Supported. NOK is the worst-performing G10 oil price drop (-0.9%), while AUD is the best (down just 0.06%, holding the 0.67 handle). The AUD/NZD continues to rise from his RBNZ/RBA conference low on April 5, gaining another 0.3% to 1.0840 over the past 24 hours. GBP, NZD, JPY and EUR are all 0.3% to 0.6% off.

coming up

  • China’s fourth quarter gross domestic product and March activity readings hit today (noon AEST). The market consensus for GDP is to grow by 2.1% quarter-on-quarter, seasonally adjusted, indicating a strong recovery in post-Corona activity (3.9% year-on-year from 2.9% in Q4). rise). March data showed industrial production up 4.7% y/y (up 2.6% year-to-date from 2.4% in Jan/Feb) and retail sales up 8.0% y/y or up 3.5% to 3.7% year-to-date. I’m here. in February. Fixed asset investment is expected to grow by 5.5% to 5.8% year-on-year.
  • Tonight, the UK releases its latest labor market data ahead of the BoE meeting on May 11, with a particular focus on wages (average weekly earnings). In Germany there was a ZEW survey, in North America housing starts and Canadian CPI fell an average of 0.4% year-on-year in core indicators, headlines fell from 5.2% to 4.3%, helped by big energy prices with last week’s US CPI numbers. was given.
  • Also keep in mind that today (April 15th) is tax deadline day, as there will be a lot of airing over the next few days related to the looming US debt ceiling issue. Depending on how much cash flows into the Treasury coffers, we can make a more accurate assessment of what the expiration date will be when the U.S. government runs out of funds.

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