US markets are struggling to get out from under higher oil, higher yields and a weaker greenback this morning after bond chaos reached Asian markets and the JOLTs reading, Chair Yellen's favorite, missed expectations. Greece is pummeling European markets: the IMF confirmed Athens made its €750M payment, however Greece used funds from its IMF account to meet the payment (and reserves kept in IMF holdings need to be replenished within a month). As of writing, the DJIA is off 0.14%, the S&P500 is down 0.30% and the Nasdaq is down 0.34%.
The bond market selloff reached Japan today, with Japanese 10-year yields up six basis points to 0.450% earlier the session and Australia up 19 basis points to 3.05% after Japan's 10-year bond auction drew bids for 2.24 times the amount for sale, the lowest in six years. There was another day of volatility in Europe, as the 10-year bund yield rose as much as 12 basis points to 0.74% before dipping lower, while the US 10-year rose as high as 2.370%.
The JOLTS job openings data - Fed Chair Yellen's favorite gauge of employment demand - missed expectations and were a bit lower than the February reading. However, the upward trend in job openings remains clear and the miss was pretty small. Analysts said the higher quits ratio (which was very strong in the retail sector) was a sign of strength, as workers wouldn't be quitting their jobs unless they were reasonably confident they could find another one.
Crude prices spiked higher in trading earlier today as the dollar weakened again. EUR/USD drifted from 1.1150 in the Asia session up to 1.1280, pulling WTI crude up to $60.50. EUR/USD dipped to 1.1230 after the US cash open and WTI briefly dipped below $60 again. Both the DoE's EIA monthly report and the OPEC monthly are due this morning. Note also that OPEC sharply denied yesterday's reports in the Wall Street Journal that it may return to oil production quotas, which were mostly abandoned back in 2011.
The SEC has announced fraud charges against the former-CEO and current CFO of for-profit college ITT Educational Services. The SEC alleges that the national operator of for-profit colleges and the two executives fraudulently concealed from investors the poor performance and looming financial impact of two student loan programs that ITT financially guaranteed. Shares of ESI fell nearly 50% before being halted earlier in the session.
Verizon announced a deal to acquire AOL this morning, in a $4.4 billion cash deal valued around $50/share, a 17% premium. Tim Armstrong, AOL's chairman and CEO, will stay on to run AOL after the acquisition. The deal is all about AOL's advertising platform: analysts expect AOL may be able to compete with the likes of Facebook and Google when it has the backing of Verizon's reach and customer base. There were reports out after the deal was announced that AOL was already in talks to spin off its Huffington Post content unit to Axel Springer or private equity.
***Looking Ahead***
- 12:00 (US) DOE Short-Term Crude Outlook
- 12:00 (US) USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report
- 12:45 (US) Fed's Williams speaks at New York Association for Business Economics
- 13:00 US) (US) Treasury to sell $24B in 3-Year Notes
- 14:00 (US) Apr Monthly Budget Statement: $155.0Be v $106.9B prior
- 16:30 (US) Weekly API Oil Inventories
- 17:00 (KR) South Korea Apr Import Price Index M/M: No est v 0.4% prior; Y/Y: No est v -17.1% prior
- 17:00 (KR) South Korea Apr Export Price Index M/M: No est v 0.9% prior; Y/Y: No est v -6.8% prior
- 17:00 (NZ) New Zealand Central Bank (RBNZ) Financial Stability Report
- 17:05 (NZ) RBNZ Govr Wheeler press conference
- 19:00 (KR) South Korea Apr Unemployment Rate: No est v 3.7% prior
- 19:50 (JP) Japan Mar Current Account Balance: ¥2.075Te v ¥1.440T prior; Adj Current Account: €1.404Te v ¥0.604T prior; Trade Balance: +¥513.1Be v -¥143.1B prior
***Economic Data***
- (PT) Bank of Portugal reports Apr ECB financing to Portuguese banks at €29.3B vs. €28.2B prior
- (IL) Israel Apr Trade Balance: -$0.9B v -$1.2B prior
- (EU) OECD Mar Leading Indicator: 100.1 v 100.2 prior
- (ZA) South Africa Mar Manufacturing Production M/M: 1.2% v 0.5%e; Y/Y: 3.8% v 1.0%e
- (US) Goldman Economist: Chain Store Sales w/e May 8th w/w: -1.7%; y/y: +2.1%
- (IN) India Mar Industrial Production Y/Y: 2.1% v 3.0%e
- (IN) India Apr CPI Y/Y: 4.9% v 4.9%e
- (US) Redbook Retail Sales w/e May 8th: +2.1% y/y, May MTD: 0.0%
- (US) Apr NFIB Small Business Optimism: 96.6 v 96.0e
- (MX) Mexico Mar Industrial Production M/M: 0.0% v 0.4%e; Y/Y: 1.7% v 1.8%e; Manufacturing Production Y/Y: 3.1% v 3.9%e
- (UK) Apr NIESR GDP Estimate: 0.4% v 0.6% prior
- (US) Mar JOLTS Job Openings: 4.99M v 5.108Me
[I]Contributed by Trade The News[/I]
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