- Asian equity markets follow the positive trend from Wall Street yesterday as Chinese export data surprise on the upside.
- In Europe semi-core and peripheral government bond markets continue their strong performance.
- Focus on whether Norges Bank will follow other central banks and cut monetary policy rates. We have an non-consensus call and expect the Norges Bank to be on hold.
The positive sentiment continues in the global equity markets on the back of the highly accommodative monetary policy around the world. Yesterday the Reserve Bank of Australia cut monetary policy rates. Furthermore, we have seen some better-than-expected corporate earnings from the U.S. The Dow Jones climbed above 15000 and S&P500 rose 0.5% to 1.626.
Asian stocks followed the positive trend and rose for a third day on Chinese imports and exports beating consensus estimates and expectations that the monetary policy stimulus will boost profits. This morning the Governor of the Reserve Bank of New Zealand said there was room to cut policy rates. China’s exports rose 14.7% in April, well above the consensus forecast of a 9.2% increase. Imports climbed 16.8%, beating the 13% forecast. Nikkei is up 1% this morning and Hang Seng is up 0.6%.
In the U.S. bond market yields rose modestly (1-2bp across the curve) after a slightly weak auction of 10-Year U.S. Treasury notes. The bid-to-cover ratio was at 3.38, lower than the average of 3.57 for the past 10 auctions. The U.S. Treasury will sell U.S.D24bn on 10-Year bonds today and USD16bn in the 30-Year bond on Thursday.
In the European bond market the solid performance of semi-core and peripheral government bonds continues and yesterday Portugal sold EUR3bn of a new 10-Year bond. The transaction was oversubscribed more than three times. We expect the performance to continue given the substantial excess liquidity and despite weak macroeconomic data from the Eurozone.
In the FX market movements in the major currencies have been fairly stable. EUR/USD is trading around the 130-131 level while USD/JPY is at the 99-level. No significant moves in the Scandi crosses either.
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