Stocks Mixed as Debt Ceiling Talks Loom

Markets Up in the Air

Stocks are flattish in early trade on Monday after a positive week saw Frankfurt hit a record high and Tokyo rise to its best in more than 30 years, whilst US indices staged a breakout from the recent trading ranges. London drifts with the FTSE 100 around 7,770, the Nikkei added another 0.9% to 31,086, the DAX pared gains to 16,236. US futures look a little weaker with the S&P 500 at 4,186 having closed Friday at 4,192. Gold holds steady at $1,975 with US 10yr yields at 3.65%, whilst spot WTI trades weaker at $71.40. GBPUSD – finding support at the 50-day line as the dollar rally checks.

Take a Hike

June hike bets drifted lower after Jay Powell seemingly pushed back against rising market expectations. The recent banking crisis and credit tightening means rates might not need to rise as much as they would otherwise, he said, adding: “We face uncertainty about the lagged effects of our tightening so far and about the extent of credit tightening from these banking stresses.” Today we have a slew of Fed speakers including Bullard, Barkin, Bostic and Daly, which might produce a more hawkish tone.

Ceiling Charade

Debt ceiling talks continue with McCarthy set to meet Biden at the White House today...the charade continues...default risks may be ‘higher’ but this is a) always going to be resolved and b) always going to the wire before it is.

China - ‘Micron is a Security Risk’

Micron shares down 5% in Germany after China bans the company...possible escalation of Trade War rhetoric? Biden says ties with China to improve “very shortly”...not sure if he is reading the same script as everyone else?

Big Week for Data

Later this week is big for inflation data. First the Tokyo core CPI, which ticked up to 3.5% at the last count, will be closely watched after last week’s national core-core reading came in at a 40-year high. Then it’s on to the US PCE inflation report. The personal consumption expenditures price index excluding food and energy, the ‘core’ index that is the Fed’s preferred measure of inflation, rose 0.3% in March from the prior month and 4.6% from a year earlier.