Stock markets around the world have paused overnight with the Dax, FTSE, other European indices and US index futures for the Dow and S&P all trading pretty much flat as traders await a US GDP update and comments from Fed Chair Yellen.  

The G-7 meeting wrapped up overnight with the usual comments about using a range of tools to grow economies and not using competitive currency devaluations. A push by host Japan for a more aggressive response to a perceived crisis didn’t get anywhere, but reports suggest Japan is now prepared to postpone a sales tax increase scheduled for next year. A comment on potential Brexit risks was thrown in as an afterthought at the last minute, likely as a bone to PMs Cameron and Abe, and completely ignored by the market.   

Crude oil is falling back from $50.00 a bit in what looks like a normal trading correction. It continues to face considerable resistance at that big round number ahead of next week’s OPEC meeting and with traders speculating a price somewhere above there could be enough to encourage some US producers to re-enter the market. Oil sensitive currencies, CAD and NOK are down about 0.4% in an otherwise quiet day for forex trading. This retreat may also put a bit of pressure on energy stocks to wrap up the week.   

Focus now turns to US markets and more speculation on whether the Fed will raise interest rates in June. The GDP update may give more colour on how the economy performed in Q1 but unless there’s a big surprise, that’s getting to be old news. Fed Chair Yellen’s speech could carry significant weight with traders. This is her first public appearance since the hawkish turn in FOMC member comments amid stronger US data and Fed minutes over the last two weeks. Chair Yellen is usually associated with the dovish camp and it will be interesting to see if she stays dovish in a bid to maintain some balance in the outlook or if like Governor Powell yesterday, she joins the chorus calling for a rate hike soon (likely June or July).  

Corporate News

There have been no major corporate announcements so far today.


Economic News

Significant announcements released overnight include:

Japan consumer prices        (0.3%) vs street (0.4%)
Japan core CPI            0.7% as expected
China industrial profits         4.2% vs previous 11.1%

Spain retail sales        6.4% vs previous 4.3%
Sweden retail sales        1.7% vs street 2.8%


Announcements due later today include:

8:30 am EDT        US Q1 GDP update        street 0.9% vs previous 0.5%
8:30 am EDT        US Q1 personal consumption    street 2.1% vs previous 1.9%
8:30 am EDT        US Q1 core PCE        street 2.1%

10:00 am EDT        US consumer sentiment        street 95.4%
11:30 am EDT        US NOAA Atlantic hurricane season forecast

1:15 pm EDT        FOMC Yellen speaking

 

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