* U.S. and Iran have agreed to extend ceasefire, sources say. * Canada's Q1 GDP contracts in the first quarter. By Niket Nishant. Canada's main stock index climbed on Friday and was on course for its second consecutive month of gains, as renewed hopes for a Middle East peace deal buoyed investor sentiment.
* S&P 500 set for longest weekly winning streak since December 2023. * Global stocks hit fresh record high. * Dollar set for weekly dip. * U.S. Treasury yields dip for fourth straight session. * Sources say Hormuz deal awaiting Trump's approval. By Stephen Culp.
U.S. Treasury yields were headed lower for a fourth straight day on Friday morning, closing out a week in which reported progress in efforts to secure a truce between the United States and Iran had spurred some optimism on markets.
* BANK OF CANADA TO AUCTION C$5 BILLION OF 2-DAY FUNGIBLE CASH MANAGEMENT BILLS ON JUNE 1, FINAL CALL FOR TENDERS SHOWS. * BANK OF CANADA TO AUCTION C$3 BILLION OF 4-DAY NON-FUNGIBLE CASH MANAGEMENT BILLS ON JUNE 1, FINAL CALL FOR TENDERS SHOWS. Source text: Further company coverage: [ ]
Federal Reserve Bank of Philadelphia President Anna Paulson said Friday "mildly restrictive" monetary policy is "well positioned" for an uncertain outlook where inflation pressures remain too high.
Canada's main stock index opened slightly higher on Friday amid reports that a deal has been reached to extend the U.S.-Iran ceasefire, even as gains were kept in check by data that showed Canada's economy contracted on an annualized basis in the first quarter. At 9:30 a.m. ET, the Toronto Stock Exchange's S&P/TSX Composite Index was up 0.12% at 34,557.46 points.
Federal Reserve Vice Chair for Supervision Michelle Bowman said on Friday the Middle East war's impact on the economy, while still being measured, could lead to persistent rises in inflation that might require tighter monetary policy.
The U.S. trade deficit in goods contracted more than expected in April as a surge in exports blunted rising imports, but economists cautioned the trend was unlikely to be sustainable, with businesses ramping up investment in artificial intelligence.
* First quarter GDP contracts 0.1% on an annualized basis. * Q1 decline follows 1% contraction in Q4 on annual basis. * GDP was flat in Q1 on a quarterly basis, StatsCan said. * Advance estimate showed growth in April likely at 0.4% By Promit Mukherjee.
The U.S. trade deficit in goods contracted in April as a surge in exports more than offset rising imports, a trend that if sustained could see trade contributing to economic growth in the second quarter. The goods trade gap narrowed 3.4% to $82.4 billion last month, the Commerce Department's Census Bureau said on Friday. Goods exports increased $8.5 billion to $219.7 billion.
* EU considers new trade tools, supply chain diversification rules. * China says EU cites selective data in trade imbalance claims. * EU tougher stance will need to bridge Franco-German divide. By Julia Payne.
Brazil's gross domestic product grew 1.1% in the first quarter from the previous three months, official data showed on Friday, compared with 1.0% growth forecast in a Reuters poll. On an annual basis, Latin America's largest economy expanded 1.8%, statistics agency IBGE said, matching market expectations.
Brazil's public sector gross debt rose to 80.4% of gross domestic product in April, from 80.0% the month before, central bank data showed on Friday. The public sector recorded a primary surplus of 24.624 billion reais for the month, beating the 22.0 billion reais forecast in a Reuters poll of economists.
Federal Reserve Bank of Kansas City President Jeffrey Schmid said the current arc of inflationary pressures means that the central bank may need to weigh tightening the overall stance of monetary policy.
Futures tracking Canada's blue-chip stocks rose on Friday as a deal to extend the U.S.-Iran ceasefire renewed hopes for an end to the Middle East conflict, while investors also awaited domestic GDP data due to be released later in the day.
Federal Reserve Bank of Kansas City President Jeffrey Schmid said on Friday that already-hot levels of inflation make it harder to assume the current energy shock will have only a temporary impact on pricing and can be ignored by the central bank.
Investors will turn to an important labor market update next week as they weigh whether simmering inflation and the potential for interest rate hikes could derail the rally in U.S. stocks. Broadcom's (AVGO) results also pose a test in the coming week for the red-hot AI trade.
Some people inside and outside the Federal Reserve agree that rule changes easing how much cash banks need to keep on hand for emergencies could allow the central bank to further cut the size of its $6.7 trillion balance sheet but also harbor doubts holdings could be slashed by the degree new Chairman Kevin Warsh desires.
* Sterling dips, remains within recent range. * BoE's Bailey said allowing inflation overshoot is justified. * Markets still expect BoE rate hike this year. By Samuel Indyk.
* May nonfarm payrolls report due on June 5. * Job growth of 96,000 expected as investors wary of hot number. * Broadcom (AVGO) results pose test for AI trade, soaring semi shares. By Lewis Krauskopf. Investors will turn to an important labor market update next week as they weigh whether simmering inflation and the potential for interest rate hikes could derail the rally in U.S. stocks.
Greece's jobless rate stood at 9.5% in April, down from an upwardly revised 10.4% in March, data from statistics service ELSTAT showed on Friday. Seasonally adjusted data showed 452,305 people were officially unemployed. Unemployment impacted women more than men, at the rates of 13.7% and 5.9%, respectively.
The European Central Bank said on Friday it had picked Roland Straub, a former adviser to current President Christine Lagarde and her predecessor Mario Draghi, to lead its monetary policy work. Straub, who recently took over as the second in command at the ECB's market operations, will replace another close Draghi aide, Massimo Rostagno, who recently retired.
* Sees 2026 exports growing at fastest pace in 5 decades. * Taiwan cbank seen leaving interest rate steady this year -analyst. By Faith Hung and Jeanny Kao. Taiwan's tech-driven economy is expected to grow at its fastest pace in 16 years in 2026, the government statistics agency said on Friday, thanks to booming demand for artificial intelligence-related technologies.
The Iran war rocked global bond markets again in May, sending yields to multi-decade highs as traders priced in central bank rate hikes - only for signs of progress in peace talks and weak economic data to bring them sharply lower again.
* This time round consumers were quick to react to price changes. * Could make them more reluctant to spend and add to pressure on economy. * ECB is all but certain to raise rates at next meeting.
Bond market volatility is boosting the case for Japan's central bank to pause the unwinding of its massive debt holdings next fiscal year, which would give Prime Minister Sanae Takaichi some relief amid growing investor concerns about her spending plans.
* Nikkei, KOSPI up around 2% * Sources say Hormuz deal waits on Trump approval. * European CPI figures awaited; Japan data supports rate hike bets. By Tom Westbrook. World stocks stood at record highs on Friday and oil futures eyed the steepest weekly drop for nearly two months as traders waited for details on a potential deal to reopen the Strait of Hormuz and extend the U.S.-Iran ceasefire.
Reserve Bank of New Zealand Governor Anna Breman said on Friday interest rates were likely to increase sooner and by more than previously signalled to combat inflation. The central bank held the official cash rate steady this week at 2.25% after Breman used her casting vote to break a 3-3 split among monetary policy committee members.
Gold prices inched higher on Friday
as investors assessed reports of a U.S.-Iran ceasefire deal amid
growing concerns around inflation and U.S. interest rate hikes.
FUNDAMENTALS
* Spot ...
The governor of New Zealand's central bank said on Friday that the official cash rate was likely to increase sooner and by more than previously signalled to combat inflation.
* May Tokyo core CPI rises 1.3% yr/yr vs forecast +1.5% * Index excluding fresh food, fuel rises 1.6% yr/yr. * Factory output rebounds in April on brisk AI demand. * Analysts expect inflation to re-accelerate on energy shock. By Leika Kihara.
Japan's factory output unexpectedly rose 0.8% in April from the previous month, versus the median market forecast for a 0.9% drop, government data showed on Friday. Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect seasonally adjusted output to rise 5.1% in May but decrease 0.4% in June.
* May Tokyo core CPI rises 1.3% yr/yr vs forecast +1.5% * Index excluding fresh food, fuel rises 1.6% yr/yr. * Analysts expect inflation to re-accelerate on energy shock. By Leika Kihara.
The S&P 500 and Nasdaq forged new record highs on Thursday, and the dollar and Treasury yields fell after the U.S. and Iran agreed to extend their ceasefire, while investors also digested the latest U.S. inflation and revised economic growth figures.
The S&P 500 and Nasdaqforged new record highs on Thursday, and the dollar and Treasury yields fell after the U.S. and Iran agreed to extend their ceasefire, while investors also digested the latest U.S. inflation and revised economic growth figures.
* US crude settles higher, Brent settles down. * US first-quarter GDP revised lower. * Orders for capital goods unexpectedly drop. * US inflation data seen above target. * Fed rate hike expectations rise. * Dollar weakens against euro, yen. By Stephen Culp.
Apparel retailer Gap cut its annual sales forecast on Thursday, signaling pressure from budget-strained Americans pulling back on discretionary spending amid macroeconomic uncertainty. The company, which is undergoing a turnaround, joined affordable luxury goods maker Tapestry in expecting weak sales growth in the current quarter amid pressured demand for its brands, including Old Navy.
Yields on benchmark U.S. Treasury notes fell on Thursday as the United States and Iran reached an agreement on a memorandum of understanding to extend their ceasefire for another 60 days, a step toward ending their three-month-old war. "What the numbers point to today is simply that we have a stagflation problem," said Peter Cardillo, chief market economist at Spartan Capital Securities.
* Musalem, Cook say rate hike may be needed if inflation doesn't ease. * April PCE inflation rose 3.8% year-on-year, driven by higher energy prices. * Debate intensifies over AI's potential to cool inflation, with Musalem and Goolsbee skeptical. By Ann Saphir.
* Crude drifts higher amid continued closure of the Strait of Hormuz. * US GDP revised lower, orders for capital goods unexpectedly drop. * Fed rate hike expectations rise as U.S. inflation data seen above target. * Dollar weakens against euro, yen. By Stephen Culp.
* Canadian dollar gains 0.4% against the greenback. * Rebounds from six-week low at 1.3869. * Current account deficit widens to C$7.18 billion. * Bond yields ease across the curve. By Fergal Smith. The Canadian dollar rebounded from a six-week low against its U.S. counterpart on Thursday as the prospect of a deal to extend the ceasefire in the Middle East boosted risk appetite.
One of new Federal Reserve Chairman Kevin Warsh's favorite inflation measures came in cool again on Thursday, offering evidence for his belief that inflation is improving and against the view of a growing number of other policymakers that interest rate hikes may be needed to tamp down rising price pressures.
* Dallas Fed's trimmed mean inflation measure may currently understate true price pressures. * Core PCE inflation rose 3.3% year-over-year, fastest since 2023, per Commerce Department. * Warsh has said he prefers "trimmed averages" to core inflation measures. By Ann Saphir.
Fannie Mae: * FANNIE MAE ANNOUNCES SALE OF REPERFORMING LOANS. * FANNIE MAE - SALE CONSISTS OF 2333 LOANS WITH $565 MILLION UNPAID PRINCIPAL BALANCE Source text: Further company coverage:
A growing number of U.S. central bankers say there may be a case for raising interest rates if inflation does not ease soon, even as they express skepticism over the power of AI to help that process along. The combination sets the table for a heated debate at Federal Reserve Chairman Kevin Warsh's first policy-setting meeting next month.
* Musalem says he would be concerned if disinflation doesn't resume in coming quarters. * April PCE inflation rose 3.8% year-on-year, driven by higher energy prices. * Musalem cautions against betting that AI-driven productivity will curb inflation. By Ann Saphir.
* Crude drifts higher amid continued closure of the Strait of Hormuz. * US GDP revised lower, orders for capital goods unexpectedly drop. * Fed rate hike expectations rise as U.S. inflation data seen above target. * Dollar weakens against euro, yen. By Stephen Culp.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.
Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
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