· The U.S. dollar rose against a basket of major currencies on Tuesday to its highest since December, as data showing a pickup in U.S. consumer spending exerted fresh selling pressure on U.S. government bonds and sent the yield on the 10-year Treasury note to its highest level since July 2011.
The dollar index, which measures the greenback against a basket of six other currencies, was up 0.63 percent at 93.173, after rising as high as 93.457. Against the yen, the dollar was up 0.58 percent at 110.29 yen, its strongest since early February.
The euro fell to a fresh 2018 low of $1.1821, after weaker-than-expected economic growth in Germany. Softer-than-expected economic news from the euro zone and Britain also helped the dollar against the euro and sterling, he said.
The benchmark government yield reached a high of 3.095 percent, blowing through the key psychological level of 3 percent it hit in late April.
· U.S. retail sales increased moderately in April as rising gasoline prices cut into discretionary spending, but consumer spending appeared on track to accelerate after slowing sharply in the first quarter.
The Commerce Department said on Tuesday that retail sales rose 0.3 percent last month after surging 0.8 percent in March. Last month's increase in retail sales was in line with economists' expectations.
Retail sales in April increased 4.7 percent from a year ago.
Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.4 percent last month after increasing 0.5 percent increase in March. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
· Fed’s Williams says 3 to 4 rate rises in 2018 right direction for policy
Doesn’t see signs that the neutral rate is moving higher
San Francisco Fed chief sees longer-run rate around 2.5%
Federal Reserve Bank of San Francisco President John Williams said he’s “very positive” about the economic outlook both in the U.S. and abroad and reiterated that he views three to four interest-rate increases this year as appropriate.
Mr Williams, who will succeed William C. Dudley as New York Fed head in June, also said he expects growth to average around 2.5 per cent in this year and in 2019.
· Delivering what may be one of the U.S. central bank’s most detailed critiques of cryptocurrencies to date, Federal Reserve Governor Lael Brainard on Tuesday said digital coins pose “serious” challenges, and she all but dismissed the possibility that the Fed could enter the market.
· North Korea will join international efforts to ban nuclear tests, its ambassador to the United Nations in Geneva, Han Tae Song, told the Conference on Disarmament on Tuesday.
North Korea on Wednesday threw into question an unprecedented summit between its leader Kim Jong Un and U.S. President Donald Trump scheduled for next month, denouncing military exercises between South Korea and the United States as a provocation and calling off high-level talks with Seoul.
Any cancellation of the June 12 summit in Singapore, the first meeting between a serving U.S. president and a North Korean leader, would deal a major blow to Trump’s efforts to score the biggest diplomatic achievement of his presidency.
· The U.S. State Department said on Tuesday it was continuing to plan for a summit between President Donald Trump and North Korean leader Kim Jong Un next month despite a report that Pyongyang was suspending talks with the South over U.S. military drills.
· The US and China are “still very far apart” on disputes over trade, technology and market access, the US ambassador to China said on Tuesday, managing expectations ahead of a visit to Washington by a senior Chinese official.
Speaking at a conference in Tokyo, Terry Branstad said his country wanted to see a “specific timetable” on market opening, following demands presented by a US delegation that visited Beijing earlier this month. Mr Branstad was one of seven US representatives who participated in the trade talks.
Mr Branstad said China had not met pledges to open financial services and cut auto tariffs. “There are many areas where China has promised to do but haven’t. We want to see a timetable. We want to see these things happen sooner or later,” he said.
· The U.S. House of Representatives will vote next Tuesday on a bill that would relax regulations introduced after the 2007-2009 financial crisis, two congressional sources said.
· The United States on Tuesday imposed sanctions on Iran’s central bank governor and an Iraq-based bank for “moving millions of dollars” for Iran’s elite Revolutionary Guard, as Washington seeks to cut off funding it says Tehran is using to fund militant activities overseas.
· The European Union cannot provide legal and economic guarantees to Iran after the United States pulled out of the 2015 nuclear accord, but is serious about seeking a way to keep investment flowing, the EU’s top diplomat said on Tuesday.
After a meeting of the foreign ministers of Iran, Britain, France and Germany, EU foreign policy chief Federica Mogherini said the group will come forward with measures in the next few weeks after tasking experts to protect European business in Iran.
The group will meet again in Vienna next week at the level of deputy foreign ministers in a special format within the nuclear deal on Iran’s request and without the United States, which abandoned the accord last week.
· Iran and European powers have made a good start in talks over how to salvage the 2015 nuclear deal but much depends on what happens in the next few weeks, Foreign Minister Mohammed Javad Zarif said on Tuesday.
· Israeli forces opened fire on demonstrators in Gaza on Monday, killing dozens and injuring more than 2,400 people protesting the Monday opening of the US embassy in Jerusalem.
As bodies fell on the border on what became the bloodiest day in Gaza since the 2014 war, US and Israeli officials celebrated the opening of the embassy.
US secretary of state Mike Pompeo also ignored the deadly protests, while declaring the US was committed to advancing peace between Israel and Palestine.
· Japan’s economy likely slowed to a crawl, or possibly even contracted slightly at the start of this year, which would break the longest run of growth seen for decades and thwart Prime Minister Shinzo Abe’s reflationary ‘Abenomics’ polices.
Many economists expect the world’s third largest economy will return to growth in the current quarter, while blaming temporary factors such as bad weather and a slowdown in global electronic products demand for the first-quarter slump.
But potential fallout from Sino-U.S. trade frictions and global protectionism cloud the outlook for Japan’s export-reliant economy in the coming quarters, they say.
· Oil prices settled a shade firmer after retreating from multi-year highs hit early in the day on Tuesday, supported by concerns that U.S. sanctions on Iran are likely to restrict crude exports from one of the biggest producers in the Middle East.
Brent crude oil LCOc1 settled at $78.43 a barrel, up 20 cents, or 0.3 percent, after reaching an intraday peak of $79.47 a barrel, up $1.24 and its highest since November 2014.
U.S. light crude CLc1 closed 35 cents, or 0.5 percent, higher at $71.31 a barrel, also not far off the day’s peak at $71.92, its highest since November 2014.
Reference: Reuters, Financial Times, Bloomberg, CNBC
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