The S&P 500 futures trade four points, or 0.1%, above fair value as the market tries to maintain its bullish disposition from the past two days.
President Trump said last night that not enough progress has been made with Mexico on immigration talks, and the planned tariffs on Mexico will go into effect on Monday if a deal is not reached. The market, though, isn't feeling too concerned about that right now as it continues to take comfort in the possibility the Fed could cut rates to help mitigate risks to slowing growth.
On a related note, the European Central Bank (ECB) left its key interest rates unchanged as was expected, and it expects those rates to remain at their current levels at least through the first half of 2020. ECB President Mario Draghi raised the outlook for FY19 GDP, but lowered those for 2020 and 2021 as risks remain to the downside.
Reviewing this morning's economic data:
- Initial claims for the week ending June 1 hit 218,000 (Briefing.com consensus 220,000), representing no change from the prior week's revised level (from 215,000). Continuing claims for the week ending May 25 increased by 20,000 to 1.682 mln.
- The key takeaway from the report is that claims continue reflecting a tight labor market.
- Nonfarm business sector productivity increased 3.4% in the first quarter (Briefing.com consensus 3.4%), according to the revised reading. The initial reading estimated that productivity increased 3.6% in Q1. Unit labor costs decreased 1.6% in the first quarter (Briefing.com consensus -0.8%), down from the initial estimate of a decrease of 0.9%.
- The key takeaway from the report is that the decrease in unit labor costs indicates muted inflationary pressures.
- The trade deficit narrowed to $50.8 bln in April from a revised deficit of $51.9 bln (from $50.0 bln) in March. Exports of $206.8 bln were $4.4 bln below the March level while imports of $208.7 bln were $5.4 bln below the March total.
- The key takeaway from the report is that even with the modest April decrease, the monthly deficit level has not changed much over the past year.
U.S. Treasuries have edged higher, pushing yields lower across the curve. The 2-yr yield is down one basis point to 1.83%, and the 10-yr yield is down two basis points to 2.10%. The U.S. Dollar Index is down 0.3% to 97.08. WTI crude is up 0.6% to $52.04/bbl, rebounding slightly from a recent stretch of losses.
Separately, Fiat Chrysler (FCAU 13.22, +0.03, +0.2%) withdrew its merger proposal to Groupe Renault (RNSDF) due to political meddling in France.