Risk on Right on Time
We wrote about positive April seasonals earlier in the week and that trade delivered with markets in a great mood to start the new month. The S&P 500 rallied 1.2% to a new record high and above 4000 for the first time.
US services ISM shot up to a new record of 63.7 vs exp 59 after manufacturing ISM hit 64.7 compared to exp 61.5. The surveys from Markit were also strong, including a survey high (since 2011) in the Canadian measure. Importantly, all the surveys highlighted shortages of raw and intermediate materials, suggesting pricing pressures in the months ahead.
OPEC+ appeared to do its part to loosen the oil market with a surprise decision to raise quotas in May. They also pre-announced higher production in June and July, adding more than 2mbpd total. Initially the market balked but had a re-think and crude rose 3.5%, perhaps owing to the slow paces of increases, along with the certainty three months out.In FX, the dollar slid as 10-year Treasury yields back off by 7 bps to 1.67%. That led to a relief rally in the euro and commodity currencies.
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