·
In US, the tone of FOMC Minutes echoed the more sober assessment
of economic activity evident in the April FOMC statement and the March meeting
when the Committee’s GDP forecasts were downgraded. The Minutes noted the
recent weakness in US data in early Q2 had not pointed to a vigorous rebound.
That makes June a (virtual) non-starter for the beginning of rate
normalisation. Markets were virtually unchanged on the publication of the
Minutes.
·
Greek debt negotiations have continued to progress, with reports
suggesting that Greece’s European creditors are making pension reform a key
priority and may be willing to compromise on other required structural reforms.
Encouragingly, EU Economic Commissioner Moscovici noted that the pieces have
started to fall into place for an agreement to be reached in the coming weeks.
·
The Bank of England Minutes showed that the vote to keep policy
settings unchanged remained 9-0, with the decision remaining “finely balanced”
for two members.
·
In the currency market, NZD declined to monthly lows and the AUD
tested back below USD0.79 in what was otherwise a stable night for currencies.
Sterling found support despite the BoE Minutes’ lack of new themes, and USD/JPY
consolidated on its monthly break.
·
US bond yields grinded lower through the session to end modestly
lower.
·
Moves in equity markets were typically moderate overnight. The
news that six major banks had been fined for currency and interest rate
manipulation did not deter investors, with the share prices of some banks
involved rallying on the news that the fines were lower than had been
provisioned
for.
·
Crude oil prices were stronger. A fall in crude oil inventories
and better demand helped push prices higher. EIA data showed that US
inventories fell 2.67m barrels last week, although at 482m barrels remained
near record highs.
Gold found some support after the FOMC minutes indicated the Fed won’t
raise rates at the June meeting.
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