US new home sales for May were reported at 623,000, falling short of the expected 693,000. In the oil sector, EIA weekly US inventories dropped by 5,836K barrels, compared to the anticipated decrease of 1,960K barrels. The US Treasury auctioned $70 billion in five-year notes at a high yield of 3.879%. The S&P 500 held steady at 6,091, while US 10-year yields fell by 1 basis point to 4.28%.

Shell In Talks With BP

Reports indicate that Shell is discussing a potential acquisition of BP. In currency markets, the NZD saw gains, while the JPY lagged, causing a decline in the US dollar during North American trading. Forex markets were active, with the weaker US dollar affecting EUR/USD after Barclays noted moderate selling of the dollar toward the month’s end. Despite hawkish comments from a BOJ official, the yen was still weak. Federal Reserve Chairman Powell mentioned that there would be no immediate changes to monetary policy, focusing instead on managing inflation. Overall, there were minimal changes in bonds and stocks, but active trading occurred in foreign exchange. The new home sales data was disappointing, suggesting that consumer activity in the housing sector may be slowing down. These numbers can provide insights into consumer confidence and potential interest rate changes. When fewer homes sell, it generally indicates that households are spending less, and this could lead fixed income markets to expect lower rates if this trend continues.

Crude Inventories And Energy Prices

US crude inventories decreased by much more than traders expected. This suggests either stronger demand or some disruptions in production. A substantial inventory drop usually supports higher energy prices, although the earlier rise in oil may have already accounted for much of this reduction. We anticipate some consolidation in oil-related assets, especially if broader economic signals remain uncertain. The Treasury auction saw moderate interest at slightly higher yields than expected based on recent data. With five-year yields near 3.88%, there is steady demand from domestic and international buyers. Many participants view real yields as appealing compared to longer-term options. This could keep the yield curve flatter unless there are surprising inflation reports. In stocks, the S&P 500 stayed flat, which was not surprising given the balanced economic inputs. Bond traders made slight adjustments with 10-year yields falling by just one basis point, while stock indices remained steady. This indicates a day of waiting rather than deciding. With Powell maintaining a consistent stance on inflation and not signaling any immediate policy changes, we didn’t expect significant movements in risk markets. In currency markets, the New Zealand dollar performed well, bolstered by better domestic data and shifts in global risk sentiment. Conversely, the yen weakened, despite a Bank of Japan official indicating a commitment to future tightening—traders remained skeptical. Rate differentials seem too wide for the yen to rally significantly unless clear signs of policy changes emerge, which seems unlikely as Japan’s inflation remains unstable. Rumors of a potential merger in the energy sector sparked some speculative interest. Investors on both sides would consider balance sheet compatibility and geopolitical factors. However, without further details, the market is likely to view this more as headline risk than a major directional catalyst. Late in the session, the dollar weakened, partly due to month-end flows. A note from a major bank indicated subtle and steady selling throughout the day, matching observed price actions. It’s important to monitor if this trend continues into the new month, especially as positions are reset. While there wasn’t a major shift in market direction, we did see strong FX flows and short-term signals building, which often precede increased volatility. We will closely monitor technical levels and be ready for significant price movements. Create your live VT Markets account and start trading now.

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