Here is what you need to know.
The Bank of Japan kept policy on hold. Japan’s central bank voted 7 to 2 in favour of keeping its benchmark interest rate unchanged at -0.1%. Additionally, members voted 8 to 1 in favour of expanding the monetary base at an annual pace of around 80 trillion yen. In its statement, the BOJ said, “Global financial markets have remained volatile. Therefore, due attention still needs to be paid to the risk that an improvement in the business confidence of Japanese firms and conversion of the deflationary mindset might be delayed and that the underlying trend in inflation may be negatively affected.” The Japanese yen is stronger by 1.6% at 104.28 per dollar.
The Bank of England holds. The BOE left its benchmark interest rate unchanged at a record low 0.50% for an 87th straight month. Additionally, the central bank held its asset purchase program at £375 billion ($530 billion). The inaction was expected as the upcoming Brexit vote will take place on June 23. In it’s statement, the BOE warned a Brexit could impact the economy, and put pressure on the British pound. The pound is weaker by 0.6% at 1.4118.
Leave has surged to a 6 point lead in an important Brexit survey. A new Evening Standard newspaper poll, conducted by reputable polling firm Ipsos MORI, shows 53% of respondents favour Leave while 47% favour Remain. This was the first time a poll conducted by Ipsos MORI poll has favoured Leave.
Foreigners sold a record amount of Treasurys. Foreign investors sold $74.6 billion worth of US Treasurys in April, according to US Treasury Department data. The outflow was “the largest since the U.S. Treasury Department started recording Treasury debt transactions in January 1978,” Reuters says. China ($1.2443 trillion) and Japan ($1.143 trillion) remained the two largest holders of US Treasury debt.
Bond yields are sinking to record lows. Money is rushing into the safety of high quality sovereign debt amid growing fears of a Brexit and uncertainty in the global economy. Thursday’s buying pushed 10-year yields in Australia (1.999%), Germany (-3.6 basis points), Japan (-20.9 bps), and the UK (1.09%) to all-time lows. As money moves into safer sovereign debt, it’s leaving peripheral Europe. Yields in Greece, Italy, Portugal, and Spain are all higher.
Gold is surging. Gold trades up 1.5% near $1308 per ounce after reclaiming the $1300 level for the first time since August 2014. Thursday’s gains come amid growing fears of a Brexit, and after the Fed held interest rates steady at Wednesday’s meeting. Additionally, silver is higher by 1.2% at $17.71 per ounce.
Disneyland debuts in Shanghai. The theme park, which cost $5.5 billion and took five years to build, opened its doors on Thursday. Disney hopes it can tap into China’s growing middle class as 330 million people live within a three hour drive or train ride from the park. The company has called this its greatest opportunity since Walt Disney purchased land in central Florida in the 1960s, Reuters says.
Stock markets everywhere are lower. Japan’s Nikkei (-3.1%) trailed in Asia and Germany’s DAX (-0.6%) lags in Europe. S&P 500 futures are lower by 7.25 points at 2064.50.
Earnings reports trickle out. Kroger and Rite Aid report ahead of the opening bell while Oracle and Smith & Wesson release their quarterly results after markets close.
US economic data is heavy. Initial claims, CPI, Philly Fed, and the current account balance will all be released at 8:30 a.m. ET. Then, at 10 a.m. ET, the NAHB Housing Market Index crosses the wires. Finally, natural gas inventories are due out at 10:30 a.m. ET. The US 10-year yield is down 1bp at 1.56%.