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Update: 2016-05-30 11:55:23 ET

Moving the Market
  • Q1 GDP -- Second Estimate: Actual +0.8%, Briefing.com consensus 0.9%, Prior 0.5%
    • GDP Deflator -- Second Estimate: Actual +0.6%, Briefing.com consensus 0.7%, Prior 0.7%
  • May Michigan Sentiment -- Final: Actual 94.7, Briefing.com consensus 95.5, Prior 95.8
  • Fed Chair Yellen (FOMC voter): Labor market has really improved; further gains in employment are possible; not seeing much sign of wage growth, suggesting slack in labor market; saw weak growth in Q1, growth looks to be picking up, and if the rebound continues and labor market continues to improve, appropriate for the Fed to gradually and cautiously increase rates over time in the coming months

5/27/2016
3:13:55 ET
10-Year:-6/32 1.85    GNMAs:     EUR/USD:1.1119    USD/JPY:110.33   

Yield Curve Flattens After Yellen Speaks

  • U.S. Treasuries finished today's session lower, with the losses concentrated in the front end and belly of the yield curve, after Fed Chair Yellen said that it will be appropriate for the Fed to raise rates in the coming months if the economy evolves as she expects. After Fed Governor Powell's remarks on Thursday, it would appear that even a majority of the more dovish Board of Governors is on board with a June or July rate hike, assuming the economic data continues on its current trajectory. The second estimate of Q1 U.S. GDP growth came out one tenth under the Briefing.com consensus of +0.9% and Michigan Consumer Sentiment was finalized at 94.7, below expectations. The U.S. Dollar Index finished near a three-week high, up 0.58% to 95.72 and the S&P 500 added 0.26% to 2,095.6 
  • Yield Check:
    • 2-yr: +4 bps to 0.91%
    • 5-yr: +4 bps to 1.38%
    • 10-yr: +2 bps to 1.85%
    • 30-yr: unch at 2.65%
  • News:
    • Trying to hedge as much as possible, Fed Chair Yellen said that if the economy remains on its current course, the Fed will gradually and cautiously increase rates over time in the coming months. She also noted that wage growth is not accelerating and that indicates that there is still slack in the labor market
    • The U.S. economy grew at a 0.8% annualized rate in the first quarter, revised up from the initial estimate of 0.5%. The Briefing.com consensus was for a greater upward revision to 0.9%. The growth rate for Q4 2015 was 1.4%
      • The report was disappointing for three reasons. First, 0.8% growth is still weak in a historical context. Secondly, personal consumption expenditures growth was left unchanged at 1.9%. The third drawback was that the upward revision had a good bit to do with the change in private inventories, which was smaller than previously estimated
    • The final reading for the University of Michigan Consumer Sentiment survey for May was revised to 94.7 from the preliminary reading of 95.8. The revised figure was below the Briefing.com consensus estimate of 95.5, yet it was still up nicely from the final reading of 89.0 for April and the 90.7 reading registered for May 2015
      • The downward revision is owed entirely to the Index of Consumer Expectations, which was lowered to 84.9 from the preliminary reading of 87.5
      • The Current Economic Conditions Index was revised up to 109.9 from the preliminary reading of 108.6
      • It was noted in the report that there were only four prior months since the peak in January 2007 that the Sentiment Index was higher than in May 2016
      • Interestingly, it was said the biggest uncertainty for consumers is not whether the Fed will hike rates in the next few months, but rather what government economic policies will look like under a new president; hence, consumers have placed an added emphasis on maintaining precautionary savings
  • Commodities:
    • WTI crude: -0.26% to $49.35/bbl.
    • Gold: -0.97% to $1,208.6/troy oz.
    • Copper: +0.24% to $2.1075/lb.
  • Currencies:
    • EUR/USD: -0.69% to 1.1118
    • USD/JPY: +0.58% to 110.33
  • Week Ahead:
    • Sunday: St. Louis Fed President Bullard (FOMC voter) (20:20 ET)
    • Tuesday: Personal Income, Personal Spending, and PCE Prices (08:30 ET); March Case-Shiller 20-city Index (09:00 ET); May Chicago PMI (09:45 ET); May Consumer Confidence (10:00 ET)
    • Wednesday: MBA Mortgage Index for the week ending 5/28 (07:00 ET); April Construction Spending (10:00 ET); May ISM Index (10:00 ET); May Auto and Truck Sales (14:00 ET); June Fed Beige Book (14:00 ET)
    • Thursday: May Challenger Job Cuts (07:30 ET); May ADP Employment Change (08:15 ET); Initial Jobless Claims for the week ending 5/28 and Continuing Jobless Claims for the week ending 5/21 (08:30 ET); Natural Gas Inventories for the week ending 5/28 (10:30 ET); Crude Inventories for the week ending 5/28 (11:00 ET); New York Fed President Dudley (FOMC voter) (11:30 ET); Dallas Fed President Kaplan (non-FOMC voter) (13:00 ET)
    • Friday: May Employment Situation Report (08:30 ET); April Trade Balance (08:30 ET); April Factory Orders (10:00 ET); May ISM Services (10:00 ET)

 
5/27/2016
2:46:05 ET
10-Year:-6/32 1.85    GNMAs:     EUR/USD:1.1113    USD/JPY:110.39   

Dollar Jumps on Yellen Comments

  • The U.S. dollar gained against every one of the majors today as Fed Chair Yellen seems to have acquiesced to the idea of a June or July rate hike. The news sent the U.S. Dollar Index to a seven-week high of 95.77, up 0.64% on the day. The euro sank to a two-month low as higher rates drew capital westward across the Atlantic in search of higher returns. The British pound has held up rather well against the greenback in recent sessions as polling data shows a progressively smaller chance for Brexit
    • Fed Chair Yellen said today that, given the economy improves in the way that she expects, "it will be appropriate for the Fed to gradually and cautiously increase rates over time in the coming months"
    • The U.S. economy grew at a 0.8% annualized rate in the first quarter, revised up from the initial estimate of 0.5%. The Briefing.com consensus was for a greater upward revision to 0.9%. The growth rate for Q4 2015 was 1.4%
    • The final reading for the University of Michigan Consumer Sentiment survey for May was revised to 94.7 from the preliminary reading of 95.8. The revised figure was below the Briefing.com consensus estimate of 95.5, yet it was still up nicely from the final reading of 89.0 for April and the 90.7 reading registered for May 2015
  • EUR/USD: -0.73% to 1.1113 
    • France's main index of consumer confidence rose far more than expected to 98 in May from 94 in April. Concerns over unemployment fell to a seven-year low. President Hollande has promised to accelerate job growth ahead of next year's elections
  • GBP/USD: -0.39% to 1.4607
    • In the U.K., GfK Consumer Confidence jumped 2 points to -1, as expected
  • USD/CHF: +0.53% to 0.9943
    • Switzerland's employment level fell to 4.88 mln in the first quarter from 4.897 mln in Q4 2015
  • USD/JPY: +0.64% to 110.39
    • Japan's National CPI fell 0.3% y/y in April, in line with estimates. The price index dropped just 0.1% y/y in March
    • Japan's National Core CPI fell 0.3% in the year to April, beating expectations and continuing March's pace of decline
    • The Tokyo region's Core CPI fell 0.5% y/y in May, a sharper drop than expected, after falling just 0.3% y/y in April
    • Economists are braced for weaker Q2 GDP following the April earthquakes on the southern island of Kyushu. Expectations for fiscal stimulus in Japan are growing. Prime Minister Abe proposed delaying the April 2017 sales tax increase for three years. Many analysts are also calling for further easing from the Bank of Japan this summer
    • The Bank of Japan's Harada said that it should be ready to cut rate further if growth risks increase
  • USD/CNY: +0.10% to 6.5632
    • Industrial profits in China rose just 4.2% y/y in April, a sharp deceleration from March's 11.2% growth. The weakness was concentrated in state-owned enterprises
  • USD/CAD: +0.44% to 1.3036
    • Canada's budget balance swung to a deficit of CAD9.44 bln in March from a surplus of CAD3.2 bln in February
  • AUD/USD: -0.61% to 0.7180
  • NZD/USD: -0.78% to 0.6699

 
5/27/2016
2:09:39 ET
10-Year:-6/32 1.85    GNMAs:     EUR/USD:1.1119    USD/JPY:110.28   

Yield Curve Flattens Sharply

  • Fed Chair Yellen's remark today that, given the economy improves in the way that she expects, "it will be appropriate for the Fed to gradually and cautiously increase rates over time in the coming months," have sent Treasuries tumbling, particularly at the two and five-year tenors. The U.S. Dollar Index has jumped to a fresh three-week high of 95.73, up 0.59% for the session. The S&P 500 has fallen to stand up 0.12% to 2,092.7 on the day. Whether the market can handle the increase or not, the Fed does look prepared to hike in June or July. A May jobs report that really exceeds expectations (after accounting for Verizon workers on strike) might prompt them to hike in June, but Yellen appears to like July better and may want to steadily guide market expectations to that conclusion. Fed Governors Brainard and Tarullo are looking increasingly isolated on the dovish wing of the FOMC, if even they have not yet embraced a second hike in coming months
  • The 2's/10's spread is narrower by 2 bps today to 94 bps, two basis points away from a n 8-year low on a closing basis, and traditionally a warning sign of an impending recession
  • Yield Check:
    • 2-yr: +4 bps to 0.91%
    • 5-yr: +4 bps to 1.38%
    • 10-yr: +2 bps to 1.85%
    • 30-yr: unch at 2.65%

 
5/27/2016
1:49:07 ET
10-Year:-5/32 1.85    GNMAs:     EUR/USD:1.1132    USD/JPY:110.04   

Yellen Comes in Slightly More Dovish Than Recent Speakers

  • Trying to hedge as much as possible, Fed Chair Yellen said that if the economy remains on its current course, the Fed will gradually and cautiously increase rates, over time, in the coming months. She also noted that wage growth is not accelerating and that indicates that there is still slack in the labor market. She still sounds more dovish than San Francisco Fed President Williams and New York Fed President Dudley. She said nothing about "two to three rate increases in 2016", but she also did not indicate that she needed to see inflation actually accelerate before raising rates. That was the very dovish view that was put forth by Fed Governors Brainard and Tarullo in the second half of 2016
  • Treasuries are trading lower after her comments and the S&P 500 is up just 0.24% to 2,095. The U.S. Dollar Index is up 0.44% to 95.58
  • Yield Check:
    • 2-yr: +2 bps to 0.90%
    • 5-yr: +3 bps to 1.38%
    • 10-yr: +2 bps to 1.85%
    • 30-yr: +1 bp to 2.65%

 
5/27/2016
1:25:53 ET
10-Year:-2/32 1.84    GNMAs:     EUR/USD:1.1148    USD/JPY:109.85   

No Comments on Monetary Policy

  • Treasuries are still unchanged this afternoon as Fed Chair Yellen speaks with the former chairman of the Council of Economic Advisers, Greg Mankiw. She has so far made no comments relevant to the direction of monetary policy
  • The S&P 500 is up 0.29% to 2,096.1
  • WTI crude is down 0.32% to $49.32/bbl.
  • The U.S. Dollar Index is up 0.31% to 95.47
  • Yield Check:
    • 2-yr: +1 bp to 0.89%
    • 5-yr: +1 bp to 1.36%
    • 10-yr: +1 bp to 1.84%
    • 30-yr: unch at 2.64%

 
5/27/2016
12:20:09 ET
10-Year:-1/32 1.83    GNMAs:     EUR/USD:1.1134    USD/JPY:109.90   

Treasuries at Standstill

  • The U.S. Treasury complex is making no progress today as investors await a public appearance from Fed Chair Yellen. The U.S. economic data was uninspiring, with Q1 GDP growth getting revised up to a lower-than-expected 0.8% annualized rate and Michigan Sentiment getting finalized at 94.7 for May, lower than the Briefing.com consensus of 95.5. Neither of these disappointments is a huge deal, but markets aren't reacting either way. The S&P 500 is up 0.31% to 2,096.6 and WTI crude is down 0.59% to $49.19/bbl. The U.S. Dollar Index is up 0.38% to 95.53. and gold is down 0.63% to $1,212.7/troy oz.
  • Yield Check:
    • 2-yr: unch at 0.88% 
    • 5-yr: +1 bp to 1.36%
    • 10-yr: unch at 1.83%
    • 30-yr: unch at 2.64%

 
5/27/2016
11:39:55 ET
10-Year:-02/32 1.844%    GNMAs:     EUR/USD:1.1136    USD/JPY:109.95   

Markets Await Yellen: The Dollar Index is moving higher as it presses toward 96. The move comes ahead of a public appearance by Fed Chair Janet Yellen. Ms. Yellen will be at Harvard (1:15pm) and is expected to answer some questions on interest rates. The markets are hoping that her comments will help confirm the recent hawkish rhetoric by Fed speakers. It should be noted that Ms. Yellen will also be speaking on June 6. This speech will come after a heavy dose of economic data next week including the May Jobs number. With such high hawkish expectations the dollar has a high bar to keep afternoon gains.

  • The euro continues to slide towards a test of its 200-sma (1.110) which will set up as a key test of support. News out of Europe continues to be quiet which allows the dollar and Fed speak to continue to drive direction for the single currency.
  • The pound is seeing some light profit taking but is gearing up for a key test of multi-month highs and the 200-sma (1.4770 area). Brexit remains the primary driver for sterling but polls continue to point toward a 'remain' vote which is easing some of the tension.
  • The yen continues to dance around the 110 level and is likely to see a tight consolidation period ahead of its Bank of Japan meeting (June 14 just ahead of the Fed). Expectations for further easing are high so the central bank has its work cut out for it. Inflation data today was mixed but continued to point to it running below the BoJs target with little evidence of a rise despite the highly accomodative policies in place.

 
5/27/2016
11:15:30 ET
10-Year:-4/32 1.84    GNMAs:     EUR/USD:1.1130    USD/JPY:109.91   

Markets Await Yellen, Could Be a Dud

  • U.S. Treasuries are losing some ground late this morning as the S&P 500 trades near a three-week high, up 0.22% to 2,094.6. Fed Chair Yellen is set to speak at 13:15 ET but many analysts have played down the possibility that she will weigh in on the economic outlook or monetary policy. Janet Yellen has moved in a dovish direction since the beginning of 2016, although we guess that the hawkish jawboning of the interest rate market by regional Fed Presidents Williams and Lockhart last week would not have happened without her tacit consent. Markets are pricing in a 28% chance of a June hike and a cumulative probability of 56% for a hike by the end of the July FOMC meeting. There is only a 66% chance of a hike by the end of the November meeting, so the market is basically saying the hike is coming sooner or much later. WTI crude is down 0.59% to $49.19/bbl. and the U.S. Dollar Index is up 0.45% to 95.60, 6 ticks away from a seven-week high
  • The FT reports today about the European Central Banks's implementation of the Corporate Sector Purchase Program (CSPP), set to begin on June 1
    • According to the article, UBS is estimating the purchases could be EUR12 bln/month (the ECB asset purchase program totals EUR80 bln/month)
    • The CSPP will cover non-financial corporate debt of maturities ranging from 5 months to 31 years
    • Issuance of corporate debt has jumped in anticipation of the ECB's program, climbing to EUR43 bln in May from EUR23 bln in February
    • Bank of America said earlier this month that the CSPP could catalyze a doubling of the size of the European bond market over five years. A shift to market-based financing from bank-based financing might be welcome in a region where non-performing loans are a big problem for banks
  • Yield Check:
    • 2-yr: uncha t 0.88%
    • 5-yr: +1 bp to 1.36%
    • 10-yr: +1 bp to 1.84%
    • 30-yr: +1 bp to 2.65%
  • 30-Year Yield (Daily):

 
5/27/2016
10:19:54 ET
10-Year:-2/32 1.84    GNMAs:     EUR/USD:1.1137    USD/JPY:109.86   

Yellen Still on Deck

  • U.S. Treasuries are all unchanged this morning, getting set to cap off a very uneventful week. The S&P 500 is up 0.24% to 2,095.1, a three-week high, and WTI crude is down 0.59% to $49.19/bbl. The U.S. Dollar Index is up 0.33% to 95.48 and gold is down 0.35% to $1,215.9/troy oz.
  • The final reading for the University of Michigan Consumer Sentiment survey for May was revised to 94.7 from the preliminary reading of 95.8. The revised figure was below the Briefing.com consensus estimate of 95.5, yet it was still up nicely from the final reading of 89.0 for April and the 90.7 reading registered for May 2015
    • The downward revision is owed entirely to the Index of Consumer Expectations, which was lowered to 84.9 from the preliminary reading of 87.5
    • The Current Economic Conditions Index was revised up to 109.9 from the preliminary reading of 108.6
    • It was noted in the report that there were only four prior months since the peak in January 2007 that the Sentiment Index was higher than in May 2016.
    • Interestingly, it was said the biggest uncertainty for consumers is not whether the Fed will hike rates in the next few months, but rather what government economic policies will look like under a new president; hence, consumers have placed an added emphasis on maintaining precautionary savings
  • Yield Check:
    • 2-yr: +1 bp to 0.88%
    • 5-yr: unch at 1.35%
    • 10-yr: +1 bp to 1.84%
    • 30-yr: unch at 2.65%

 
5/27/2016
9:23:22 ET
10-Year:-1/32 1.83    GNMAs:     EUR/USD:1.1153    USD/JPY:109.70   

Stocks Set to Open Flattish

  • Treasuries are ticking lower at the moment and the U.S. Dollar Index has traded to a session-high, now up 0.27% to 95.43. The S&P 500 is set to open up 0.09% to 2,091.9 and WTI crude is down 1.33% to $48.82/bbl. Gold is down 0.35% to $1,216.1/troy oz.
  • Deutsche Bank's chief economist, Joseph LaVorgna, notes that the upward revision to Q1 U.S. GDP growth was "mostly due to inventories ($69.6 bln vs. $60.9 bln)" and the fact that inventories were revised up with no revisions to final sales (1.2%) means the economy still has elevated stockpiles
  • Yield Check:
    • 2-yr: +1 bp to 0.88%
    • 5-yr: unch at 1.35%
    • 10-yr: unch at 1.83%
    • 30-yr: unch at 2.64%
  • 10-Year Yield (Hourly):

 
5/27/2016
8:47:48 ET
10-Year:-1/32 1.83    GNMAs:     EUR/USD:1.1164    USD/JPY:109.53   

Treasuries Unchanged

  • The U.S. economy grew at a 0.8% annualized rate in the first quarter, revised up from the initial estimate of 0.5%. The Briefing.com consensus was for a greater upward revision to 0.9%. The growth rate for Q4 2015 was 1.4%
    • The change in business investment was revised to -2.6% from the first estimate of -3.5%
    • Household purchases grew at 1.9%, in line with the initial estimate
    • The GDP deflator was revised down to +0.6% from the initial estimate of 0.7%. The Briefing.com consensus was for no change
  • The Treasury complex remains virtually unchanged after the release of the GDP report and the S&P 500 is set to open up 0.16% to 2,093.4. WTI crude is down 1.01% to $48.98/bbl. and the U.S. Dollar Index is up 0.17% to 95.33. Gold is down 0.11% to $1,219.1/troy oz.
  • Yield Check:
    • 2-yr: unch at 0.88%
    • 5-yr: unch at 1.35%
    • 10-yr: unch at 1.83%
    • 30-yr: unch at 2.64%

 
5/27/2016
8:26:28 ET
10-Year:unch 1.83    GNMAs:     EUR/USD:1.1170    USD/JPY:109.63   

European Borrowing Costs Drop

  • The German 2-year Schatz yield touched a two-and-a-half month low today as weak capital goods spending in the U.S., reported Thursday, caused investors to doubt a June rate hike from the Fed. Citi said in a research note to clients that even hawkishness from the Fed could have a deflationary effect on the eurozone economy, thereby lowering yields. We tend to believe that the euro would depreciate in the wake of rate hikes in the U.S., offsetting a lot of that effect. The economic data from the eurozone today showed that consumer confidence in France improved sharply in April but that Italian consumer and business confidence ebbed. 
  • European Economic Data:
    • France's main index of consumer confidence rose far more than expected to 98 in May from 94 in April. Concerns over unemployment fell to a seven-year low. President Hollande has promised to accelerate job growth ahead of next year's elections
    • In Italy, consumer confidence unexpectedly fell to 112.7 in May from 114.1 in April
      • Business confidence dropped to 102.1 from 102.7, also confounding expectations for improvement
    • Spanish retail sales grew by a better-than-expected 4.1% in the year to April but still missed economists' expectations
    • In the U.K., GfK Consumer Confidence jumped 2 points to -1, as expected
    • Switzerland's employment level fell to 4.88 mln in the first quarter from 4.897 mln in Q4 2015    
  • Yield Check:
    • France, 10-yr OAT: -2 bps to 0.46%
    • Germany, 10-yr Bund: -2 bps to 0.13%
    • Greece, 10-yr note: +5 bps to 7.16%
    • Italy, 10-yr BTP: -2 bps to 1.35%
    • Portugal, 10-yr PGB: +1 bp to 3.02%
    • Spain, 10-yr ODE: -2 bps to 1.48%
    • U.K., 10-yr Gilt: unch at 1.42%

 
5/27/2016
7:20:41 ET
10-Year:unch 1.83    GNMAs:     EUR/USD:1.1166    USD/JPY:109.68   

Yield Curve Flattens Slightly

  • U.S. Treasuries are mostly unchanged this morning but remain near one-week highs following Thursday's rally. The economic data released overnight showed that Japan remains mired in deflation and expectations are growing for further fiscal and/or monetary stimulus there this year. In France, economic data has been disappointing so far this year but consumer confidence surged in April. Spain has been leading the recovery in the eurozone but could use some help from its neighbor across the Pyrenees. Industrial profits plunged in China. Fed Chair Yellen will speak publicly today although it is unlikely that she will comment on the economic outlook or monetary policy. The second revision to Q1 U.S. GDP growth will also be released. The S&P 500 is set to open up 0.16% to 2,093.4 and WTI crude is down 0.97% to $49.00/bbl. The U.S. Dollar Index is up 0.17% to 95.33 and gold is down 0.18% to $1,218.2/troy oz.
  • Yield Check:
    • 2-yr: +1 bp to 0.88%
    • 5-yr: unch at 1.35%
    • 10-yr: unch at 1.83%
    • 30-yr: -1 bps to 2.63%
  • International News:
    • Japan's National CPI fell 0.3% y/y in April, in line with estimates. The price index dropped just 0.1% y/y in March
      • Japan's National Core CPI fell 0.3% in the year to April, beating expectations and continuing March's pace of decline
      • The Tokyo region's Core CPI fell 0.5% y/y in May, a sharper drop than expected, after falling just 0.3% y/y in April
      • Economists are braced for weaker Q2 GDP following the April earthquakes on the southern island of Kyushu. Expectations for fiscal stimulus in Japan are growing. Prime Minister Abe has already proposed delaying the April 2017 sales tax increase. Many analysts are also calling for further easing from the Bank of Japan this summer
    • Industrial profits in China rose just 4.2% y/y in April, a sharp deceleration from March's 11.2% growth. The weakness was concentrated in state-owned enterprises
      • Investment returns were down 19.8% y/y in April from +20.4% in March. One suspects that the spring of 2015's stock market volatility may be making year-on-year comparisons difficult
    • France's main index of consumer confidence rose far more than expected to 98 in May from 94 in April. Concerns over unemployment fell to a seven-year low. President Hollande has promised to accelerate job growth ahead of next year's elections
    • In Italy, consumer confidence unexpectedly fell to 112.7 in May from 114.1 in April
      • Business confidence dropped to 102.1 from 102.7, also confounding expectations for improvement
    • Spanish retail sales grew by a better-than-expected 4.1% in the year to April but still missed economists' expectations
    • In the U.K., GfK Consumer Confidence jumped 2 points to -1, as expected
    • Switzerland's employment level fell to 4.88 mln in the first quarter from 4.897 mln in Q4 2015
  • Data out Friday:
    • Q1 GDP and GDP Deflator -- Second Estimate (08:30 ET)
    • May Michigan Sentiment -- Final (10:00 ET)
  • Fed Speaker:
    • Fed Chair Yellen (FOMC voter) accepts Radcliffe Medal and participates in "Building an Economy for Prosperity and Equality" panel (13:15 ET)

 
5/26/2016
3:17:37 ET
10-Year:+11/32 1.83    GNMAs:     EUR/USD:109.75    USD/JPY:1.1191   

Treasuries Rally as Core Durable Goods Miss Estimates

  • U.S. Treasuries moved sharply higher today despite pending home sales touching a 10-year high in April. Traders took their cue instead from a mixed durable goods orders report. While the headline number for April blew past estimates, the gain was driven by orders for aircraft, whereas core durable goods orders unexpectedly declined. Fed Governor Powell, in a rare public appearance, said that a rate hike may be appropriate fairly soon if the U.S. economy rebounds in the second quarter. The S&P 500 meandered around the unchanged mark to trade up 0.11% at 2,092.9 this afternoon. The U.S. Dollar Index declined 0.20% to 95.17
  • Yield Check:
    • 2-yr: -5 bps to 0.87%
    • 5-yr: -6 bps to 1.35%
    • 10-yr: -4 bps to 1.83%
    • 30-yr: -3 bps to 2.64%
  • News:
    • U.S. durable goods orders grew by 3.4% m/m in April, far ahead of the Briefing.com consensus of 0.6%. March's growth was revised up to 1.9% from 0.8%
      • Durable goods orders excluding transportation grew 0.4% m/m, short of the Briefing.com consensus of 0.5%. March's number was revised up to 0.1% from -0.2%
      • Core durable goods orders fell 0.8% m/m, badly missing expectations for a gain. Core orders are down 4.1% from their level in 2015
      • The jump in the headline number was driven by orders for commercial aircraft, which grew by 65%
    • St. Louis Fed President James Bullard said this morning in Singapore that the U.S. is at or beyond full employment "by nearly any metric"
      • Bullard, a moderate hawk who votes on the FOMC this year, went on to say that "the FOMC has laid out, via the SEP, a data-dependent slow normalization. Market-based forecasts of FOMC policy, in contrast, envision almost no normalization"
    • Fed Governor Powell (all governors always vote) said that a rate hike may be appropriate fairly soon (full speech here)
    • Initial jobless claims fell to 268K for the week ending May 21, beating the Briefing.com consensus of 275K. The prior week's reading was 278K
      • Continuing jobless claims rose by 11K to 2163K for the week ending May 14
    • The $28 bln 7-year Treasury auction drew strong demand, stopping through by 0.7 bps. That capped a three-day string of very strong non-dealer demand for Treasury auctions
      • Auction results: High yield: 1.652%; Bid-to-cover: 2.57; Indirect bid: 64.6%; Direct bid: 16.9%
  • Commodities:
    • WTI crude: -0.38% to $49.37/bbl.
    • Gold: -0.25% to $1,220.8/troy oz.
    • Copper: unch at $2.1015/lb.
  • Currencies:
    • EUR/USD: +0.37% to 1.1191
    • USD/JPY: -0.41% to 109.75
  • Data out Friday:
    • Q1 GDP and GDP Deflator - Second Estimate (08:30 ET)
    • May MichiganSentiment - Final (10:00 ET)
  • Fed Speaker:
    • Fed Chair Yellen (FOMC voter) accepts Radcliffe Medal and participates in 'Building an Economy for Prosperity and Equality' panel (10:30 ET)