Rise and shine everyone.

With not much going on in terms of macro data in the US, Fed speakers remain front and center. Yesterday, we got some hawkish-sounding discussions from the Fed speakers and we’re likely to see more in the days to come. This hasn’t gone unnoticed and caused bond yields to move higher yesterday.

Earnings were a bit of a disappointment last night with Palo Alto Networks falling 8% after hours because their EPS beat was narrower than their track record of double-digit beats. They also provided in-line guidance and narrowed their billings guidance for the year.

US Equities were trading lower this morning after Asian markets pulled back and are now more or less flat. US Treasury Yields are pulling back while the US Dollar remains flat.

Over in the commodities complex, oil. silver and gold are pulling back, while NatGas, and Copper continue their run.

European markets are also pulling back in early trading following Asian markets, as yields spiked as well yesterday and in early trading.

Asia-Pacific Markets Pull back on Mixed Concerns

Asia closed lower with Hang Seng underperforming by -2.1%. There have been concerns raised about the recent property measures, as to whether they are sufficient. There’s the emphasis that the policies need to shift from increasing credit supply to boosting credit demand. We’re also seeing earnings come through for a number of companies. Mainland China equities are still signaling bullish momentum.

Reserve Bank of Australia’s minutes reiterated their stance that it was difficult to rule in or out changes to their policy rate. They did consider a rate hike but decided to avoid excessive fine-tuning of rates. The recent flow of data has increased the risk of inflation staying above the band and this weighing on markets and expectations for a rate cut. Momentum in equities continues to remain relatively bullish though.

Risk on for Crypto

While Bitcoin is pulling back in early trading, it crossed 71,000 yet again after reports circulated there is a 75% chance that the SEC could approve Ethereum spot ETFs this week. We’ve seen this play out before for Bitcoin, where the “buy the rumor, sell the news” worked very well.

JP Morgan Investor Day - 2 rate cuts this year

JPMorgan Chase raised its FY24 net interest income guidance to $91 billion from $89 billion, reflecting an expectation of only two interest rate cuts this year. Despite shares surging over 50% since last October, recent profit-taking has muted stock reaction. The bank also increased its FY24 expense guidance by $1 billion to $92 billion, including a $1 billion Foundation contribution. CEO Jamie Dimon remains cautious about macroeconomic risks, citing ongoing inflationary forces and geopolitical uncertainties.

Quote of the Day

April CPI report was good news but too soon to tell what path inflation is on. Inflation risks remain tilted to upside. Previously, I expected three rate cuts this year but no longer think that is still appropriate. - Loretta Mester, Cleveland Fed President

Chart of the Day

The big news on the Street is that Mike Wilson has changed his stance and updated his S&P 500 price target to 5400 by June 2025, from his year-end target of 4500 for the year.

Meanwhile, JP Morgan’s Marko Kolanovic continues to maintain the lowest target with 4200 and a bearish stance on the market.

Calendars

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