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Risk Assets Retreat Despite Upbeat US Data

US stocks and commodities are both trading off their local highs while Treasuries are rallying marginally as investors reassess the global growth outlook.  Between the June FOMC meeting next week, Brexit vote in 2 weeks, and US presidential nominating conventions in July, heightened market volatility is expected and it appears investors are taking some chips off the table.  Also adding to the bearish tone, the Wall Street Journal reported that renowned investor George Soros has recently reentered the market after a long break from trading.  Soros Fund Management LLC reportedly sold stocks and bought gold and shares of gold miners last quarter due to concern over the global economic outlook and the potential for large market shifts.
 
In terms of new US data releases, a report showed the number of Americans filing jobless claims unexpectedly declined last week, pointing to a resilient labor market, contradicting the market view after the weak May payrolls print last Friday.  Economists had forecast claims rising to 270,000 last week versus the 264,000 that was reported.  Claims remained below 300,000 for the 66th consecutive week, the longest streak since 1973.  The four-week moving average, which tends to reduce some of the weekly volatility, fell 7,500 to 269,500 last week.  A separate report showed wholesale inventories increased 0.6% in April after a 0.2% increase in March, which should boost second-quarter GDP.  The inventory increase came despite a rise in sales at wholesalers for the second straight month. 

Aside from the data, there is a $12 billion 30-year note auction this afternoon.  All three major US stock indexes are currently down close to 0.50%, while the US bond market is rallying for a 3rd straight day, with Treasuries and swap rates down 1-4 bps across all major maturities.  Oil prices snapped a three-day rally, with both WTI and Brent crude down over 1%.

 

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