US EARLY MORNING: Equity futures are a touch higher ahead of FOMC, Treasury refunding, ADP, and ISM services

US equity futures are slightly above unchanged (NQ +0.3%, RTY +0.3%, ES +0.3%, YM +0.2%), trading cautiously ahead of today’s busy session which will feature the highly anticipated FOMC meeting and post-meeting press conference with Chair Powell (+50bps rate hike and QT is expected, our preview is here), ADP jobs data will provide us with the usual preview ahead of Friday’s official US jobs report (395k expected, and similar is expected for the official data), while the ISM services data is also due (58.5 expected from 58.3). On the fixed income front, the Treasury’s quarterly refunding will likely see debt sale amounts cut again, with the announcement set to be made ahead of the Fed’s potential QT announcement (the Treasury on Monday already announced a refunding of USD 110bln will raise around USD 55.2bln of cash in the quarter and refund USD 54.8bln in maturing securities). Ahead of today’s action, Treasury yields are slightly higher, but towards the lower end of the day’s range, while major curve spreads are mixed, but around neutral. The Dollar Index, which has already seen hefty gains in the last couple of weeks in anticipation of Fed hawkishness to manage inflation pressures, is currently unchanged. Crude futures are up around USD 2.80 as the EU prepares to implement a phase out of Russian energy within six months, and a phase out of Russian refined products by the end of the year; the bloc assures that such moves will take place in an orderly fashion. Meanwhile, weekly private inventory data were bullish with larger-than-expected stock declines across the board, according to Citi, and would be bullish for prices if confirmed by the DOE report due later today. Energy traders will also be contending with OPEC+ headlines ahead of Thursday’s OPEC+ and JMMC meetings (the JTC sees the 2022 surplus rising +600k BPD vs its previous view, to 1.9mln BPD; OECD stocks are expected to slightly exceed 2015-19 average in Q4); the OPEC+ group is ultimately expected to keep policy steady this month, analysts believe.

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04 May 2022 - 09:52- Fixed IncomeData- Source: Newsquawk

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