German bond yields expectedly opened higher yesterday, but did not move that much during the day, and the 10-year yield ended the day up by around 2bp. US yields saw only minor moves as well, with the 10-year yield closing slightly lower. Trading volumes in general were rather low. Intra-Euro-zone spreads narrowed – another illustration that spread narrowing has not run its course yet.
Bonds still have some performance potential left at the current levels, and yields should trade with a small downward bias today.
Equities had a broadly positive day on both sides of the Atlantic yesterday. S&P 500 climbed another 0.41%, and is now less than 1% short of its record highs reached on 4 April. Asian equities are trading mixed again this morning, and the moves have not been that big. Europe is set to open close to flat.
Chinese PMI still depressed
The HSBC/Markit flash manufacturing PMI for China posted a small rebound after five consecutive falls, but at 48.3 (vs. 48.0 in March) remains at a depressed level. The new orders index picked up more than the headline, but remains low. Overall then, the numbers do not point to much better performance for the Chinese economy in the near term, but at least raise hopes that after the recent falls, confidence would be stabilizing. The mini-stimulus introduced by the authorities will offer some support, but no big-scale stimulus measures are in store this time.
Downside risks to today’s PMIs
The highlight in today’s calendar will be the flash April Euro-zone PMIs at 11:00 CET. The numbers have been holding up quite well lately, but especially the manufacturing component is likely to continue to fall. French numbers will be released already at 9:00 CET and German ones at 9:30 CET.
Elsewhere in the calendar, Bank of England minutes will be released at 10:30 CET, the preliminary US Markit manufacturing PMI at 15:45 CET and US March new home sales at 16:00 CET.
Portuguese and US auctions ahead
Portugal will resume its bond auctions for the first time since 2011 today, when it will re-open its February 2024 bond for EUR 0.5 to 0.75bn. The results will be released at around 11:30 CET. In the US, benchmark auctions will continue with USD 35bn of 5-year notes.
Nordea