Stocks set the tone early on following another solid earnings report from Dell computer, though dollar weakness briefly got the better of both asset classes. Flows appeared mostly position-driven after the previous run-up, but slightly narrower U.S. trade gap in March and a leap in May U. Michigan consumer sentiment to 96 from 93 also did some fundamental damage to longs.
The dollar's trade-weighted index cracked below 113 for the first time in 7-months, with next big support post-9-11 lows of 111.40, compared to Jan highs of 120.34 as the good will of foreign investors was tested. The Jun bond shed 22/32 to 100-06, though losses were a little more pronounced in the front-end and the 2s-30s spread narrowed back under +240 bp.
Oil prices recovered by late afternoon, after faltering on news that Russia would end export restrictions in June.
The Fed also proposed a new 2-tier discount rate system to apparently enhance liquidity among prime borrowers, without the negative stigma of proving need.