CURRENCY MARKET WRAP
USDJPY, +0.20%, $110.86
EURUSD, -0.04%, $1.1218
GBPUSD, -0.08%, 1.3033
USDCAD, -0.68%, $1.3346
AUDUSD, +0.30%, $0.7097
NZDUSD, +0.41%, $0.6804
The U.S. Dollar Index increased 0.1% to 97.27. U.S. Core PCE Price Index, which excludes food and energy, increased 0.1% (consensus 0.2%). On a year-over-year basis, the core PCE Price Index is up 1.8% (consensus 1.9%). The weak consumer spending report extended the run of soft data ranging from housing starts to manufacturing that have flagged a sharp slowdown in growth early in the first quarter. The key takeaway from the report is that the core PCE Price Index slipped below the Fed’s longer-run inflation target of 2.0%, which can be used by the FOMC as a reason for maintaining its newfound patient stance. The final University of Michigan Index of Consumer Sentiment for March increased to 98.4 (consensus 97.8). After slumping in January, due to the partial government shutdown, sentiment has rebounded. The key takeaway from the report is that a large share of households reported rising incomes and lower expected year-ahead inflation rates, leading to increased real income expectations.
NEC Director Larry Kudlow saying he believes the Fed should cut rates by 50 basis points since there is no inflation and the U.S. economy is fundamentally healthy. Kudlow’s comments came after Fed Governor Randal Quarles said further rate hikes may be necessary, as he remains optimistic about economic growth.
U.S. and China held “constructive” trade talks in Beijing last week, according to Treasury Secretary Steven Mnuchin and the White House. Trade talks will continue this week in Washington with China’s Vice Premier Liu He.
Risk appetite returned on Monday morning, following data released over the weekend that showed economic activity in China bouncing back in March. The official Purchasing Managers’ Index (PMI) rose to 50.5 (consensus 49.6) in March from February’s three-year low of 49.2, marking the first expansion in four months, according to data released by the National Bureau of Statistics (NBS) on Sunday.
STOCK MARKET WRAP
S&P500, +0.67%, 2,834.40
Nasdaq, +0.80%, 7,378.77
Nikkei Futures, +0.71%, 21,210.0
The S&P 500 gained 0.67% on Friday, capping its best quarter since 2009 amid a risk-on sentiment and continued trade optimism. Friday’s advance propped the S&P 500 to a gain of 13.1% this quarter. The S&P 500 health care (+1.2%), industrials (+1.0%), and information technology (+1.0%) sectors outperformed the broader market. Conversely, the energy (-0.2%) and real estate (-0.1%) sectors were the lone groups to finish with losses.
Lyft (LYFT 78.29, +6.29, +8.7%) was the stock of the day after the company made its highly-anticipated market debut on the Nasdaq, opening at $87.24 after its IPO priced at $72.00 per share. In other key corporate news, several proxy firms came out in support for Celgene’s (CELG 94.34, +6.89, +7.9%) proposed merger with Bristol-Myers (BMY 47.71, -0.13, -0.3%), prompting Starboard Value to withdraw its proxy solicitation. Starboard remains opposed to the deal, though.