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Breakfast Bites - Fri May 26, 2023

Rise and shine everyone and Happy Friday.

The big news for today is the PCE inflation numbers set to be released at 8:30am ET.

Further news suggests that Republican and White House negotiators are moving closer to an agreement to raise the debt limit and cap federal spending for two years. House Democrats don’t like what they are hearing about spending cuts.

Markets are trading higher this morning. Gold is giving up its gains awhile copper and oil remain largely flat. The US Dollar is pulling back marginally and Rates are largely flat this morning. The Yield Curve inverted further to -0.70% yesterday.

Asia and Australia

  • Asian equities ended mixed Friday. Nikkei and Topix again diverged with Nikkei higher on tech stocks support, Topix lower.

  • Tokyo core inflation slowed to 3.2% y/y in May, lower than consensus 3.4% and prior month's 3.5%. Largely reflected drop in electricity and gas prices due in part to government subsidies that came into effect earlier this year. Ex-energy and food inflation accelerated to an in-line 3.9% from 3.8%, fastest since 1982. - A deceleration in inflation means that the BoJ will probably not consider a shift in policy just yet.

  • Taiwan's government said Q1 GDP contracted -2.9% y/y against consensus expectations of -3.0%, FY growth forecast at 2.0% from previous 2.1%.

  • China easing bets ratcheted up with cost of 12-month interest rate swaps slipped to 2.06% this week, as compared with 2.47% two months ago.

  • Yen weakened to above ¥140 per dollar as markets price in another Fed rate hike

Europe, Middle East, Africa

  • European equity markets close lower. Oil/gas, telecom and utilities underperform, while technology and banks the best performing sector.

  • UK retail sales data came in at 0.5% - positive and better than expected.

  • The Turkish Lira falls to 20 to the dollar for the first time as polls predict Erdoğan victory at runoff election

The Americas

  • US president Joe Biden signalled late on Thursday that White House officials were “making progress” in negotiations over the US debt ceiling, as the looming deadline over an unprecedented government default stretched investors’ nerves.

  • Costco reported a beat on EPS yesterday but, reported revnues inline.

  • The second estimate for Q1 GDP was revised up to 1.3% from the advance estimate of 1.1% and the GDP Price Deflator was revised up to 4.2% from the advance estimate of 4.0%.

  • US money market fund assets have swelled to a record high of $5.4T from less than $5.3tn in late April and $4.8tn at the start of the year.

  • Elon Musk's brain implant firm Neuralink receives FDA approval to conduct human trials

  • Chapter 11 filings by indebted companies jump in May, including five during a 24-hour span


(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)


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