We might have expected the bid for Treasurys to vanish after the president this morning said the June 12 summit with North Korea "could" still happen. But troubles in the EU periphery have yields falling in Western Europe and the U.S.
Spain is driving the narrative today, with the future of PM Rajoy in doubt and corruption convictions for former officials in his ruling party. Spanish stocks are down 2.1%, and the 10-year yield is up eight basis points to 1.48%. Italian shares are off 1.4%, and its 10-year yield is up 14 basis points to 2.54%.
The German 10-year Bund yield is down 8.5 basis points to 0.39%, and the 10-year U.S. Treasury is lower by 5.5 basis points to 2.92%. TLT +0.8%, TBT -1.6%.
Antitrust officials from China’s Anti-Monopoly Bureau of Ministry of Commerce met with Micron Technology (NASDAQ:MU) yesterday to “express concerns” about continued price increases for PC DRAM products.
China is the largest importer of memory products and thus is more vulnerable to DRAM price shifts. China has worked to build up its domestic DRAM and NAND Flash industries and that’s likely to ramp with the continued trade tensions with the US.
Political uncertainty in Italy over the past couple or weeks has fed the rout in government bonds for the EU peripheral countries (namely Italy, Spain to an extent), but growing calls to remove Spanish PM Mariano Rajoy are doing the trick today.
At issue are the corruption-related convictions of a number of former officials of Rajoy's ruling party. The centrist Ciudadanos party today indicated it will back a no-confidence vote in Rajoy unless he calls a snap election.
"Rajoy’s chances of completing his term are minimal, it’s a matter of timing now,” says Oxford Economics' Angel Talvera.
Most of Europe is in the green, but Spain's IBEX 35 has tumbled 2% and Italy's MIB 1%. Government bond yields are lower in Germany and the U.K., but Spain's 10-year yield is up 7 basis points to 1.47%, and Italy's 7.5 basis points to 2.476%.
Checking the Spanish banks, Santander (NYSE:SAN) and BBVA are both down more than 4% premarket.
An overnight report that OPEC and Russia are mulling an increase in production by up to 1M barrels per day has WTI crude oil down 2.2% to $69.13 per barrel.
Also in the news are comments by Saudi Arabia Energy Minister Khalid Al-Falih that the current pace of oil demand growth is "not sustainable." On production, Saudi Arabia, he says, has about 2M barrels per day of spare capacity.
The major average futures are in the green, but the XLE is down 0.85% premarket after yesterday's 1.7% decline. USO -2.25% premarket
"Mexico is not going to negotiate [NAFTA] on the basis of pressure," said President Enrique Pena Nieto's spokesman, but sources said the country made a new offer after the U.S. launched a probe into auto tariffs.
"If an agreement is reached, it will be one that truly benefits Mexico. If these conditions don’t exist, Mexico will not move forward."
Irish voters will decide today whether to remove a ban on abortion from the country's constitution, after legalizing divorce in 1995, and three years ago becoming the first country in the world to adopt gay marriage by popular vote.
Government funding is also on watch. The European Commission has expressed concerns about the cost-effectiveness and sustainability of the Irish health system, which could have negative impacts in the medium term on fiscal sustainability.
North Korea is still hopeful for a "Trump formula" to resolve the standoff over its nuclear weapons program, and remains open to an upcoming summit, as it blew up tunnels leading to its nuclear facilities in front of international journalists.
President Trump canceled the June 12 meeting yesterday, calling the collapse "a tremendous setback for North Korea and indeed a setback for the world."
The new verdict comes almost six years after a jury awarded Apple more than $1B in the case, linked to infringement of iPhone IP.
The damages portion was returned to a lower federal court in December 2016 by the U.S. Supreme Court in order to determine whether an entire iPhone, or its components, were the "article of manufacture" that would affect damages.
The new jury decision effectively splits the difference between wildly different suggestions from the companies: $28M in damages suggested by Samsung, and $1B suggested by Apple.
But with about $399M at stake in the retrial, the $538.6M figure is a relative win for Apple.
American Depositary Receipts of BT Group (BT +0.3%), down as much as 1.3% earlier, have jumped back into positive ground after word that the incumbent British telecom is drawing interest in its Openreach fixed network.
The network has been a political bone of contention, with rivals (particularly Vodafone (NASDAQ:VOD)) saying Openreach needs to be separated and/or regulated to provide an even playing field.
Updated: Bloomberg reports that BT has gotten informal interest from private-equity and infrastructure investors, though deliberations are early stages and might not result in any deals. Under consideration are minority and majority stake purchases in the unit, which could be valued overall at £12.4B-£24.9B (up to $33B) -- a wide range consideration regulatory uncertainty.
In a letter to North Korean dictator Kim Jong Un, the president says their planned June meeting is no longer going to happen. "Based on the tremendous anger and open hostility displayed in your most recent statement ... it is inappropriate at this time, to have this long-planned meeting."
Stocks (SPY -0.6%) are slipping modestly, and the 10-year Treasury yield is now firmly under 3% - off three basis points to 2.965%. TLT +0.75%, TBT -1.5%
Singapore’s economy remained on solid footing in the first quarter, with the government narrowing its growth forecast for 2018 to 2.5 to 3.5 percent expressing more certainty of a steady pace in 2018 as global trade risks and tightening financial conditions allow for a patient monetary policy.
Steady growth that’s within the government’s forecast range, coupled with data earlier this week showing inflation comfortably within the target, should support the central bank’s plans to gradually tighten monetary policy this year.
Construction fell 5% Y/Y, Manufacturing climbed 9.8% percent, financial services industry surged 9.1% in 1Q18.
Looking to stop MS-13 from crossing into the U.S. illegally, President Trump has warned of plans to cut funding for countries from which gang members originate.
"We're looking at our whole aid structure. It’s going to be changed very radically... We're going to work out something where every time someone comes in from a certain country, we are going to deduct a rather large sum of money."
"China opposes the abuse of national security clauses, which will seriously damage multilateral trade systems," said Gao Feng, spokesman at the Ministry of Commerce, adding that it will "firmly defend" its rights and interests.
The comments follow the opening of an investigation by the Trump administration into car and truck imports, which may lead to new U.S. tariffs similar to those imposed on imported steel and aluminum in March.
North Korea's senior envoy for American affairs has renewed a threat to call off an upcoming summit and warned that Pyongyang could "make the U.S. taste an appalling tragedy it has neither experienced nor even imagined."
Choe Son Hui also also referenced a "nuclear-to-nuclear showdown" and dubbed Vice President Mike Pence "a political dummy" for his comparisons to Libya's denuclearization.
French unemployment rose 0.3% in the first quarter of the year, confounding economists' expectations for a decline and suggesting President Emmanuel Macron's policies to boost jobs and growth are struggling to find traction.
French ILO jobless rate rose to 9.2% in the first quarter, up from 9.0 percent in the last quarter of 2017, compared to the forecast of 8.8%.
While disappointing for a government that has banked on bringing high unemployment down via faster growth and tweaks to employment law, analysts suggest France may now be hampered by a wider loss of momentum across the euro zone.
Germany flash private sector composite output index deteriorated in May to 53.1 from 54.6 in April, compared to the forecast of 54.7.
German services PMI declined to 52.1 this month, from 53.0 in April.
German manufacturing PMI slumped to 56.8, lowest in 15 months from 58.1 in April.
Commenting on the report, Phil Smith, Principal Economist at Markit, said, “weaker order book growth and a further waning of business confidence point to the economy carrying a lot less underlying momentum than at the end of 2017."
Margins are already cycle-high for advertising sector firms, and adding in growth that lags GDP makes a warning bell for the stocks, Morgan Stanley says.
The giants -- WPP, Publicis Groupe (OTCQX:PUBGY), Interpublic Group (NYSE:IPG) and Omnicom (NYSE:OMC) -- look to be losing share in media spending, the firm says in a note. If the sector goes through a cyclical slowdown in 2019, then valuation multiples could re-test lows from late 2017, it says. (h/t Bloomberg)
WPP today is down 4.7%; Publicis is off 2.7%; Interpublic Group is 2.5% lower (but closer to its 52-week high than its 52-week low); Omnicom is 4% lower.
Tata Motors (TTM +0.9%) trades higher despite posting almost a 50% drop in net profit during Q1. The bottom line mark also missed the consensus estimate of analysts by a wide margin.
Investors make have their focus on the automaker's performance in its domestic market. "We gained market share in both commercial and passenger vehicles with strong improvement in profitability and positive cash flow," notes Tata Chairman N Chandrasekaran.
Jaguar Land Rover posted 4% revenue growth during the quarter.
Hitting new 18-month lows, IHS Markit's Eurozone PMI fell from 55.1 in April to 54.1 in May, suggesting a stiffer policy challenge for the ECB ahead.
While there was a series of public holidays in May, it is "becoming increasingly evident that underlying growth momentum has slowed compared to late last year, especially in relation to exports," said Chris Williamson, economist at IHS Markit.
Adding to the losses seen on Tuesday, U.S. stock index futures are sinking further into the red, after President Trump told reporters there was a "substantial chance" his summit with Kim Jong Un will not take place on June 12.
The president also said he was "not satisfied" with trade talks with China.
"We have a long way to go," he declared, adding he wants the talks to go "fairly quickly."
Asia: Nikkei -1.2%; Hang Seng -1.7%; Shanghai -1.4%; Sensex -0.5%.
Europe: FTSE 100 -0.6%; CAC 40 -1.4%; DAX -1.2%.
U.S. futures: Dow -0.8%; S&P -0.7%; Nasdaq -1%.
Oil is down 0.5% at $71.87/bbl, gold is flat at $1219/ounce and the 10-year Treasury yield is down 5 bps to 3.01%.
The lira slid as much as 2.8% against the dollar overnight to a fresh record low of 4.7989, after Fitch Ratings said it was concerned about the erosion of the central bank's independence to fight double-digit inflation.
President Erdogan confirmed last week that he intends to take more responsibility for Turkey's monetary policy if he wins an election next month.
The currency has slumped about 12% this month alone, with only the Argentine peso having plunged more.
The program has a one-year duration, expiring May 22, 2019.
It reflects "confidence in the health and long-term outlook of the company," says CEO Sergio Alonso. “We are committed to delivering shareholder value, and with a strong balance sheet, and operating cash to sufficiently fund both our previously announced dividend resumption and investment programs, we believe we can buy back our shares while maintaining the flexibility to continue to execute on our strategic investment in the future.”
Other round participants: Danhua Capital, Legend Capital, and DotC United.
The news aggregation company has over 50M users and is available in over 10 of India’s languages.
Competitor: Bytedance’s Toutiao has 200M daily users in China and the parent company also owns Dailyhunt in India. Other competitors include Inshorts, NewsPoint, and a service from Alibaba’s (NYSE:BABA) UC Web.
The growth in the German economy continues to be robust but the underlying momentum has likely weakened and the risk of a global trade war still remains.
The slowdown comes at a sensitive time for the European Central Bank, which is debating whether to end a 2.55 trillion euro bond purchase scheme, satisfied that growth is strong enough now to generate much needed inflation.
But the Bundesbank dismissed some of these worries, arguing that the slowdown has to be seen in the context of exceptionally strong momentum since mid-2016.
European Central Bank policymaker Erkki Liikanen stated that underlying inflation in the Eurozone will need time to accelerate and support the rise in headline inflation.
He further states there was an exceptional amount of uncertainty about how unconventional monetary policy worked but argued that easy monetary policy remained necessary for inflation to rise back to the ECB's target of almost 2.0%.
The company unveiled 20 new titles for PC and mobile, including "MMO games, sandbox games, battle arena games, puzzle games, simulation games, collectible card games and sports games."
It's introducing NetEase Da Shen to bring game players on to a single platform, an "online community of elite game players," as part of the news.
And it announced licensing partnerships with TV, film and stage producers and book/comic publishers to extend its titles, including a live action movie based on Onmyoji and Internet dramas based on the Knives Out and Tianxia franchises.
Matt Hancock, the UK secretary of State for Digital, Culture, Media and Sport, says he doesn't expect to intervene since the proposed deal "does not raise concerns in relation to public interest considerations which would meet the threshold for intervention.”
Interested parties have until 5 p.m. Thursday to submit statements and Hancock says he'll come to a final decision shortly.
The deal's at the crossroads of a few others: The Comcast-Sky bid comes directly in the middle of Fox's (FOX +1.5%, FOXA +1.4%) own bid for the 61% of Sky it doesn't already own, and complicates Disney's (DIS +0.7%) bid for Fox's media assets (and possible separate bid for Sky).
A decision favoring AT&T (T +0.5%) in its Time Warner (TWX +0.1%) bid would likely strengthen Comcast's own bid for Fox media assets, Mike Farrell notes.
The professor will serve as chairperson of the board's nominating and corporate governance committee as well as sitting on the audit committee.
He's currently Essilor Chair Professor in Accounting and an associate dean at CEIBS in Shanghai, and has served on several public companies boards, including People's Insurance of China Limited and China Cinda Asset Management.
Automobile stocks are generally higher after China lowered its auto import tariff to 15% from 25%. The Finance Ministry also dropped the tariff on imported car parts to a standardized 6% across the board from an average of 10%.
Shares of Tata Motors closed up 3.8% in Bombay, while the U.S.-trade ADRs are up 3.3% in premarket trading. BMW is 1.95% higher in Frankfurt, while Daimler (OTCPK:DDAIF) is up 1.55% and Volkswagen (OTCPK:VLKAY) is 1.36% higher in its home market. Ford (NYSE:F) is up 0.78% premarket, while GM is 1.02% higher and Fiat Chrysler Automobiles (NYSE:FCAU) is showing a 2.44% gain. Tesla (NASDAQ:TSLA) is up 0.86% after the China development.
The easing of trade tensions between the U.S. and China is continuing, with the latter pledging to cut import tariffs on passenger vehicles to 15%, down from 25%. Import duties on car parts will be reduced to 6%.
It comes after Washington froze its proposed Chinese tariffs and looked into lifting the ban on ZTE, while Beijing halted its probe into U.S. sorghum imports and restarted the review of the Qualcomm-NXP deal.
Indonesia's central bank will conduct three foreign exchange swap auctions this week to ensure there is enough rupiah liquidity in the market following the hike in its key rate, the 7-day reverse repo rate by 25 bps to 4.50%
The overnight contract for the Jakarta Interbank Offered Rate rose to 4.22528 percent on average the following day, from 4.02500 percent.
The rupiah has been under pressure in past weeks as U.S. Treasury yields rose and the dollar rallied. The currency continued to fall despite BI's rate hike and on Monday it softened further to trade at 14,195 to the dollar, its weakest since October 2015.
The supposedly bullish news of a power-sharing agreement between Italy's Five Star Movement and The League isn't doing much to help that country's market for government debt, and chatter about a eurozone break up is again entering the conversation.
Italy's 10-year government bond has exploded higher by 18 basis points today to 2.40%. Against Germany, it looks even worse, as 10-year Bund yields are down six basis points.
Italian stocks are the worst performers on the Continent as well, with the FTSE MIB down 1.5% vs. the Stoxx 600's 0.3% advance.
Checking another peripheral name, Spanish 10-year yields are up 7.5 basis points to 1.50%, and the IBEX 35 is off 0.45%.
"Carmen Reinhart dropped an interesting stink bomb on the markets last week," JPMorgan Asset Management Global CIO Bob Michele tells Bloomberg.
Economist Reinhart took note of higher debt levels in emerging markets, as well as the increased exposure of that debt to foreign currency.
Michele agrees: "These economies have levered up and it’s not clear they can absorb higher funding rates going forward." 2016's taper tantrum ended up being a nothing-burger, says Michele, but this time, monetary tightening is the real deal - QE is over and a central bank rate hike cycle shows no signs of slowing.
Altice (OTCPK:ALLVF) is off 1.8% in U.S. trading after word from MSCI that it will delete Altice A shares from its global standard and large-cap indexes.
The move is effective May 22, the day the stock goes ex-dividend for a separation of Altice USA (ATUS -3.3%), where Altice shareholders will get 0.4163 share of Altice USA for each share of Altice held.
Shares of Altice Class A are down 7.8% in Amsterdam.
WestJet Airlines (OTC:WJAFF, OTC:WJAVF) responds on Twitter to reports of works disruptions and a potential strike by pilots.
"We have not received any notification of labour action and remain actively engaged in negotiations. We will provide additional updates should this change as they become available," tweets the airline.
Stocks, oil prices and the dollar are all getting a boost, with the Dow set to leap 228 points, amid easing U.S.-China tensions that have roiled global markets this year. Dow +0.9%; S&P 500 +0.6%; Nasdaq +0.7%.
"We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework,” Treasury Secretary Steven Mnuchin told Fox News.
Trade Representative Robert Lighthizer still cautioned that tariffs remained an important tool to "protect our technology."
Oil is up 0.4% at $71.65/bbl, gold is 0.6% lower at $1284/ounce and the 10-year Treasury yield is flat at 3.07%.