Rise and shine everyone.

It’s a positive beginning to the week for investor sentiment, even with US core PCE data coming in slightly above expectations year-over-year. This uptick was largely anticipated by the market following a similar surprise in the quarterly data the previous day.

With Japan on holiday, there was no U.S. Treasury (UST) trading in the Asian session to influence the markets further, leaving most Asian stock markets and S&P 500 futures trading higher. The Japanese yen however, had a very volatile morning. First, the USD/JPY crossed 160 in the early hours of trading and then soon revered down to 155. Traders are quite “sure” that there’s been some intervention buying but, there are no official reports as yet.

Driven by gains in mainland property indices, the Hang Seng Index once again led Asian markets upward, increasing by 1.4% by midday. Since reaching its lows in January, the Hang Seng has risen 20%, officially entering bull market territory and marking its longest winning streak since October 2023.

This is a big week for macro data with the Fed’s Interest Rate decision on Wednesday and job data coming out throughout the week, with the Non-farm Payroll being released on Friday. With growth slowing, and inflation remaining sticky, the next data point to keep an eye on will be unemployment because this could be a major reason for the Fed to decide on cuts.

In terms of earnings, we have Amazon & AMD on Tuesday and Apple on Thursday after the close. Other than that we also have other large caps reporting - McDonalds, Coca-cola, Pfizer, MasterCard, 3M, and Eli Lilly, to name a few.

QRA Announcement at 3pm ET today

US Treasury is set to announce less detailed borrowing estimates for the Apr-June quarter (v $202B prior estimate announced on Jan 29th) and also how much it expects to borrow during Q3 2024 in net marketable debt. Remember, the borrowing estimates are often revised later on but, today’s announcement shouldn’t bring any major surprises. We still expect the issuances to be weighted more towards bills, i.e., the shorter-term issuances.

ECB’s Lagarde Warns about Inflation

ECB President Christine Lagarde's recent comments indicate that further weakness in the Euro (EUR), combined with high commodity prices, might contribute to inflationary pressures. This situation could potentially disrupt the European Central Bank's (ECB) plans for monetary easing. Lagarde's remarks highlight the ECB's concern over the currency's performance and its impact on inflation, suggesting that the ECB may consider adjusting its monetary policy to stabilize the economy and control inflation. At this stage, however, it’s highly unlikely that they move the first cut from June. The Fed’s higher-for-longer stance certainly will not help but, the ECB deceleration in inflation has actually shown more progress than the US.

Germany’s inflation data is set to be released later today while the Euro Area’s inflation and GDP data is set to be released tomorrow.

China’s Industrial Profits Fall while Tesla secures deal

In March, China's industrial profits and industrial revenues declined by 4.0% and 1.3% YoY, respectively, a significant drop from the increases of 10.2% and 4.5% observed in January-February.

The recent data underscores the challenges the Chinese government faces in sustaining economic recovery, particularly due to a downturn in the property sector, weak domestic demand, and ongoing risks of deflation. Profits in state-owned enterprises saw a decline, falling 2.6% compared to a modest increase of 0.5% in January-February. Meanwhile, the growth in profits for private sector companies significantly decelerated, registering at 5.8% compared to 12.7% in the previous period. These figures reflect the broader economic headwinds impacting different segments of the economy.

Meanwhile, Elon Musk visited China on April 28 to accelerate the rollout of Full Self-Driving software, which was announced on the same day that Tesla vehicles were made available in the country. The company aims to partner with Baidu’s map and navigation systems.

Chart of the Day

Research from Goldman Sachs shows that the market still leans heavily towards “quality” stocks, which are now trading at a premium compared to historical standards.

Other Stories

• SoFi Technologies beats by $0.01, beats on revs; guides Q2 revs below consensus; raises FY24 adjusted revenue and GAAP EPS guidance

• Domino's Pizza beats by $0.18, reports revs in-line; US comps +5.6%; reaffirms long-term guidance

• Philips reports Q1 (Mar) results, misses on revs; Resolves the Respironics personal injury and medical monitoring litigation in the US for $1.1 billion. Shares were up +37% on the news.

• President Biden announces $7.4 billion in student debt cancellation for 277,000 more Americans

Calendars

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