Insights 
VT 
US May new home sales were reported at 623,000, falling short of the 693,000 expected. In the oil sector, EIA weekly US inventories decreased by 5,836K barrels compared to the anticipated drop of 1,960K barrels.
The US Treasury auctioned $70 billion of five-year notes at a high yield of 3.879%. The S&P 500 remained unchanged at 6,091, while US 10-year yields decreased by 1 basis point to 4.28%.
Shell In Talks With BP
A report suggested Shell is in discussions to acquire BP. In currency markets, the NZD led gains while the JPY lagged, contributing to a decline in the value of the US dollar during North American trade.
Forex markets were active as the US dollar weakened, influencing EUR/USD after Barclays pointed to moderate USD selling towards month-end. Despite hawkish comments from a BOJ official, the yen ended the day as a laggard.
Comments from Federal Reserve Chairman Powell indicated no immediate changes in the monetary policy approach, focusing instead on measured inflation. Overall, markets reflected minimal changes in bonds and stocks but active trading in foreign exchange.
The data from new home sales came in soft, and not by a narrow margin either. This shortfall implies that consumer activity within the housing sector may be cooling off, despite month-to-month fluctuations. These figures aren’t just about homes—they can offer clues on consumer sentiment and future interest rate moves. When fewer homes are sold, it typically means households are spending less with long-term confidence. One would need to consider that fixed income markets might begin pricing lower potential rates going forward, especially if similar indicators continue this pattern into the next month.
Crude Inventories And Energy Prices
As for crude, US inventories dropped by a much larger amount than traders had pencilled in. That kind of shift suggests stronger demand or production hiccups, perhaps both. In our view, that level of inventory draw tends to lend support to energy prices, but the earlier gain in oil may have already reflected much of this reduction. There’s likely to be a little consolidation in oil-related assets, especially if broader macro signals remain mixed.
The Treasury auction was met with moderate interest at slightly higher yields than some might have expected based on recent economic data. With 5-year yields printing just below 3.88%, we think this reflects steady demand from both domestic and international buyers. There’s a sense among participants that real yields remain attractive, particularly in comparison to longer-dated instruments. That could reinforce the flatter end of the yield curve unless fresh inflation surprises appear.
On equities, the S&P kept to flat levels, which isn’t all that surprising given that the macro inputs were quite balanced. While bond traders adjusted modestly—with 10-year yields dipping by just one basis point—stock indices largely moved sideways. This underlines a day of digestion, not decision. With Powell keeping a steady line on inflation and not hinting towards an imminent policy tweak, we didn’t expect major repricing across risk markets.
Currency markets told a more active story. The New Zealand dollar put in a strong session, helped partly by improving domestic data and shifts in global risk sentiment. In contrast, the yen weakened, even as a policymaker from the Bank of Japan tried to signal commitment to eventual tightening. Traders didn’t buy into it. We suspect rate differentials remain too wide for the yen to rally meaningfully, unless firm signals of policy change take hold. That’s unlikely just yet, particularly with Japan’s inflation still not persistent.
The rumour surrounding a potential merger between two majors in the energy sector brought brief speculative interest. Shareholders on both sides would likely weigh not only balance sheet compatibility but geopolitical implications. We don’t see a firm deal yet, and without further details, the market will probably treat this more as a headline risk than a directional driver.
Meanwhile, late-session dollar weakness was partially explained by month-end flows. A note from one major bank suggested subtle yet persistent selling through the session, aligning with observed price action. It’s worth watching to see whether this trend continues during the early days of the next month, especially as positioning gets reset.
There wasn’t a wholesale shift in direction for markets overall, but we did notice strong FX flows and short-term signals building. That often precedes more aggressive volatility measures. We’ll stay close to those technical levels and be ready when price shapes break cleanly.
