Morning Juice – US Session Prep (16th May)

Sentiment
US futures gained, with the S&P 500 on track for one of its best weeks this year, as easing trade tensions between the US and China buoyed appetite for risky assets and traders bet the Federal Reserve will step in to avoid a recession.

Contracts on the S&P 500 climbed after the index closed up 4.5% for the week on Thursday as the latest economic data spurred speculation the Fed will cut interest rates twice this year. Europe’s benchmark Stoxx 600 gauge also gained, heading for a fifth weekly advance.

US equities are back in favor following the de-escalation of trade tensions between the US and China. They’re now trading like last month’s rout never happened, even though uncertainty remains about the effect of tariffs on the US economy and the direction that the global trade war will take in the coming months.

The dollar weakened for a second session against major peers, with the yen and Swiss franc among the beneficiaries. The 10-year Treasury yield was lower after declining 10 basis points Thursday as traders added bets on Fed rate cuts.

Traders are also watching negotiations around the US budget with its promise of large tax cuts and the potential impact that will have on the fiscal deficit.Elsewhere, Japan’s economy shrank for the first time in a year, illustrating its vulnerability even before sustaining the impact of Trump’s tariff measures. The yen gained on Friday to trade around 145 per dollar. Bank of Japan official Nakamura, the most dovish board member, warned against hurrying to raise the benchmark interest rate.

In commodities, gold fell to extend its weekly loss as demand for haven assets waned. Oil prices declined after Iran’s foreign minister cast doubts on the status of US-Iran nuclear talks.

Docket
08:30 ET
US Housing Starts for April
Forecast: 1.363M, Prior: 1.324M, Range: 1.4M / 1.236M

10:00 ET
University of Michigan Survey May Prelim
Sentiment – Forecast: 53.4, Prior: 52.2, Range: 56.5 / 50.3

Speakers
10:50 ET
Trump participates in a US-UAE Business Council Breakfast Roundtable.

11:00 ET
ECB’s Lane, BoE’s Lombardelli, and Riksbanks Deputy Governor Seim participate in panel on “central bank communications and uncertainty” at the 2nd Thomas Laubach Research Conference, organized by the Federal Reserve Board in Washington.

Good luck, and have a good weekend!