Market Wrap

The S&P 500 edged up just 0.1% on Wed, with most sectors falling, but big tech climbing. The Dow lost 0.2% overnight though tech-heavy Nasdaq managed to still eked out a gain of 0.7%. US Treasury yields headed higher, as the market pared expectations of the federal funds rate cuts. Yields were 5-7bp higher across the curve, with the 10Y rising above 4.50% for the first time in nearly three months. the DXY index ended the day 0.1% higher above 101, WTI June contract down 1.3% to $62.9 and Gold lost 2.3%.

Chinese banks issued CNY 280 billion in new loans in April down by 61% y/y, the lowest since 2005, due to the US trade war affecting credit demand. Total social financing rose by CNY 1.16 trillion, reflecting the government's plan to increase bond sales, including special debt issuance.

China on Wed suspended curbs on exports of rare earths and other goods and technologies for military use targeting 28 US entities. The suspensions will last for 90 days. China's Ministry of Commerce is also suspending a trade and investment ban against 17 US companies. Sentimentally positive for broader markets.

Gold prices have lost 9% from the recent highs of $3500 on May 6th to currently trade around under $3200/oz as the de-escalation of trade tariffs between US-China led shift investors sentiments towards risk assets. We expect gold to remain under performing to cryptos in short term as the latter is witnessing large fresh inflows in recent weeks. Last week alone cryptos backed ETF’s saw inflows rising $2 billion, and in three weeks it is staggering $5.5 billion with $1.8 billion fund moving to bitcoin alone.

Data watch: UK GDP, UK GDP Growth Rate, EU Employment Change, EU Industrial Production, US PPI, US Retail Sales, US Initial Jobless Claims.