MNI US OPEN: Stocks Continue To Bounce As Dollar Softens

SPAIN: PPI Slows, But Stuck At Elevated Levels

Spain's factory gate inflation slowed for a second consecutive month in May, but still still at historically elevated levels, the National Institute of Statistics said Monday. Prices rose 0.9% on month, which left the producer price index 43.6% above levels seen in May 2021. This months outturn slowed from a downwardly revised 44.5% in April and a record high 47.0% in March.

Core factory inflation also slowed, decelerating on an annual reading for the first time in more than a year, rising 15.3% on year ago levels.

The data will offer some respite to ECB policymakers, with a modest dip in the core rate, but, if reflected in overall EZ inflation readings later this week, the overall level is still at levels that will have the Governing Council starting the rate hiking cycle over the summer months.

FIXED INCOME: EU, UK and US Govies trade heavy

• A mixed trading starts for EGB's and Bund, but futures are nonetheless in the red, and are trading in wide ranges (90 ticks for Bund).
• Volumes have been very low, with most investors on the sideline, ahead of a packed week for speakers, with the ECB Forum on the 27th/29th, German CPI on Wednesday, and the week ends with the EU CPI on Friday.
• Instead, investors and market participants will be on the lookout, for change in stance from Central Bankers, following a poor set of data last week.
• Peripherals are mixed, Greece is 8.4bps tighter, while Italy sits 2.5bps wider vs the German 10yr.
• Gilt trades inline with most of Europe and Germany, translating in a small 0.5bp wider Gilt/Bund spread.
• Similar story for US Treasuries. super light volumes, with just 170k lots traded overnight, and during the European morning session.
• Looking ahead, US Durable Goods, and ECB Lagarde are notable events.
• Sep Bund futures (RX) down 81 ticks at 147.13 (L: 146.92 / H: 147.82)
• Germany: The 2-Yr yield is up 3.9bps at 0.852%, 5-Yr is up 3.9bps at 1.202%, 10-Yr is up 4.4bps at 1.486%, and 30-Yr is up 3.3bps at 1.724%.
• Sep Gilt futures (G) down 47 ticks at 113.5 (L: 113.35 / H: 113.84)
• UK: The 2-Yr yield is up 4.6bps at 1.978%, 5-Yr is up 4.5bps at 1.999%, 10-Yr is up 4.9bps at 2.351%, and 30-Yr is up 5.9bps at 2.606%.
• Sep BTP futures (IK) down 82 ticks at 120.99 (L: 120.86 / H: 121.51)
• Sep OAT futures (OA) down 76 ticks at 137.58 (L: 137.46 / H: 138.38)
• Italian BTP spread down 1.3bps at 200.8bps
• Spanish bond spread up 0.9bps at 112.1bps
• Portuguese PGB spread up 1bps at 109bps
• Greek bond spread down 6.9bps at 226.9bps

FOREX: Sentiment Supported as Equities Retain Corrective Cycle Higher

• Equity markets remain in a corrective cycle, and trade higher again Monday, underpinning a calmer outlook to currency markets so far this week. As a result, the greenback is softer and the USD Index is through last week's lows. The main beneficiaries so far have been the EUR and SEK, with both currencies posturing ahead of the Riksbank decision on Thursday and the ECB's Sintra policy forum across the week.
• AUD, NZD are the weakest performers so far Monday, but both currencies hold within recent ranges and are yet to test any material downside levels. AUDUSD continues to trade above 0.6851, the Jun 14 low. This support however remains exposed and trend signals are bearish. A resumption of weakness would also signal scope for a test of key support and the bear trigger at 0.6829, the May 12 low. Clearance of this support would confirm a resumption of the downtrend and open 0.6805, the Jun 22 2020 low.
• Data releases due Monday include prelim May durable goods as well as pending home sales. ECB's Lagarde is due to speak as she marks the opening of the ECB's central banking forum in Sintra. Markets watch for any update on the progress of the anti-fragmentation tool expected to be unveiled in the coming policy meetings.

EQUITIES: Europe Bounces Sharply From Last Week's Lows, Cyclical Names Lead Gains

• Asian markets closed stronger in a follow-through from the US equity rally late last week: Japan's NIKKEI up 379.3 pts or +1.43% at 26871.27 and the TOPIX up 20.7 pts or +1.11% at 1887.42. China's SHANGHAI closed up 29.438 pts or +0.88% at 3379.185 and the HANG SENG ended 510.46 pts higher or +2.35% at 22229.52.
• European equities are stronger, with consumer discretionary and tech names leading the way: German Dax up 149.5 pts or +1.14% at 13267.83, FTSE 100 up 53.63 pts or +0.74% at 7262.4, CAC 40 up 42.12 pts or +0.69% at 6115.68 and Euro Stoxx 50 up 32.91 pts or +0.93% at 3566.6.
• U.S. futures continue to rise, with the Dow Jones mini up 98 pts or +0.31% at 31585, S&P 500 mini up 17.75 pts or +0.45% at 3934, NASDAQ mini up 73.5 pts or +0.61% at 12214.5.

COMMODITIES: Precious Metals Bounce On Weaker USD

• WTI Crude down $0.48 or -0.45% at $107.07
• Natural Gas down $0.15 or -2.4% at $6.071
• Gold spot up $11.08 or +0.61% at $1837.96
• Copper up $2.65 or +0.71% at $376.95
• Silver up $0.35 or +1.64% at $21.5125
• Platinum up $3.47 or +0.38% at $914.55