Markets Suffer Post-Memorial Day Data Hangover

Economic Data

- (ES) Spain Apr YTD Budget Balance: -€12.0B v -€9.9B prior
- (ZA) South Africa Q1 GDP Annualized Q/Q: 1.3% v 1.5%e; Y/Y: 2.1% v 2.1%e
- (UK) May CBI Industrial Reported Sales: 51 v 20e
- (HU) Hungary Central Bank (NBH) cut Base rate by 15bps to 1.65%, as expected
- (US) Apr Durable Goods Orders: -0.5% v -0.5%e; Durables Ex Transportation: 0.5% v 0.3%e; Capital Goods Orders (Non-defense/Ex-Aircraft): 1.0% v 0.3%e; Capital Goods Shipments (Non-defense/Ex-Aircraft): 0.8% v 0.3%e; Durables Ex-Defense: +0.2% v 3.4% prior
- (US) Mar FHFA House Price Index M/M: 0.3% v 0.7%e; Q/Q: 1.3% v 1.1%e
- (US) Mar S&P/ Case-Shiller 20 City M/M: 0.95% v 0.90%e; Y/Y: 5.04% v 4.60%e; HPI Index NSA: 175.20 v 175.00e
- (US) Mar S&P/ Case-Shiller M/M: 0.12% v 0.50%e; Y/Y: 4.14% v 4.16% prior; HPI Index NSA: 168.03 v 166.7 prior
- (MX) Mexico Mar Retail Sales M/M: 0.2% v 0.2%e; Y/Y: 5.5% v 4.5%e
- (US) May Preliminary Markit Services PMI: 56.4 v 56.5e; Composite PMI: 56.1 v 57.0 prior
- (US) Apr New Home Sales: 5.04K v 505Ke
- (US) May Consumer Confidence Index: 95.4 v 95.0e
- (US) May Richmond Fed Manufacturing Index: 1 v 0e
- (US) May Dallas Fed Manufacturing Activity: -20.8 v -11.5e

The DJIA is down triple-digits this morning as the dollar soars and the 10-year yield drops five basis points. As of writing, indices appear to have bottomed out with the DJIA down 0.95%, the S&P500 off 0.89% and the Nasdaq down 1.10%.

The raft of US economic data out this morning was very mixed. May consumer confidence was in line with expectations and flat on a m/m basis. May preliminary Markit PMI services index declined slightly from April, right in line with expectations. The advance April durable goods report was slightly stronger: the decline in the headline figure was mainly due to the volatile civilian aircraft sector, while excluding transportation durables the data widely topped estimates and saw decent gains and the March data were revised higher for the second time. The S&P/Case-Shiller and FHFA March housing price indexes were mixed, while April home sales were robust. The regional Dallas and Richmond Fed manufacturing surveys were terrible.

In Greece, PM Tsipras scored a rare political victory in gaining Syriza's approval to reach a bailout deal with European creditors, however the revolt by Syriza's left-wing fringe showed that patience is running out with the negotiation process. European figures reiterated that time and liquidity are running out ahead of Greece's next big IMF payment crunch on June 5th, and negotiations apparently remain tough. Greek figures were warning that absent a deal, there is no money available to make the June 5th payment. European sovereign yields are lower while peripheral yields are rising, reflecting the tension over Greece.

The confluence of today's US data, Greece and Friday's comments by Fed Chair Yellen is boosting the dollar against its major pairs. Yellen on Friday indicated that interest rates could still be increased this year, if US economy continued to improve. Just ahead of the US session EUR/USD tested 1.0940, before dropping back into the upper end of the 1.0800 handle. USD/JPY has shot up to eight-year highs, with USD/JPY testing 123.30 earlier today.

Traders are sending oil prices lower today in reaction to last Friday's surprising Baker Hughes rig count data. Although the series disclosed the 24th straight week of drilling declines, the oil-rig count fell by just one. The horizontal oil-rig count actually increased by four, the first weekly gain since late November. With many participants suggesting may stabilize around $60 and most of higher-cost operations shut at this point, the industry could be putting a floor in production declines. WTI is down $1.50 on the day, trading around $58.40.

Charter Communications reached a deal to buy Time Warner Cable for $55 billion. Including debt, the deal is valued at about $79 billion. Charter will pay $195.71 per share in the cash-and-stock deal - $100 of it in cash with the rest in Charter shares. The offer is based on Charter's 60-trading day volume weighted average price. Charter also confirmed with its plan to buy Bright House Networks, a smaller cable company, for $10.4 billion. With the three companies integrated, Charter would become the second-largest TV-and-Internet provider in the US.

Looking Ahead

- 13:00 (US) Treasury to sell $26B in 2-Year Notes
- 15:00 (AR) Argentina Mar Economic Activity Index (Monthly GDP) M/M: No est v -0.6% prior; Y/Y: 1.7%e v 1.4% prior
- 15:00 (AR) Argentina Apr Industrial Production M/M: No est v -0.6% prior; Y/Y: -1.9%e v -1.6% prior
- 19:50 (JP) Bank of Japan (BOJ) April 30 meeting minutes
- 20:10 (US) Fed's Lacker discusses Financial Stability in Louisiana
- 21:30 (CN) China Apr Industrial Profits Y/Y: No est v -0.4% prior