Bond Pressure Eases; Dollar Remains Soft

 
Snapshot: 

        -Euro climbs, last at $1.1260; 10-year Treasury yield at 2.22%; stock futures gain; Nymex crude at $61.45; gold at $1193.20
        -Watch for: April retail sales; earnings from Kohl's, SINA/Weibo, Applied Materials
        News: Eurozone Growth Accelerates; China Industrial Output Jumps; Japan Current Account Surplus Soars
        In currency markets Wednesday, the euro climbed 0.4% against the dollar to $1.1260. Better eurozone data have fueled the common currency's rebound from a 12-year low of under $1.05 in March. At the same time, there have been signs of weakness in the U.S. economy that have dampened expectations the Federal Reserve will soon raise interest rates.
        The current level of the euro "mainly reflects concerns among market participants that the much promoted divergence of monetary policies on both sides of the Atlantic might die an early death," said Commerzbank currency strategist Esther Reichelt.
        The British pound also rose ahead of the Bank of England's quarterly inflation report, which will provide the latest hint on the likely timing of an interest-rate increase from the central bank. Sterling was up 0.2% at $1.5698.
        U.S. Treasurys continued Tuesday's late rally and pushed further ahead in Europe as core bond markets settled after recent sharp losses.
        At 4.43am ET, the June contract was 10/32 higher at 127-115 while the 10-year cash was quoted at 2.22%, nearly 15 basis points off Tuesday's high. Ahead, the Treasury will hope that the upcoming $24 billion 10-year sale will draw the same strong demand seen at Tuesday's 3-year sale.
        European bonds steadied, helped by Tuesday's turnaround in the U.S. Treasury market. Germany's 10-year yield was marginally lower at 0.66%.
        U.S. stocks look set for their first gain in three days, recovering from wobbles in the bond markets, as investors look ahead to retail data that could further weaken the case for a summer Federal Reserve rate hike.
        Futures for the Dow Jones Industrial Average climbed 62 points, or 0.4%, to 18,091, while those for the S&P 500 index gained 8.25 points, or 0.4%, to 2,103.25. Futures for the Nasdaq 100 index added 21.50 points, or 0.5%, to 4,442.25.
        On Tuesday, fluctuations in the bond market sent markets lower in Europe and the U.S. However, bond markets appeared to have calmed down on Wednesday, with yields moving in tight ranges early in the day.
        Monthly retail sales data is due at 8.30am ET, expected to show growth of 0.1% in April, down from 0.9% in March.
        Such a slowdown would further underline the "general cooling of economic data that has been coming out of America, and partially [explain] why currency markets have generically pushed the date for interest rate rises out to September," said Alastair McCaig, market analyst at IG in a note.
        Excluding auto sales, retail numbers are forecast to come in at 0.4%, the same pace of growth as seen in March.
        Also due at 8.30am ET is the import-price index for April. A report on March business inventories follows at 10am ET.
        Oil prices rose in London, supported by a weaker dollar and despite a bearish assessment by one of the world's top energy forecasters.
        In its closely watched monthly oil market report, the International Energy Agency said that while growth in U.S. shale output is expected to slow, output growth outside North America will remain robust and add to the global oversupply of oil. Brent crude for delivery in June rose 0.8% to $67.42 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, June-dated light, sweet crude futures traded at $61.45 a barrel, up 1.1% from Tuesday's settlement.
        Gold prices were slightly higher on the London spot market on a softer dollar.
        Spot gold was trading up just 0.004% at $1,193.20 a troy ounce in morning European trade, marking the tenth day since the metal traded above the $1,200 level.
        Eurozone Growth Accelerates
        A return to expansion in France and Italy helped boost eurozone economic growth in the first three months of 2015 to its fastest pace in almost two years.
        China Industrial Output Jumps
        Value-added industrial output in China rose 5.9% in April from a year earlier, accelerating from a 5.6% growth in March.
        Japan Current Account Surplus Soars
        Japan posted its biggest current account surplus in seven years in March, as a jump in exports put the balance back on a level last seen regularly before the global financial crisis.
        IEA: OPEC Battle for Oil Market Share Just Beginning
        A global battle for market share between OPEC and non-OPEC producers that has rocked oil markets and fed into the biggest price slump since the financial crisis is just getting started, the International Energy Agency said Wednesday.
        Beijing Condemns Proposed U.S. Military Plan in South China Sea
        Beijing strongly condemned on Wednesday a proposed U.S. military plan to send aircraft and Navy ships near disputed South China Sea islands to contest Chinese territorial claims over the area.
        China Housing Market Shows Signs of Life
        China's housing sales showed signs of a turnaround in April, posting year-over-year growth for the first time since December 2013, as home buyers waded back into the market following recent policy easing measures by the central government.
        Bank of England Cuts U.K. Growth Forecasts
        The Bank of England cut its growth forecasts for the U.K. economy on Wednesday, but signaled it remains on course to lift its benchmark interest rate from its historic low in the middle of next year.
        Greece's Economy Contracts for Second Quarter Running
        Greece's economy contracted for a second consecutive quarter in the first three months of the year, data from the country's statistics office showed Wednesday.
        RBNZ Warns on Strong Kiwi
        Reserve Bank of New Zealand Governor told a parliamentary committee that the central bank still views the strong New Zealand dollar as "unjustified and unsustainable."
        Write to paul.larkins@wsj.com
        (END) Dow Jones Newswires

        May 13, 2015 06:28 ET (10:28 GMT)

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