• Wall Street equities closed near flat on May 13. While the DJI slipped by -0.21% and the S&P 500 edged down by -0.02%, the Nasdaq finished higher, rising by +0.29%.
• Higher inflation expectations pressured stocks on Monday after the New York Fed reported a +26 bps increase in 1-year inflation expectations to 3.26%, up from March's 3.00%. Furthermore, hawkish comments from Fed Vice Chair Jefferson added to the stock decline. He emphasized the need to maintain the policy rate in restrictive territory, citing concerns about inflation reaching target levels.
• The 10-yr UST yields dropped by -2.0 bps to 4.48%, while 2-yr yields also decreased by -2.0 bps to 4.85%. Monday's T-note prices gained support from strong European government bonds and speculation of easing price pressures in the upcoming US PPI and CPI reports.
• This week, the market’s attention will be on US inflation reports. Tuesday's April core PPI is forecasted to ease to +2.3% YoY from March's +2.4% YoY. Wednesday's April core CPI is expected to decrease to +3.6% YoY from March's +3.8% YoY.
• Meanwhile, the markets are pricing in a 3.5% probability of a -25 bps rate cut for the June 11-12 FOMC meeting, and a 25% chance for the following meeting on July 30-31.
• In Asia, China's finance ministry announced the sale of 1tn yuan (USD138.24bn) in long-term special treasury bonds this week. Sales include seven tranches of 20-year bonds starting May 24, 12 tranches of 30-year bonds from May 17 to Nov. 15, and three tranches of 50-year bonds starting May 17.
• Global bond yields were mixed on Friday, The German bund yield fell by -0.7 bps to 2.51%, while the 10-yr UK gilts yield edged up by +0.9 bps to 4.17%. The Japanese 10-yr JGB yield closed up by +2.5 bps 0.94
