Mid-Day Report: Markets Stay in Consolidations, US Data Missed

 

Markets continue to engage in consolidation today. While Nikkei dropped another -737 pts to close below 14000 at 13589, European equities pared initial loss and turned positive quickly.

 

US futures also point to mildly higher opening. Data from US saw Q1 GDP revised slightly lower to 2.4% while price index was revised low to 1.1%. Initial jobless claims rose more than expected to 354k in the week ended May 24. Continuing claims rose 63k to 2.99m in the weekended May 18.

 

Dollar pared initial loss and recovered into US session. Yen was also mildly lower. But most major pairs are stuck in range and we'd expect more consolidations ahead.

 

Italy sold EUR 3b in 10-year bonds today with average yield at 4.14%, up from last month's auction at 3.94%. Demand was down slightly with bid-to-cover ratio at 1.38 times, comparing to prior 1.42 times. It also sold EUR 2.75b in five year bonds with yield at 3.01%, up from prior 2.84%. Overall, the sale met maximum target and is see as solid by markets.

 

Confidence data from Eurozone showed slightly more than expected improvement in May.

 

Economic confidence rose to 89.4, industrial confidence improved to -13.0, consumer confidence rose to -21.9, services confidence rose to -9.3. Swiss GDP rose more than expected by 0.6% qoq in Q1.