Crypto Takes its Time

Bitcoin is trading near $71K, where it was a day ago, but Ethereum (+1%) has moved up – a small but important step up from the consolidation range. These two coins account for over 70% of the total crypto market capitalisation and show no signs of excitement so far. It seems that the market preferred to climb smoothly to the March highs. So, we should not expect an acceleration of growth immediately after reaching them because, with smooth growth, traders will move stop orders higher.

ECB Starts Cuts Earlier and May Move Faster Than Fed

The European Central Bank cut all three of its key interest rates by 25 points, which is in line with market expectations. The ECB has kept rates unchanged for the past nine months and tightened policy from July 2022 to September 2023, raising rates by a combined 450 basis points.

European Central Bank Kicks Off Its Rate Cut Cycle

The European Central Bank (ECB) today joined the growing group of advanced economy central banks that have begun their monetary easing cycles, lowering its Deposit Rate by 25 bps to 3.75%.

ECB Review: Cutting and Keeping

Today, the ECB decided to cut its three main policy rates by 25bp, which leaves the key policy rate at 3.75%. This cut follows a 9-month period with unchanged policy rates on the back of the rapid hiking cycle since mid-2022. The rate cut was widely expected and thus focus was on the communication.

Time for the Spakfilla?

The national accounts confirmed that demand growth remained soft. Revisions to past tourism spending have no implications for future inflation but underline that weak supply is still an issue.

All Eyes on US Jobs Data as Two G7 Banks Start Cutting Rates

Today, all eyes turn toward the US jobs data. The week was marked by softer-than-expected job openings in April, a significantly lower-than-expected May ADP report, a surprise decline in the pace of unit labour costs from 4.7% to 4% and an unexpected jump in US weekly jobless claims.

Today's US Payrolls Important for Both Sides of Atlantic

Today’s US payrolls are important for both sides of the Atlantic in our view. The ECB’s data dependence should be seen broadly, with not only European data important for policy going forward, but also what the likes of the Fed (will) do. And the Fed’s sensitivity to the labour market is high. Consensus expects a job growth of 180k in May, more or less the pace of April. Wages are expected to grow 0.3% (3.9% y/y).

US: Q1 GDP Revised Slightly Lower, But Details Show Domestic Economy Still Strong 

The second estimate of first quarter GDP showed a slightly softer pace of economic expansion than previously reported. However, the overarching narrative has not changed. Even after accounting for the downward revisions, final sales to domestic purchasers (our best gauge of domestic activity) still advanced by a healthy 2.8% (previously 3.1%), and if not for a sizeable drag from net exports and inventories, first quarter growth would have come in at 2.6%.

Sunset Market Commentary

The two-day sell-off on core bond markets slightly went into reverse today. A downward revision to US Q1 price deflators (core PCE 3.6% Q/Q from 3.7%) and Q1 personal consumption (2% Q/Q from 2.5%) triggered the leap higher in which US Treasuries outperform German Bunds. Weekly jobless claims continue to hover near extremely low levels (219k from 216k) but didn’t have any market impact. US yields currently lose 4.2 bps to 5.7 bps with the belly of the curve outperforming the wings.

OPEC+ Meeting Could Switch Oil Regime

Oil declined for the second day in a row, reversing down from its 200-day moving average for the third time this month. An OPEC+ meeting is scheduled for this weekend with enough potential to break the tie.