While events in Ukraine have once again broken out into lethal fighting, and in a surprise development the Chinese Yuan crossed the 6.25 line for the first time in two years threatening to accelerate the unwind of carry trades which have a 6.25-6.30 point of max pain, futures remain completely focused solely on the strong after-hours results from Apple and Facebook which have helped push Spoos overnight to near record levels once again. The biggest push was given to NASDAQ futures which are back up 1% with optimism for US tech returning with the material earnings beats from both Apple ($11.62 EPS vs Est $10.17 EPS) and Facebook ($0.34 Adj EPS vs $0.24 forecast). Shares in both companies rose in afterhours trading with Facebook up +5% and Apple up more than +7% (supported further by the announcement that the company was expanding its share buyback plan to $90bn from $60bn). Not even the Nikkei being down 1%, the SHCOMP down 0.5% and the USDJPY once again treading water could put a dent in the tech-driven euphoria, which somehow also managed to slam gold and silver to month lows.
On today’s calendar we have initial claims which consensus expects to rise to 315K from 304K, but far more important than layoffs (since hiring is well below pre-recession levels), is the Durable Goods report also at 8:30am which will show whether or not the long suffering and longer expected capex boom is finally coming.
Bulletin summary headlines from Bloomberg and RanSquawk
- Treasuries little changed before week’s auctions conclude with $29b 7Y notes, WI yield 2.315%; drew 2.258% in March.
- 5Y notes sold yesterday drew 1.732%, 0.6bp above WI yield at 1pm according to Stone & McCarthy and highest since May 2011
- ECB’s Draghi said any worsening of the medium-term outlook for inflation in the euro area could be the trigger for broad-based asset purchases
- Spain sold EU2.65b 10Y bonds at a record low 3.059%, down from 3.291% at a previous sale on April 3
- Ukraine said its forces entered the city of Slovyansk and killed five pro-Russian separatists as it stepped up an offensive in the east, a day after the government in Moscow warned it would respond if Russians were attacked
- Bank of Japan officials are increasingly concerned the nation’s bond market is failing to reflect emerging inflation, raising the risk of a sudden surge in yields, according to people familiar with the matterÂ
- German business confidence rose in April, with the Ifo institute’s business climate index advancing to 111.2 from 110.7 in March
- Obama warned China the U.S. would protect East China Sea islands administered by Japan and urged the two countries to peacefully resolve a dispute over the territory that has raised tensions across Asia
- Sovereign yields mostly higher. Asian stocks mostly lower, with Nikkei -0.9%, Shanghai -0.5%. European equity markets, U.S. stock futures gain. WTI crude and copper higher, gold little changed
- European equities are seen higher across the board (Eurostoxx50 +0.9%) amid European M&A activity, positive EU earnings, Apple earnings and a dovish Draghi. E-Mini S&P futures have now retraced all of the biotech/Ukraine led sell-off and are now 10 points off record highs.
- ECB’s Draghi said that that bond and money markets could cause the central bank to act with potential rate cuts, asset purchases and an extension of full-allotment tools.
- Spot gold on the lowest levels of the month trading below the 100 DMA, with no real levels of support until USD 1238/oz, which was last seen at the end of Jan 2014.
- Later will see the release of US weekly jobs data, durable goods, EIA nat gas, comments from ECB’s Constancio and a host of earnings.
