Daily summary: FOMC minutes fail to move markets, debt ceiling in focus

• FOMC minutes turned out to be a non-event. Document largely echoed FOMC statement and Powell's presser. However, it included line that Fed staff is still projecting a mild recession as likely near the end of the year

• Wall Street indices traded lower today as debt ceiling negotiations have still not resulted in an agreement

• S&P 500, Dow Jones and Nasdaq trade around 0.8% lower each while small-cap Russell 2000 is a top laggard (-1.5%)

• US House Speaker McCarthy said that Republicans offered a number of concessions on debt ceiling but there is a number of issues on which two sides are still far apart

• JPMorgan said that it assess risk of failure to get debt ceiling deal done ahead of X date at 25% and that it continues to rise

• European stock market indice slumped today with German DAX dropping 1.9%, UK FTSE 100 and French CAC40 moving 1.7% lower each and Dutch AEX declining 1.5%

• Fed's Waller said he would support rate hike in June or July with uncertainty over the banking sector situation justifying waiting until June

• NZD slumped after RBNZ delivered a 25 basis point rate hike today. While decision was in-line with market expectations, RBNZ said that rates in New Zealand have peaked and this triggered a slump in the currency

• RBNZ also said policy will remain restrictive for some time and that rate cuts may in the second half of 2024

• UK core CPI inflation unexpectedly accelerated from 6.2 to 6.8% YoY in April (exp. 6.2% YoY) and reached the highest level since March 1992. Headline CPI decelerated from 10.1 to 8.7% YoY (exp. 8.2% YoY)

• Spike in UK core CPI boosted BoE rate hike odds. Markets now see 25 basis point rate hikes at the next two meetings and almost 100 basis point of cumulative tightening by the end of 2023

• German IFO index dropped from 93.4 to 91.7 in May (exp. 93.0). IFO economists warned that German economy is heading for a stagnation in Q2 2023

• EIA report showed a massive 12.45 million barrel draw in US oil inventories (exp. +0.8 mb). Gasoline inventories dropped by 2.05 million barrels (exp. -1.1 mb) while distillate inventories dropped by 0.56 million barrels (exp. +0.4 mb)

• NVIDIA is set to report earnings after close of Wall Street session today

• Oil trades 0.5% higher supported by a bullish EIA report on US oil inventories

• Spike in US yields is putting pressure on precious metals - gold drops 0.5%, silver trades 1.3% lower and platinum slumps 1.4%

• Cryptocurrencies are trading lower amid overall increase in risk-aversion. Bitcoin drops 3.4%, Ethereum trades 3.2% lower while Dogecoin drops 3.1%

• USD and EUR are the best performing major currencies while NZD lags the most

NZDUSD is making a massive move lower today as USD caught a bid from rising yields and NZD slumped on RBNZ rate hike pause announcement. The pair plunged below the support zone marked with 200-session moving average and 38.2% retracement, and moved to a 2.5-month low.