- The US stock market recovers on sharply lower crude oil prices but sentiment on Asian stock markets is slightly negative. Bond yields are largely unchanged.
- Focus today will be on the release of German May consumer prices and durable goods orders in the US later this afternoon.
- In line with consensus we expect Norges Bank to keep its leading interest rate unchanged at 5.5% and maintain a hawkish tone.
Markets Overnight
The US stock market yesterday evening recovered on the back of a sharp drop in crude oil prices and broad weakness within commodity prices. S&P 500 and Nasdaq yesterday closed up 0.7% and 1.5% respectively. However, the Asian stock markets have been slightly negative this morning with Nikkei and Hang Seng down - 1.3% and -0.3% with weakness mainly in energy and mining stocks.
Bond yields are largely unchanged since market close in Europe yesterday with 2Y and 10Y US bond yields trading largely unchanged at 2.49% and 3.91% respectively.
The crude oil / USD correlation was temporarily re-established yesterday with USD strengthening on the back of lower crude oil prices. EUR/USD this morning is trading at 1.5696. JPY has weakened slightly and USD/JPY and EUR/JPY are trading at 104.02 and 163.26 respectively. Despite some softness in commodity prices there has been no major impact on commodity currencies. EUR/NOK is trading largely unchanged at 7.8682. No major movement in SEK either. EUR/SEK is trading at 9.3033 this morning.
As mentioned above crude oil prices yesterday tumbled from USD 133 to just about USD 128. Crude oil prices have recovered slightly overnight and the July NYMEX crude oil future this morning is trading just below USD 128.