Market Commentary: Tuesday 14th May

Rangebound markets overnight, Nikkei +0.39%, CSI 300 -0.23% but all eyes are on this 'Yen Story'. GS released a piece about Tourism in Japan and how the weaker Yen is encouraging interest and USDJPY opens at 156.50. It has now recovered 50% of the intervention driven losses. Yesterday the BOJ reduced its QE purchases in the 5/10 year sector to Yen 425 bn but remained within estimates. 10yr JGB's are at fresh 6 month highs. The next area to focus on is +97bp the highs seen in November and the highest since May 2013. 30yr JGB's printed above 2% for the fist time since 2011 and despite all this we still appear to be heading back to 160 level, with fundamentals being ignored.

Domestically UK's wages excluding bonus rose 6% y/y vs. 5.9% expected in January-March, GBP fails to rally and opens at 1.2560 and in corporate news, BHP second approach for rival Anglo American Plc, that valued the miner at $43 billion was rejected. Uber Technologies Inc. is buying Delivery Hero SE’s Foodpanda business in Taiwan for $950million.

Marketwise the yield on 10-year Treasuries was little changed at 4.48%, Bitcoin fell 0.7% to $62,654.77, Ether fell 0.4% to $2,943.65, West Texas Intermediate crude rose 0.2% to $79.24 a barrel, Spot gold rose 0.4% to $2,345.63 an ounce. Data wise, we see Germany CPI and ZEW survey expectations today, at 13.30 we see US PPI ahead of tomorrow's US CPI where the headline y/y is expected to fall slightly to 3.40% with core y/y down to 3.60%. On the speaking front we hear from the Bank of England Economist Huw Pill, the Fed Chair Jerome Powell and ECB Governing Council member Klaas Knot.

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