Morning Update – 15/05/2017 – by Arjun Lakhanpal

Morning all.. US stocks drifted lower but considering the weak US data on Friday the move was tiny. The S&P closed down just 0.15% but US yields and the dollar remained rather weak into the NY close. In Asia we have seen a very quiet session with the Nikkei down 0.13% and the FX markets confined to tiny ranges. US 10yr yield remaining around 2.33% keeping a cap on the dollar. USDJPY had a 30 pip range in Asia. At the G7 meeting, US Tres Sec Mnuchin said we do not want to be protectionist but we reserve our right to be to the extent that we believe trade is not free and fair; most countries more confident with US economic message, Europe and Japan remain concerned. Japan Fin Min: Mnuchin remarks on trade sounded clearer than prev G20 comments in March; uncertainty remains over US policies incl monetary policy and tax reform. French Fin Min: all 6 other G7 countries told US (some v directly) that it is absolutely necessary to continue with spirit of international cooperation on global economic policy.. Rather weak data from China again; China Apr Ind Output missed: +6.5% vs +7.1% consensus-China Apr Fixed-Asset Investment missed: +8.9% YTD vs +9.1% consensus and China Apr Retail Sls beat: +10.7% vs +10.6% consensus. In Japan; Japan Apr Corp Goods Prices: +0.2% m/m vs -0.1% cons & +2.1% y/y vs +1.8% consensus. Oil is higher in Asia, WTI up 1.7% as Russia/Saudi Joint Oil Statement last night(Mon): Saudi and Russia agreed that output cuts need to be extended until March 2018 at same terms as current deal; aim of oil output cuts is to rebalance markets; agreed to do whatever it takes to stabilise mkt and reduce oil inventories to 5y average. There are more worry signs from N. Korea regarding missile launches which may keep markets risk averse but the rise in oil helping. This morning we have very little data of note so looks like being a quiet one. Good luck