Has the Fed ended the flattening of the US Treasury yield curve?
Yesterday, the Fed hinted that this could be the last rate hike of this cycle, leading some to wonder if the flattening of the US Treasury yield curve is finally over. After the FOMC meeting, the difference between 10-year and 5-year Treasury yields turned positive. It should be noted that this part of the curve was the first to turn negative in March 2022. Will this new trend continue in the weeks and months to come? Source: Bloomberg
Doubts about a 25bp Fed hike tonight?
Today, Fed Governor Powell will present the conclusions of the Fed meeting, a crucial moment as the market believes it will mark the end of the Fed's rate hike cycle. Despite deteriorating macroeconomic indicators and another failure of a major US regional bank (FRB), the market believes there is a near 90% chance of a rate hike. Powell is also expected to emphasize that rates will have to remain high for an extended period of time as inflation remains high. However, there are doubts about how the Fed will take into account the recent failure of First Republic Bank and the ongoing debt ceiling situation. Note that there is no update on the US economic outlook and the dot charts.
ECB: A 25 Basis Point Hike Carved in Stone?
The next ECB meeting is coming up on Thursday and this morning two crucial data points were released. Eurozone core inflation saw a slight decrease in April from 5.7% to 5.6%, marking the first decline in 10 months. This is a positive sign that core inflation is heading in the right direction. Meanwhile, the ECB's bank lending survey indicated that credit standards "tightened considerably" in Q1. This shows that the ECB's monetary policy, which includes rate hikes and quantitative tightening, is starting to have an impact on the system. Source: Bloomberg
Can Apple break it ?
Apple has rallied 35% since January 2023 ! Will it be able to break January 2022 major resistance downtrend ? Chart source: Bloomberg
Incredible: Amazon's AWS revenue over the last 12 months ($83 billion) was higher than the revenue of 460 companies in the S&P 500
From $3 billion to $83 billion in less than 10 years (>40% annualized growth). Source: Charlie Bilello
US real GDP rose just 1.1%, a big drop from the 2.6% GDP in Q4 and lower than estimates (1.9%)
It was the lowest GDP print since Q2 2022 when growth was negative to the tune of -0.6%... Personal Consumption added 2.48%, up from 0.70% in Q4. Fixed Investment subtracted -0.07%. The big hit was the change in private inventories, which subtracted 2.26% from the GDP print. Net exports were a modest contributor to GDP, adding 0.11%. Government consumption added another 0.81% to the bottom line number, effectively contributing more than 70% of the final print. Source: Bloomberg, www.zerohedge.com
Why are US bond yields moving higher despite GDP growth miss? US Q1 Core PCE is higher than expected
While US GDP Q1 growth rate came in well below expectations, PCE and core PCE prints were unexpectedly hot, the former coming in at 4.0% above the 3.7% expected and higher than the 3.9% in Q4, while core PCE came in at 4.9%, well above the 4.4% in Q4 and also hotter than the 4.7% expected. In fact, as shown below, this was the 5th consecutive "beat" of median core PCE expectations.
Germany will go from being a net exporter of electricity to a net importer of electricity in Europe
Germany will go from being a net exporter of electricity to a net importer of electricity in Europe after the nuclear power plants are shut down. Last week, electricity imports reached their highest level in one day since 2021. Source: HolgerZ, Bloomberg
