Sample Category Title

Battered oil prices have stopped the bleeding for now as the market seems to be looking past the disappointment that yesterday's OPEC meeting did not expand on production cuts, instead of extending.

Global equities too are under pressure following crude oil's -5% loss yesterday; the loss seems to have undermined sentiment towards risk assets in general.

The pound has slid on a poll showing PM Theresa May's Conservatives' lead shrinking, two weeks before an election. According to the latest YouGov/Times poll, the Conservatives lead Labour by +43% to +38% ahead of June 8th election.

Comments from the St. Louis Fed President Bullard (dove) in Tokyo this morning are weighing on the 'mighty' dollar as he noted 'prices are deviating noticeably from the Fed's +2% inflation path' and called market expectations of 'two more rate hikes this year as too aggressive.'

1. Stocks lose some appeal on risk attitude

In Asian overnight, regional bourses traded mostly mixed despite the continued bullish momentum stateside, where the sixth consecutive positive session Thursday took U.S indices to new record highs.

In Japan, the Nikkei share average extended its losses (-0.6%) as the yen's gains (¥111.03) outright accelerated - the benchmark index still managed to cap off a winning week (+0.5%). The broader Topix fell -0.6%.

In Hong Kong, stocks broke a five-day winning streak, as gains in air carriers were offset by weakness in energy shares. The Hang Seng index was unchanged, while the China Enterprises Index gained +0.1%. For the week, both Hang Seng and HSCE gained +1.8%.

In China, stocks have ended the week higher with state-led buying offsetting the midweek Moody's downgrade. The blue-chip CSI300 index fell -0.2%, while the Shanghai Composite Index added +0.1%. For the week, CSI300 advanced +2.3%, while the SSEC gained +0.6%.

In Europe, regional indices trading mostly lower led by the FTSE MIB and French CAC, with the FTSE100 outperforming having traded new all time highs, mostly supported by a weaker pound (£1.2860).

U.S stocks are set to open in the red (-0.1%).

Indices: Stoxx50 -0.7% at 3559, FTSE +0.1% at 7524, DAX -0.4% at 12568, CAC-40 -0.7% at 5298, IBEX-35 -1.0% at 10831, FTSE MIB -1.0% at 21083, SMI -0.2% at 9019, S&P 500 Futures -0.1%.

2. Oil stops the bleed for now, gold shines

Oil prices have edged higher ahead of the U.S open, but remain on the back foot after plummeting -5% in yesterday's session when OPEC and some non-OPEC producers agreed to extend a pledge to cut around -1.8m bpd until the end of the Q1 2018. The market was pricing in 'longer or larger curbs.'

Brent crude futures are at +$51.80 per barrel, up +0.66% from Thursday's close. They are still set to end today's session with a weekly loss of more than -3%. U.S West Texas Intermediate (WTI) crude futures continues to trade below the psychological +$50 handle, at +$49.15, though still up +16c from yesterdays close.

A weaker dollar coupled with a pullback in investor risk appetite is supporting gold. In the overnight session, spot gold has rallied +0.5% to +$1,261 an ounce, and is poised for a +0.5% gain for the week.

3. Global yields fall on risk attitude

It's not just a calm tone in equities, the bond market's volatility index has fallen to its lowest level in nearly three years this week as the Fed minutes further reduce risk of a big rise in yields.

Note: A lower reading suggests that investors expect smaller price swings or a relatively tight trading band for yields.

Currently, fixed income dealers expect the U.S 10-year Treasury yield to continue to trade between +2.20% and +2.50% in the near-term. Ahead of the open stateside, U.S 10's have backed up +1 bps to +2.24%.

In Europe, the bond market is being supported by muted expectations of a rapid turnaround in the ECB's policy. French (OAT's) 10-year yields are little changed, while German Bunds have dropped -1 bps to +0.36%.

In Japan, 10-year JGB yield declined -0.01 bps to +0.035% on disappointing CPI data overnight (see below).

4. 'Big' dollar remains under pressure

The pound has been one of the big movers with sterling falling to a new two-month low against EUR at €0.8724 after a YouGov opinion poll showed the lead for PM Theresa May's Conservative Party falling by -5 points ahead of the June 8 election. Outright, GBP/USD has dropped -0.5% to a two-week low of £1.2861, easily extending Thursday's fall after data revealed an unexpected downward revision to U.K Q1 GDP.

The EUR/USD (€1.1227) continues to hover atop of the psychological €1.12 handle. Many expect the 'single' unit pullbacks to be brief and shallow. The 'bulls' believe the EUR is in the process of going higher - the prospect of the ECB announcing a path to more tapering of its asset-purchase program at the June ECB meeting, improving eurozone economic activity, and rising eurozone capital inflows is expected to support the currency towards €1.1275 -1.13.

JPY (¥110.98) currency is firmer in the aftermath of Japan's April CPI data.

5. Japan's inflation recovers

Rising energy prices in April are finally making a dent in 'disinflationary' forces in Japan, as headline CPI hit a three-month high while Core-CPI (ex-food) hit a two-year high.

Japan National CPI rose for the fourth consecutive month - y/y +0.4% vs. +0.4%e; Core-CPI +0.3% vs. +0.4%e.

Overall, despite the uptick, the data remains well below the BoJ's target. However, the consensus continues to expect higher inflation in Japan in coming months due to a tightening labor market and a recovery in energy prices.

As the week draws to a close, risk appetite appears to be drying up, not helped of course by recent moves in oil which is dragging on global benchmarks.

Oil Bounces But Losses Weigh on Indices

Oil has been one of the standout performers throughout May as traders banked on an extension to the deal between a number of OPEC and non-OPEC producers that came into effect earlier this year. The deal – which will see the 1.8 million barrel a day cut extended from the middle of this year to the first quarter of 2018 – was agreed between participating producers on Thursday, prompted a sudden and sharp sell-off in oil.

The reason for the sell-off was simple. There had been so much reported on the agreement in the weeks leading up to the meeting that it had been fully priced in. Once speculation became reality, there was no more gains to be had, not in the near-term anyway. Should we see full compliance and evidence that inventories are falling back towards their five year average, as intended, the prices may well creep higher once again. The result for now though has been a correction in oil prices which is weighing on energy stocks and therefore indices, particularly those with heavy exposure.

FTSE Makes Small Gains as GBP Weakness Offsets Oil Moves

The FTSE 100, which ordinarily would be feeling the pain of this, is actually trading a little higher this morning. A second day of selling in the pound – this time driven by the latest poll numbers which show the gap between the Conservatives and Labour has shrunk to only five points from around 20 a couple of weeks ago – is more than compensating for the weakness in energy stocks and therefore helping to support the index.

Could Gold Be Headed Towards $1,300?

Gold is benefiting from the more risk averse sentiment in the markets today, as well as the weakness in the US dollar which is off by around one fifth of one percent. Gold is currently trying to push its way through $1,265 which has been a tricky level for the yellow metal over the last few months. A move above here could see it test its 2017 highs just shy of $1,300.

It's been a relatively quiet morning on the newsflow and data side, with no numbers from Europe leaving traders looking to the US releases as we close out the week. A first revision of Q1 GDP will certainly be of interest as the Fed considers its second rate hike of the year at its next meeting in June. Policy makers have shown a clear desire to see evidence that the first quarter weakness was only transitory and an upward revision here may provide them with more comfort. Of course, the opposite is also true. We'll also get durable goods orders and consumer surveys from UoM this afternoon, while the leaders of the G7 are also due to meet in Italy.

The GBP/USD is still in uptrend on 4h but it is showing a bearish divergence that could tank the price lower. 1.2830 is support and if the support breaks, the pair could head towards 1.2785. In case of retracement, we might see 1.2900-1.2915 the POC zone (inner trend line, ATR pivot, W4, EMA89). The POC zone could also reject the price towards 1.2830 and 1.2785. At this point the interim resistance is 23.6 fib - 1.2886 so short term traders could possibly reject the price from that level in the form of short term momentum trades.

Yesterday, OPEC and non-OPEC producers concluded their meeting in Vienna, agreeing to extend the duration of the November output-cut deal by 9 months at the previous volume of 1.8 mbpd. However, even though the producers reached an accord, oil prices dropped in the aftermath of the event, which in our view reflects a 'buy the rumor, sell the fact' reaction. An extension of 9 months was widely anticipated by markets, suggesting that all of the good news may have already been priced in. Thus, some investors that were looking for a longer extension or deeper cuts in production may have been left disappointed, which caused WTI prices to drop.

WTI fell below two support (now turned into resistance) levels in a row and the longer-term upside support line taken from the low of the 5th of April 2016. The decline was halted near the 48.40 (S1) support level. Even though the price structure on the 4-hour chart suggests the near-term outlook is cautiously negative, in order for us to get confident on further declines, we would like to see a decisive break below the 44.00 zone. Such a break would signal a forthcoming lower low on the 4-hour chart, and may set the stage for further downside extensions.

As for the bigger picture, we stick to our view that a long-term healthy uptrend in oil prices is still unlikely. The continued increase in US production – evident by the recent EIA data as well as the recovery in the Baker Hughes oil rig count – is likely to keep a lid on any significant gains in the precious liquid’s price. In addition, there is also the risk that the nations which are exempted from the production cuts, Libya and Nigeria, raise their output notably in the future, thereby offsetting some of the cuts from the other producers.

Sterling takes a hit from an election opinion poll

The British pound dipped overnight, following the release of a UK election opinion poll by YouGov. The poll showed that although the Conservatives are still ahead, Labour is catching up, with the two parties expected to secure 43% and 38% respectively. Considering that the FT’s rolling average of polls currently shows the two parties at 46% and 33%, this poll likely triggered speculation that this election race may actually be closer than previously anticipated.

In our view, fresh polls showing that the gap between these two parties continues to narrow could prove negative for sterling, on concerns that Theresa May and the Conservatives may not secure the strong majority they are seeking in Parliament. Finally, we believe that the British pound could become increasingly more sensitive to incoming polls as we approach Election Day, given that polls released just a few days ahead of the event may capture voters’ sentiment more accurately and thereby, carry more importance for investors.

GBP/USD fell overnight, breaking below the support (now turned into resistance) level of 1.2900 (R1). During the early European morning Friday, the pair looks to be headed for a test near the crossroad of the 1.2850 (S1) key support zone and a short-term uptrend line taken from the low of the 14th of March. New polls that show the Labour party catching up even further could trigger further declines in Cable. If the bears manage to overcome the aforementioned crossroad, they could initially aim for the next support hurdle at 1.2770 (S2).

Today’s highlights:

The European morning is relatively quiet, with no major indicators due to be released. The only event that could attract some attention is the G7 summit in Italy. We think that market focus will be on the language the G7 use about free trade, considering that after US President Trump got elected, the G20 dropped their commitment to 'resist all kinds of protectionism'.

In the US, durable goods orders for April are due out. The forecast is for the headline print to have declined, while the core figure is expected to have risen, a rebound from previously. We share the view for a decline in the headline print, considering the slowdown in civilian aircraft orders in April, while we see the risks surrounding the core forecast as skewed to the downside. We base this view on the nation’s ISM manufacturing PMI, which showed that new orders slowed down notably during the month. Soft durable goods orders could bring USD under renewed selling interest.

As for the rest of the US data, we also get the 2nd estimate of GDP for Q1. Expectations are for economic growth to have been revised upwards, albeit slightly. However, we doubt that it will have a significant market impact, given that the Fed has already pointed that it considers the soft growth in Q1 as transitory. As a result, we expect investors to pay more attention to incoming US data for Q2 (such as durable goods orders), as well as the Atlanta Fed GDPNow model, in order to get a better picture of whether economic growth has rebounded.

We have one speaker on the agenda: ECB Executive Board member Benoit Coeure.

WTI

Support: 48.40 (S1), 47.50 (S2), 46.00 (S3)

Resistance: 49.90 (R1), 50.60 (R2), 52.00 (R3)

GBP/USD

Support: 1.2850 (S1), 1.2770 (S2), 1.2700 (S3)

Resistance: 1.2900 (R1), 1.2950 (R2), 1.3000 (R3)

The euro has been drifting this week, and continues to stay close to the 1.12 level. Currently, EUR/USD is trading at 1.1220. For a second straight day, there are no releases in the eurozone. It’s a busy day in the US, highlighted by Second Estimate GDP, which is expected to post a gain of 0.9%, better than the initial GDP report of 0.7%. This will be followed by Core Durable Goods Orders and UoM Consumer Sentiment. Leaders of the G7 are gathered in Sicily for a two-day meeting, with the response to global terror high on the agenda, especially in light of the Manchester bombing earlier this week.

German indicators continue to point upwards, and German business confidence hit a record high in May. The Ifo Business Climate Index improved to 114.6, its highest level since Germany was reunified in 1991. The election of Emmanuel Macron as the French president has boosted business confidence, as the German corporate sector is optimistic that Berlin and Paris can work together to improve the eurozone economy. France is Germany’s second largest trading partner and Macron underscored the importance he attaches to Franco-German relations when he visited German chancellor Angela Merkel within days of winning the presidency. The Brexit vote and Donald Trump’s “America first” agenda present serious challenges to the EU, and Merkel and Macron will have no problem seeing eye-to-eye in their desire to deepen European integration.

Federal Reserve policymakers find themselves in a quandary, as the US economy has been sending conflicting signals with regard to inflation and employment. The labor market remains red hot, as the unemployment rate fell to 4.4 percent in April, its lowest level since 2007. Problem is, inflation hasn’t kept up, and remains below the Fed target of 2 percent. The Fed minutes stated that the central bank plans to raise rates “soon”, and the odds of a June hike remain at about 78%, unchanged by the minutes. At the same time, the Fed has provided itself some wiggle room, and could opt to delay a hike until the second quarter if inflation or consumer indicators take an unexpected nosedive. As for additional hikes in 2017, the markets remain skeptical. The odds for a September rate stand at just 37%, with the markets unclear on whether the Fed will make further moves this year if inflation remains below the Fed target. Even if soft first quarter data was a blip, the markets (and possibly Fed policymakers) are concerned that President Trump, who is facing congressional investigations over his connections with the Russian government, may not be able to pass his agenda of cutting taxes and reigning in government spending. Gone are the heady days at the end of 2016, when a red-hot US economy had analysts predicting four rate hikes in 2017.

• Oil Bounces But Losses Weigh on Indices;
• FTSE Makes Small Gains as GBP Weakness Offsets Oil Moves;
• Could Gold Be Headed Towards $1,300?
• US GDP Data Eyed as Fed Seeks Reassurances on Q1.

As the week draws to a close, risk appetite appears to be drying up, not helped of course by recent moves in oil which is dragging on global benchmarks.

Oil has been one of the standout performers throughout May as traders banked on an extension to the deal between a number of OPEC and non-OPEC producers that came into effect earlier this year. The deal - which will see the 1.8 million barrel a day cut extended from the middle of this year to the first quarter of 2018 – was agreed between participating producers on Thursday, prompted a sudden and sharp sell-off in oil.

The reason for the sell-off was simple. There had been so much reported on the agreement in the weeks leading up to the meeting that it had been fully priced in. Once speculation became reality, there was no more gains to be had, not in the near-term anyway. Should we see full compliance and evidence that inventories are falling back towards their five year average, as intended, the prices may well creep higher once again. The result for now though has been a correction in oil prices which is weighing on energy stocks and therefore indices, particularly those with heavy exposure.

The FTSE 100, which ordinarily would be feeling the pain of this, is actually trading a little higher this morning. A second day of selling in the pound - this time driven by the latest poll numbers which show the gap between the Conservatives and Labour has shrunk to only five points from around 20 a couple of weeks ago – is more than compensating for the weakness in energy stocks and therefore helping to support the index.

Gold is benefiting from the more risk averse sentiment in the markets today, as well as the weakness in the US dollar which is off by around one fifth of one percent. Gold is currently trying to push its way through $1,265 which has been a tricky level for the yellow metal over the last few months. A move above here could see it test its 2017 highs just shy of $1,300.

It's been a relatively quiet morning on the newsflow and data side, with no numbers from Europe leaving traders looking to the US releases as we close out the week. A first revision of Q1 GDP will certainly be of interest as the Fed considers its second rate hike of the year at its next meeting in June. Policy makers have shown a clear desire to see evidence that the first quarter weakness was only transitory and an upward revision here may provide them with more comfort. Of course, the opposite is also true. We'll also get durable goods orders and consumer surveys from UoM this afternoon, while the leaders of the G7 are also due to meet in Italy.

Spot Gold is probing above key $1265 barrier (Fibo 61.8% of $1295/$1214/multiple upside rejections/weekly cloud top) on fresh bullish recovery on Friday, in attempt to finally break above $1245/$1265 congestion that extends into seventh straight day.

Strong bullish setup of daily MA's is supportive for further advance, as 55SMA contained recent dips at $1247, guarding key support at $1245 (daily cloud base) and rising 10SMA that formed bull-cross with 55SMA, continues to underpin the action.

Fresh weakness of the dollar kept gold price on the front foot, with sustained break and close above $1265 pivot, expected to open next targets at $1270 (late Apr lower platform) and $1276 (Fibo 76.4% retracement.

The yellow metal is on track for the third consecutive bullish weekly close that supports scenario.

Broke daily cloud top at $1258 now acts as initial support ahead of rising 10SMA/daily Kijun-sen at $1251.

Res: 1267, 1270, 1276, 1280
Sup: 1262, 1258, 1253, 1251

The pair was sharply down on Friday, driven increased risk aversion after President Trump’s comments on North Korea.

Fresh bears extended below 111.00 handle and touched Fibo 61.8% of 110.23/112.12 support, signaling that recovery phase off 110.23 (18 May low) may be over.

Repeated failures to break and close above daily cloud top (111.80) resulted in fresh weakness, as recovery rally stalled here, despite brief upticks above 112.00 barrier.

Daily studies are turning into bearish setup on latest weakness and signal increased risk of further easing which may result in full retracement of 110.23/112.12 corrective upleg and test of psychological 110.00 support, reinforced by 200SMA.

Corrective upticks on oversold near-term studies should be capped by broken daily Kijun-sen at 110.62 which guards daily cloud top barrier.

Res: 111.30, 111.62, 111.80, 112.12
Sup: 110.90, 110.50, 110.23, 110.00

Notes/Observations

Poll suggest that UK June 8th Parliamentary election could be more closely contested than previously thought; Conservative hold 5-point lead over Labour and might foreshadow a messier Brexit

G7 meets in Italy with differences on trade and climate change issues

Overnight:

Asia:

Japan National CPI rose for the 4th straight month and at a 3-month high (Y/Y: 0.4% v 0.4%e); Core CPI hit a 2-year high (Y/Y: 0.3% v 0.4%e)

Moody's commented following recent sovereign downgrade of China: Country might no longer get A1 rating if there were signs that debt kept rising and debt exceeds expectations

Europe:

UK YouGov/Times ElectionPoll: Conservatives 43%(-1) Labour 38%(+3); 5 % ;lead smallest since Apr 2016 (**Note: Taken after Manchester bombing)

EU draft negotiating paper: Brexit negotiators to demand UK agree to pay a fixed percentage of outstanding obligations on the day it leaves the EU

Americas:

Fed's Brainard (dove, voter): Risk balance has shifted due to a brighter global outlook; China's issues pose medium-term downside risk to the global economy

Fed's Williams (moderate, non-voter) reiterated own view that 3 interest rate hikes are appropriate in 2017; Fed to release details of balance sheet plan in coming months

Fed's Bullard (non-voter, dovish): Prices have started to deviate noticeably from 2% inflation path; Lagging price level is worrisome. Fed should start reducing balance sheet to increase policy flexibility.

Energy:

OPEC/non-OPEC ministers agreed to extend production cuts by 9 months at current levels (as speculated). OPEC did considered 6, 9 and 12-month oil reduction scenarios and consideration to deeper production cuts

Economic Data

(TR) Turkey May Economic Confidence: 100.5 v 99.5 prior

(HU) Hungary Apr Unemployment Rate: 4.6% v 4.4%e

(CN) Weekly Shanghai copper inventories (SHFE): 198.6K v 196.4K tons prior

(TW) Taiwan Q1 Final GDP Y/Y: 2.6% v 2.6%e

(IT) Italy May Consumer Confidence Index: 105.4 v 107.3e (lowest reading since Jan 2015); Manufacturing Confidence: 106.9 v 108.0e; Economic Sentiment: 106.2 v 107.4 prior

Fixed Income Issuance:

(IN) India sold total INR150B vs. INR150B indicated in 2024, 2027, 2034 and 2046 bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx50 -0.7% at 3559, FTSE +0.1% at 7524, DAX -0.4% at 12568, CAC-40 -0.7% at 5298, IBEX-35 -1.0% at 10831, FTSE MIB -1.0% at 21083, SMI -0.2% at 9019, S&P 500 Futures -0.1%]

Market Focal Points/Key Themes European Indices trade mostly lower led by the FTSE MIB and French CAC, with the FTSE100 outperforming having traded new all time highs. Corporate news flow has been relatively quiet, Restaurant Group shares are outperforming up over 10% following a trading update and Spirax-Sparco trades sharply higher after the acquisition of Chromalox for $415M. RBS shares trade lower after the termination of settlement talks over 2008 rights issue, and Petrofac continues to fall following analyst downgrades. Alfa Financial Services saw strong demand after its IPO this morning with shares higher by ~30%. On the US earnings docket, Big Lots expected to report in a quiet day for scheduled corporate news ahead of the long weekend.

Equities

Consumer discretionary [Restaurant Group [RTN.UK] +8.7% (Trading update), Intertek Grp [ITRK.UK] -1.0% (Earnings), Britvic [BVIC.UK] -2.8% (Pepsi sells 11.8M shares at 695p/shr)]

Industrials: [Spirax-Sparco [SPX.UK] +6.7% (Acquisition)

Financials: [RBS [RBS.UK] -1.8% (Termination of settlement talks over 2008 rights issue), Alfa Finl Services [ALFA.UK] +30% (IPO priced at 325p/shr)]

Energy: [Petrofac [PFC.UK] -4.2% (Follow through, analyst downgrade)

Speakers

EU President Tusk opening remarks at G7 in Italy noted that the Summit would be one of the more challenging one in years as leaders had different views on trade and climate. Expected unity to be expressed on Ukraine; nothing showing that sanctions should be lifted against Russia

EU's Juncker: President Trump was not aggressive at all on German trade (refute earlier press reports). (**Note: German press reported that President Trump complained about the Germany's trade surplus, Trump conversation to EU officials about Germans were "bad, very bad" because the country sold more cars to the US than it imported)

IMF's Rice: confident that a deal to ease the Greek debt burden can be reached in the next few months

IMF Mission Statement on Ukraine: Decisive implementation of reforms remains critical for Ukraine to achieve stronger and sustainable growth

Portugal Debt Agency (IGCP): Early repayment of an additional portion of the IMF loan will be made over the next 30 months

China PBoC said to consider changing methodology around daily Yuan mid-point fixing. Said to add "counter-cyclical adjustment factor" that may reduce the impact of market swings. Under new formula, institutions said to provide quotes for the fixing taking into account the previous day's official closing price (occurs at 16:30 local time). No further details of the new formula provided

China's Dagong credit agency: China's downside economic risks are controllable

Currencies

GBP was softer and at 2-month lows after a poll showed a narrowing lead for British PM May over her opposition ahead of elections next month. assumption that a landslide election win for May would strengthen her hand over hard-line Brexiteers in her ruling party and allow her to negotiate a smoother departure from the European Union, had been a source of support for sterling. GBP/USD lower by 0.5% around 1.2870 just ahead of the NY morning. The pair has had much difficulty sustaining moves above 1.30 in prior sessions.

JPY currency was firmer in the aftermath of Japan's Apr CPI data. Overall the data trend did provide some light at the end of the tunnel as core CPI inflation rate accelerated to two-year high but still well below the BOJ target. Some analysts expect higher inflation in Japan in coming months due to a tightening labor market and a recovery in energy prices

Fixed Income

Bund futures trade at 161.59 up 21 ticks, recovering losses from the earlier part of the week to end up slightly higher on the week. Key resistance lies between the 161.70 to 162.00 range, followed by 163.68. A break of 160.01 support level could see lows target 159.01 followed by 157.50.

Gilt futures trade at 128.97 higher by 9 ticks after tentatively breaking the May 18th high of 128.94. Major resistance remains the 129.14 April 18th high. If we see another leg higher, upside may target the 132.80 level. Key support lies at the 128.52 support level. An acceleration lower could test the 127.43 region.

Friday's liquidity report showed Thursday's excess liquidity declined to €1.6255T a drop of €2.5B from €1.6280T prior. Use of the marginal lending facility rose to €204M from €186M prior.

Corporate issuance saw $350M come to market via one issue with American Financial Group Inc's senior unsecured offering This week's issuance is at $36.25B, ahead of the analysts' issuance target to come in around $35B. For the week ending May 24th Lipper US fund flows reported IG funds net inflows $2.1B bringing YTD inflows to $56.98B, High yield funds reported outflows of $0.57B bringing YTD outflows to $6.01B.

Looking Ahead

(IT) G7 Leaders begin 2-day meeting in Taormina, Sicily

(BR) Brazil May CNI Consumer Confidence: No est v 103.4 prior

06:00 (UK) DMO to sell combined £2.0B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £1.0B respectively)

06:45 (US) Daily Libor Fixing - 07:00 (BR) Brazil May FGV Construction Costs M/M: +0.1%e v -0.1% prior

07:30 (IN) India Weekly Forex Reserves

08:00 (BR) Brazil Apr PPI Manufacturing M/M: No est v 0.0% prior; Y/Y: No est v 1.7% prior

08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming Bond issuance

08:15 (UK) Baltic Dry Bulk Index

08:30 (US) Q1 Preliminary GDP Annualized Q/Q: 0.9%e v 0.7% advance; Personal Consumption: 0.4%e v 0.3% advance

08:30 (US) Q1 Preliminary GDP Price Index: 2.3%e v 2.3% advance; Core PCE Q/Q: 2.0%e v 2.0% advance

08:30 (US) Apr Preliminary Durable Goods Orders: -1.5%e v +0.9% prior; Durables Ex Transportation: 0.4%e v 0.0% prior; Capital Goods Orders (Non-defense ex aircraft): 0.5%e v 0.5% prior; Capital Goods Shipments (Non-defense/ex-aircraft): 0.5%e v 0.3% prior (revised from 0.3%); Durables Ex-Defense: No est v 0.5% prior

09:00 (MX) Mexico Apr Unemployment Rate (Seasonally adj): 3.5%e v 3.5% prior; Unemployment Rate (unadj): 3.3%e v 3.2% prior

09:30 (BR) Brazil Primary Budget Balance (BRL): +6.7Be v -11.0B prior; Nominal Budget Balance: -26.3Be v -54.3B prior; Net Debt to GDP Ratio: 48.1%e v 47.8% prior

10:00 (US) May Final University of Michigan Confidence: 97.5e v 97.7 prelim

11:00 Potential sovereign ratings

(KR) Kuwait Sovereign Debt to be rated by Moody's

(QA) Qatar Sovereign Debt to be rated by Moody's

13:00 (US) Weekly Baker Hughes Rig Count data

15:00 - (CO) Colombia Central bank Interest Rate Decision: Expected to cut Overnight Lending Rate by 25bps to 6.25%

Gold Stalling for the time at $1263.

Gold's retracement seems to end up. Hourly support is located at 1246 (18/05/2017 low). Stronger support is given at 1195 (10/03/2017 low). Expected to show further upside pressures.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

Silver Monitoring 50% Fibonacci retracement.

Silver increases. Strong support is given at 15.63 (20/12/2017 low). Closest support is given at 16.20 (04/05/2017 low). Key resistance is given at a distance at 19.00 (09/11/2017 high). Expected to breakl 50% Fibonacci retracement around 17.30.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Crude oil Collapsing.

Crude oil has collapsed after the bounce on short-squeeze move. Support is given at a distance 43.76 (05/05/2017 low). Demand was very strong and the road is wide-open for further increase.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 24.82 (13/11/2002) while resistance can now be found at 55.24 (03/01/2017 high).