Fixed Income Market Overview
On Friday, U.S. Treasury yields remained steady as investors evaluated the latest economic data and its implications for Federal Reserve policy. The 10-year Treasury yield increased by 2 basis points to 4.396%, and the 2-year Treasury yield edged slightly higher to 4.795%. Yields and prices move inversely, with one basis point equal to 0.01%.
Investors considered the U.S. economic state following Thursday’s data showing a 0.9% rise in import prices, well above the 0.3% estimate, and weekly jobless claims aligning with expectations. This followed earlier key inflation readings: the consumer price index (CPI) for April rose 0.3% month-over-month and 3.4% year-over-year, with the monthly figure slightly below forecasts and the annual figure meeting expectations.
Atlanta Fed President Raphael Bostic expressed satisfaction with April’s inflation progress but emphasized the need for patience and vigilance, indicating the Fed is “not there yet” on inflation goals. Fed officials have recently suggested caution in monetary policy changes, particularly regarding interest rate cuts, awaiting more evidence of sustainable inflation easing. Additional comments from central bank officials are expected soon. Earlier in the week, the producer price index for April showed a higher-than-expected 0.5% monthly increase.
Microsoft’s Mistral partnership avoids merger probe by British regulators.
Goldman Sachs looks to expand private equity credit lines as deal making picks up.
AI infrastructure startup CoreWeave raises $7.5 billion in debt deal led by Blackstone.
GameStop shares fall 20% after it files to sell additional stock, says first-quarter sales dropped.
China consumption slows as retail sales and investment data disappoint.
Major Indicies
| Symbol | Price | Change | %Change |
|---|---|---|---|
| DJIA | 40,003.59 | 134.21 | 0.34%↑ |
| NASDAQ | 18,546.23 | -11.73 | -0.06%↓ |
| SNP 500 | 5,303.27 | 6.17 | 0.12%↑ |
| NIKKEI | 38,787.38 | -132.88 | -0.34%↓ |
| VIX | 11.99 | -0.43 | -3.46%↓ |
| HIS | 19,553.61 | 177.08 | 0.91%↑ |
Bonds
| Name | Yeild | CHG |
|---|---|---|
| US 10-YR | 4.43% | 0.04 |
| US 30-YR | 4.56% | 0.05 |
| US 5-YR | 4.45% | 0.05 |
| JPN 10-YR | 0.95% | 0.03 |
| UK 10-YR | 4.13% | 0.05 |
Futures & Commodities
| Name | Last | Change | %Change |
|---|---|---|---|
| WTI CRUDE | 80.06 | 0.83 | 1.05%↑ |
| NAT GAS | 2.626 | 0.131 | 5.25%↑ |
| GOLD | 2,417.40 | 31.90 | 1.34%↑ |
| SILVER | 31.26 | 1.38 | 4.63%↑ |
| COPPER | 5.050 | 0.173 | 3.55%↑ |
Equity Market Overview
HSBC Holdings Plc
Shares of HSBC Holdings fell over 3% in Hong Kong on Friday after reports that its top shareholder, Ping An Insurance, might reduce its stake in the bank. Despite this, HSBC shares remain at their highest since August 2018, trading around 68 Hong Kong dollars per share. Bloomberg reported that Ping An is considering further reducing its $13.3 billion position in HSBC, potentially through more share sales like the recent $50 million sale disclosed last week. Ping An cut its stake from 8.01% to 7.98% on May 7. This was the first sale since Ping An supported a failed 2023 motion to spin off HSBC’s Asia business. There are also rumors of a potential large stake acquisition by a Middle Eastern sovereign wealth fund or ultra-rich investor.
Compagnie Financiere Richemont SA
Shares of Swiss luxury group Richemont rose as much as 6.3% on Friday after reporting record full-year sales, despite a decline in Asia-Pacific spending. Group sales increased 3% to 20.6 billion euros ($22.38 billion) for the year ending in March. Shares later traded up 4.9% by 10:00 a.m. London time. Fiscal fourthquarter sales fell 1% due to a slowdown in Asia-Pacific, but this was offset by growth in other regions. Chairman Johann Rupert noted that a rebound in Chinese demand would take time. Nicolas Bos was named the new group CEO, effective June 1. Other luxury stocks, including LVMH and Kering, traded lower, with Kering warning of a sharp profit downturn due to decreased demand for Gucci in Asia-Pacific.
Applied Materials
Applied Materials reported fiscal secondquarter results that surpassed expectations, driven by strong growth in China amid increased chip demand due to the artificial intelligence wave. However, the company’s stock fell over 1% in after-hours trading following the announcement. Adjusted diluted earnings per share (EPS) for the quarter were $2.09, up from $2.00 the previous year, with revenue rising to $6.65 billion from $6.63 billion, exceeding analyst forecasts of $1.99 EPS on $6.54 billion revenue. Sales in China more than doubled to $2.83 billion, while sales in the United States declined to $853 million. Adjusted gross margin improved to 47.5% from 46.8% a year earlier. For fiscal Q3, Applied Materials projected adjusted EPS between $1.83 and $2.19 per share on sales of approximately $6.65 billion, plus or minus $400 million, surpassing Wall Street estimates of $1.97 EPS on $6.59 billion revenue.
