June 2. Canada hikes
Relatively quiet Tuesday with US interest rates little changed from Friday though Canada became the first G7 country to raise rates, moving to 0.50%.
–US equities were weak as the US opened a criminal probe into BP. BP stock was down 17.6%, but Halliburton (HAL) was also down 17.4% and there was spillover into other energy issues and stocks generally.
–A Bloomberg story cited rising tensions in the mideast as a market mover, though there appears to be a confluence of bad news, including the Israeli boat mishap, BP’s failure to stop the oil leak, further concerns about european banks, worries about slowing Chinese growth, etc. Slightly stronger economic news in the US is currently overshadowed by international events. Even if there’s a strong non-farm payroll figure, it might be largely dismissed due to census hiring.
–With less than two weeks to go for EDM10 expiration, the basis closed from around 20 bps last week to just under 4 bps, with three month libor setting just under 54 bps, and EDM10 at 57.5 bps.
–Though commodities are generally weak, gold rose, and there was a piece in zerohedge saying the US Mint sold 190,000 1-ounce American eagles, the most since January 1999.
