Heading into the final hour of trading, stocks are still stuck in a sideways trade. Trading this afternoon has been quiet.
Selling has intensified against Treasuries, however. The benchmark 10-year Note is down 45 ticks, which has pushed its yield back above 3.7%. Meanwhile, the 30-year Bond has shed 72 ticks, which has lifted its yield to almost 4.6%.

Costco Wholesale Corp
Wholesale retailer reports that same-store sales fell 7% in May, worse than expected.

Johnson & Johnson
The pharmaceutical division says it will seek approvals for 13 new medications by 2013, including a hepatitis C treatment.

Palm Inc
Reviews of the handheld-maker's new smartphone, the Pre, are mostly positive in advance of its weekend release.

UAL Corp
United Airlines says it plans to order up to 150 new planes by the fall, as it assesses the future of its fleet.

Wal-Mart Stores Inc
World's biggest retailer expects to hire more than 22,000 people to its new or expanded domestic stores this year.

Oil continues to march higher (up $3.08 at $69.20 currently) posting a new 2009 high of $69.60, before stalling ahead of psychological resistance at $70.00.
Overnight, Goldman Sachs commodity strategy team raised its oil forecasts. "Over the past few months the broad commodity market has been trading largely on better credit conditions and very expansionary Chinese policies (energy prices have been further supported by tighter OPEC supply).," they say. Goldman notes that the stabilization in global growth has not yet been fully played out in the energy markets. Because of this their commodity team has raised its WTI forecast "well above the forwards" and see WTI trading at $75/barrel, $85/barrel and $90/barrel in 12 months time.

The euro rose against the yen and the pound after European Central Bank President Jean-Claude Trichet said he sees signs that the worst of the recession has passed.
The 16-nation currency also erased a decline against the dollar as Trichet said at a press conference in Frankfurt interest rates at current levels are “appropriate,” while declining to rule out further reductions. The region’s economic performance will be “much less negative” this year, he added. Policy makers held the main refinancing rate at an all-time low of 1 percent today, in line with economists’ forecasts.
Trichet “hedged himself quite nicely by saying rates are appropriate for now, but it doesn’t mean they will be appropriate in the future,” said Geoffrey Yu, a currency strategist at UBS AG in London. “There was a huge sell-off in the euro half an hour before the conference began. Price action was a bit distorted. I think people are just looking to go back into their short dollar positions.”
The ECB cut the main interest rate last month and said the bank plans to buy about 60 billion euros ($85 billion) of covered bonds to hold down borrowing costs. The central bank will start the program next month and complete it in June next year, buying covered bonds rated not less that BBB, Trichet said today.
The dollar strengthened against the yen after Fitch Ratings reiterated its confidence in the U.S. and U.K.’s top credit grades, citing the countries’ fiscal strength.
The pound tumbled against the dollar, before recovering, amid speculation that Prime Minister Gordon Brown was poised to resign. A British government spokesman described the rumor as “nonsense.”
The Bank of England kept its main interest rate at 0.5 percent today and said it will refrain from increasing gilt purchases beyond the 125 billion pounds ($205 billion) already announced amid signs of an economic recovery.

FTA economist Brian Wesbury says "the long-term trend of strong productivity growth is still intact. This elevates long-run econ potential. "

Mining stocks are weighing heavily on the blue-chip indices, despite strength in the metals market, with Rio Tinto (RIO), BHP Billiton (BLT), Anglo American (AAL), and Xstrata (XTA) leading losses in London, wiping around 18pts from the FTSE. Oil and energy
stocks on the other hand are holding firm, as WTI Nymex broke once again through the $67/bbl level, amid a Goldman Sachs report that crude will reach $85/bbl by the end of year. Banks are also making some gains, with bargain hunting offering a boost following recent slips, and with BNP Paribas (BNP) in Paris, and Barclays (BARC) in London, outperforming. The FTSE-100 is currently flat, CAC-40 up 21pts (+0.6%), and Xetra-DAX up 30pts (+0.6%).

Stocks struggled to rise Thursday morning as investors weighed signs of improvement in the labor market with a rash of lackluster retail sales.

GS is saying incremental data such as jobless claims, employment component of nonmanufacturing ISM, job advertising, and Challenger "all look somewhat better." They still look for May unemployment rate at 9.2%.

The major stock indices continue to trade in mixed fashion, but commodity prices are snapping back after slumping in the prior session.
Gold is currently up 0.6% to trade at $971.10 per ounce as it works its way back from a 1.9% loss in the prior session. Gold prices were recently up more than 1%. Silver prices are up 1.7% to $15.57 per ounce after suffering a 4.0% loss Wednesday.
Crude oil prices are garnering support after analysts at Goldman Sachs forecast oil prices of $85 per barrel for 2009, which represents a near 30% premium over the prior session's closing price. Oil prices are currently up 2.5% to $67.80 per barrel.
Natural gas suffered some of the worst declines in commodities trading Wednesday by slumping 9.0%. Natural gas prices are currently down another 4.1% to $3.61 per contract, following a build in weekly inventories.
The Baltic Dry Index finished lower for the first time in 24 sessions by shedding 4.6%. The Capesize Index gave back 7.2%, while the Panamax Index shed 2.1%. Losses in the Supramax Index (-0.3%) and the Handysize Index (-0.1%) were modest.

HFE economist Ian Shepherdson says downshift in jobless claims "continues but progress is painfully slow and claims at their current level are still consistent with massive declines in payrolls." On productivity, "Given the massive drop in GDP, these data show companies controlling costs very aggressively indeed."

Continues to meet support on approach to $1.6165, the level having contained pullbacks on three occasions now. Bids interest seen placed to $1.6150, a break to allow for a deeper move toward $1.6130/20 and $1.6085/80. Resistance $1.6220.

Stocks are making solid gains in the first few minutes of trading. The upward move is being led by strength in energy stocks and financial stocks.
Energy stocks actually helped lead losses in the prior session, dropping 3.3% as crude oil prices shed 3.6%. However, energy stocks are currently up 0.8% as oil prices rebound 2.5% to trade at $67.80 per barrel. Oil received a bullish bid from Goldman Sachs analysts, who forecast that oil prices will reach $85 per barrel this year, according to Reuters.
After a quiet session yesterday, financial stocks are sporting the best gains of any sector in today's action. Financial stocks are currently up 1.2% as regional banks (+2.4%) and investment banks and brokerages (+2.4%) find favor.
In contrast, Treasuries are under pressure. The benchmark 10-year Note is down a sharp 27 ticks, which has pushed its yield up to 3.65%

- Pick up of growth to positive territory expected 2010

Stocks are currently looking at a flat start for the session.

- Perhaps we'll concentrate on 3-10 year maturities
- We have room to maneuver to optimize our bond-buying programme

- Bank rate remains at 0.50%

Data released:
09:00 Е16 Retail sales (April) adjusted +0,2% -0.6%
09:00 Е16 Retail sales (April) adjusted Y/Y -2,3% -4.2%
11:00 UK BoE meeting announcement 0.50% 0.50% 0.50%
11:45 E16 ECB meeting announcement 1.00% 1.00% 1.00%

“The ECB is caught between a rock and a hard place,” said Simon Derrick, chief currency strategist in London at Bank of New York Mellon Corp. “There are signs of a rebound in the economy and oil prices are rising. On the other hand, the euro has strengthened to a level that historically would start to worry politicians. It will be interesting to see if Mr. Trichet makes any comments on currencies at the press conference.”
The Euro has weakened on after the ECB monetary policy decision, extending its reversal from 1.4240 to levels below intra-week low at 1.4095. At the moment the Euro trades around 1.4070. On the initial support level lies at 1.4070, and below there, the Euro could find support at 1.4000 and then 1.3960/70. Resistance levels lie at 1.4100 and above there, 1.4170/80 and 1.4245 (intra-day /Jun 1 high).

Confirm expectation price developments to remain dampened.
- Survey data show economic activity to drop less rest 2009

- Min. bid rate at refi tender remains at 1.00%
- Marginal lending rate 1.75%, Deposit rate 0.25%
- Focus turns to the ECB press briefing which begins at 12:30GMT.

Oil rose above $67 a barrel on Thursday after a 3.5 percent decline the previous day, boosted by increased oil price forecasts from U.S. investment bank Goldman Sachs.
U.S. crude for July delivery rose $1.19 cents to $67.31 a barrel by 5:45 a.m. EDT. London Brent crude gained $1.37 to $67.25. Further support for oil prices came from higher European equity markets and a weaker U.S. dollar on Thursday.Much of oil's rally this year has tracked stock market gains as investors look to equity markets for signs of economic recovery, while a weaker dollar can boost the appeal of oil and other commodities as a hedge against inflation.
"Equity markets are performing well, the dollar is falling, add to that Goldman Sachs and you see why oil has risen," said Simon Wardell, oil analyst at Global Insight.

- Bank rate remains at 0.5%
- Leaves current asset purchase target at stg125bln.

The euro rose against the dollar before a European Central Bank meeting at which policy makers may avoid cutting interest rates and expanding asset purchases.
The yen fell versus the dollar and the euro as gains in stocks fueled appetite for higher-risk assets and a report showed Japanese investors increased purchases of overseas bonds to the most in a month. “European equities and U.S. futures are heading higher, signaling risk appetite is once again picking up,” said Michael Klawitter, a foreign-exchange strategist in Frankfurt at Commerzbank AG. That’s “providing support for euro-dollar.”
The pound rose against the dollar after a report by Halifax showed home values unexpectedly rose 2.6 percent in May, the most since 2002. The Bank of England, meeting today, will keep interest rates at 0.5 percent and refrain from increasing gilt purchases beyond the 125 billion pounds ($205 billion) already announced, according to economists.
The Dollar Index fell, paring its biggest gain in more than four months yesterday, when Federal Reserve Chairman Ben S. Bernanke told the House Budget Committee in Washington the central bank won’t finance government spending over the long term. “Bernanke told Congress that the Fed won’t accommodate wider budget deficits by simply printing money, clearly attempting to reassure foreign investors worried about the U.S. dollar’s safe-haven status,” John Kyriakopoulos, Sydney-based head of currency strategy at National Australia Bank Ltd. wrote in a research report.

EUR/USD
Offers: $1.4250, $1.4300, $1.4350
Bids:$1.4205/195, $1.4150

USD/JPY
Bids: Y95.60/50, Y95.30/20
Offers:Y96.80, Y97.20

Resistance 3:Y97.80
Resistance 2:Y96.80
Resistance 1:Y96.70
Current price: Y96.38
Support 1: Y95.30
Support 2: Y94.50
Support 3: Y93.80
COMMENTS: Dollar continues to rangebound. Minor resistance is near session highs on Y96.70. Above the bullish momentum will strengthen up to Jun 01 high at Y96.80. Further rise may extend to Y97.80. Strong support is around Tuesday’s lows on Y95.30. Below correction may widen to Y94.50 and Y93.80.

Resistance 3:Chf1.0960
Resistance 2:Chf1.0860
Resistance 1:Chf1.0750
Current price: Chf 1.0678
Support 1:Chf1.0560
Support 2:Chf1.0480
Support 3:Chf1.0370
СOMMENTS: Techs on dollar hasn’t changed much. Strong support comes near channel line from Apr 22, coming today at Chf1.0560. Below losses may widen to Chf1.0480 and Chf1.0370. Resistance is near yesterday’s highs on Chf1.0750, further – on Chf1.0860 (Friday’s high). Next band of resistance is around Chf1.0960 (May 28 high and May 13 and 20 lows).

Resistance 3:$1.6800
Resistance 2:$1.6500
Resistance 1:$1.6430
Current price: $1.6405
Support 1: $1.6160
Support 2: $1.5850
Support 3: $1.5600
COMMENTS: The sterling looks optimistic. Resistance comes at $1.6430 (session highs). Above the target comes at $1.6500. Stronger level is near $1.6800 (50,0% Fibo of $2.0130-$1.3520 decline). Support is near session lows on $1.6160. Below losses may widen to $1.5850 (yesterday’s low), then – to $1.5600.

Resistance 3: $1.4440
Resistance 2: $1.4340
Resistance 1: $1.4200
Current price: $1.4197
Support 1: $1.4100
Support 2: $1.4040
Support 3: $1.3860
COMMENTS: Euro retreated after recent rally. Minor resistance is at session highs on $1.4240. Stronger level is near channel line from Apr 28, coming at $1.4340. Break above that level points to further rise up to Dec 17 highs on $1.4440. Strong support comes at Jun 02-03 lows on $1.4100. Below losses may widen to $1.4040, then – to $1.3860 (lower bound of the channel).

- Mar Sales Revised To -0.1% On Mo; -3.4% On Yr
- Apr Retail Sales Forecast +0.2% MM; -3.3% YY
- Apr Retail Sales First Monthly Rise Since Sep 2008

Jumps back from pullback lows of $1.6350 to retest earlier recovery highs at $1.6372 on the initial react to the release of better than expected Haslifax house price data. Second wave of buying then takes rate through reported resistance at $1.6380/85 and on to $1.6394 at writing. Offers seen placed between $1.6400/10 ahead of $1.6435/40.

Hang Seng Index ends down 0.40% at 18,502.77 on Thursday.

The yen weakened for a second day versus the dollar and declined against the euro after a report showed Japanese investors increased purchases of overseas bonds to the most in a month.
The pound fell for a second day versus the dollar before the Bank of England announces its policy decision at noon in London. Governor Mervyn King’s forecasts last month showed it needs to spend 125 billion pounds ($204 billion) of newly printed money in U.K. debt markets to combat the recession.
Gains in the euro against the dollar may be limited on speculation European Central Bank policy makers also meeting today will take further steps to keep down borrowing costs in the 16-nation region as optimism over the global recovery wanes.
ECB policy makers will hold the main refinancing rate at 1%, and the BOE will keep its benchmark at a record low 0.5%, according to surveys of economists.

EUR/USD recovered from $1.4130 to $1.4220.

Japan's benchmark stock indices ended Thursday's session lower across the board, inching back from the eight month highs seen Wednesday. The Nikkei 225 was lower by 72.71 points, or 0.75%, to stand at 9668.96. The broader-based TOPIX was 3.51 points lower at 910.99.

Majors close
07:55 Германия Индекс деловой активности в секторе услуг, Май, 45.2 46,0 43,8
08:00 Е16 Индекс деловой активности в секторе услуг с учетом сезонных колебаний, Май, 44.8 44,7 43,8
08:30 Великобритания Индекс деловой активности в секторе услуг, Май, 51.7 48,7
09:00 Е16 Индекс цен производителей, м/м, Апрель, -1.0% -0,7%
09:00 Е16 Индекс цен производителей, г/г, Апрель, -4.6% -3,1%
09:00 Е16 ВВП, предварительные данные, кв/кв, 1 кв, -2.5% -2,5% -2,5%
09:00 Е16 ВВП, предварительные данные, г/г, 1кв, -4.8% -4,6% -4,6%
12:15 США Изменение количества занятых по данным ADP, Май, -532К -541К -491К
14:00 США Индекс деловой активности в секторе услуг, Май, 44.0 -44,9 -43,7
14:00 США Производственные заказы, Апрель, +0.7% 0,2% -0,9%

Japanese stocks edged up, sending the Nikkei 225 Stock Average to its longest winning streak in five months, led by glassmakers on optimism sales of flat-screen materials will recover.
Asahi Glass Co. and Nippon Electric Glass Co. surged more than 5% after JPMorgan Chase & Co. rated them “overweight” on expectations sales will rebound.
Tosoh Corp. and Mitsui Chemicals Inc. climbed on speculation mergers will increase profitability in the chemical sector.
Sumitomo Trust & Banking Co. lost 1.7% after share sales by JPMorgan and American Express Co. sent U.S. financial stocks lower.
The Nikkei has soared 38% since hitting a 26-year low on March 10, pacing a global rally on optimism government stimulus packages totaling $2.2 trillion are taking effect. The MSCI World Index has jumped 45% since its March low.

European stocks slid the most in three weeks as investors speculated a three-month rally has outpaced expectations for earnings and economic growth.
Bouygues SA posted the biggest drop in six months after the French builder and mobile-phone operator said net income sank 29%. STMicroelectronics NV led chipmakers lower after an industry association predicted that global semiconductor sales this year will fall 10 times more than previously forecast.
Gross domestic product in Europe contracted 2.5% from the fourth quarter, matching an initial estimate and the most since the data were first compiled in 1995, the European Union’s statistics office in Luxembourg said today.
European household consumption shrank 0.5%, while exports slid 8.1% and imports declined 7.2%, all the most since the series started in 1995. Investment spending fell 4.2%, after a 4.3% contraction in the previous quarter that was also the sharpest since 1995.
STMicroelectronics, Europe’s largest chipmaker, sank 4.3%. ASML Holding NV, the region’s biggest producer of semiconductor equipment, declined 3.2%.
HSBC Holdings Plc fell 1%. The bank’s weighting on Hong Kong’s benchmark Hang Seng Index will be capped at 15% from the current 20% on June 8 following a quarterly review last month. The change to the 42- constituent index will take effect on June 8.

U.S. stocks fell for the first time in five days, extending a worldwide slump, as a report showed employers cut more jobs than forecast and the Standard & Poor’s 500 Index traded at the most expensive in eight months.

Data released
07:45 Italy PMI services (May) 43.1 43.0 42.0
07:50 France PMI services (May) 48.3 47.6 46.5
07:55 Germany PMI services (May) seasonally adjusted 45.2 46.0 43.8
08:00 EU(16) PMI services (May) 44.8 44.7 43.8
08:30 UK CIPS services index (May) 51.7 49.5 48.7
09:00 EU(16) PPI (April) -1.0% -0.8% -0.7%
09:00 EU(16) PPI (April) Y/Y -4.6% -4.5% -3.1%
09:00 EU(16) GDP (Q1) preliminary -2.5% -2.5% -1.6%
09:00 EU(16) GDP (Q1) preliminary Y/Y -4.8% -4.6% -1.4%
12:15 USA ADP employment (May) -532K -541K -491K
14:00 USA ISM Non-mfg composite index (May) 44.0 44.9 43.7
14:00 USA ISM Non-mfg business index (May) 42.4 - 45.2
14:00 USA Factory orders (April) 0.7% 0.4% -1.9 (-0.9)%

The dollar rose against the euro for the first time in five days on speculation an economic recovery will be too weak to sustain gains in higher-yielding assets such as stocks, encouraging demand for safety.
The greenback climbed against almost all of the most-traded currencies and the euro weakened as the contraction in the EU economy deepened in the first quarter.
The pound dropped the most against the dollar in almost two weeks on bets a three- month rally in European stocks outpaced expectations for earnings and economic growth.
European Union’s statistics office reported that gross domestic product in the euro area decreased 2.5% in the first quarter. It was the biggest economic contraction since the data were first compiled in 1995.
The Standard & Poor’s 500 Index declined for the first time in five days, losing 1.4% as ADP Employer Services reported U.S. companies cut 532,000 jobs last month. The median forecast of economists was for a reduction of 525,000.
A report from the Labor Department on June 5 will probably show the U.S. jobless rate climbed last month to 9.2%, the highest in more than 25 years.
The dollar also rose versus the euro after Reuters reported Asian central banks are likely to keep buying U.S. Treasuries to help maintain market stability. The news service cited officials and other people with direct knowledge of policy whom it didn’t identify.

EUR/USD printed highs on $1.4330 before rose back to $1.4100.

Resistance 3:Y97.80
Resistance 2:Y96.80
Resistance 1:Y96.40
Current price: Y96.29
Support 1: Y95.30
Support 2: Y94.50
Support 3: Y93.80
COMMENTS: Dollar continues to rangebound. Minor resistance is near session highs on Y96.40. Above the bullish momentum will strengthen up to Jun 01 high at Y96.80. Further rise may extend to Y97.80. Strong support is around Tuesday’s lows on Y95.30. Below correction may widen to Y94.50 and Y93.80.

Resistance 3:Chf1.0960
Resistance 2:Chf1.0860
Resistance 1:Chf1.0750
Current price: Chf 1.0665
Support 1:Chf1.0560
Support 2:Chf1.0480
Support 3:Chf1.0370
СOMMENTS: Techs on dollar hasn’t changed much. Strong support comes near channel line from Apr 22, coming today at Chf1.0560. Below losses may widen to Chf1.0480 and Chf1.0370. Resistance is near yesterday’s highs on Chf1.0750, further – on Chf1.0860 (Friday’s high). Next band of resistance is around Chf1.0960 (May 28 high and May 13 and 20 lows).

Resistance 3:$1.6660
Resistance 2:$1.6500
Resistance 1:$1.6340
Current price: $1.6285
Support 1: $1.6160
Support 2: $1.5850
Support 3: $1.5600
COMMENTS: The sterling retreats. Support comes at earlier broken resistance at $1.6160. Below losses may widen to $1.5850 (Monday’s low), and then – to $1.5600. Resistance is near $1.6340 (session high). Stronger level comes at $1.6490/00 (61.8% Fibo of yesterday’s decline). Above there is a chance to test Wednesday’s high at $1.6660.

Resistance 3: $1.4440
Resistance 2: $1.4340
Resistance 1: $1.4200
Current price: $1.4176
Support 1: $1.4100
Support 2: $1.4040
Support 3: $1.3860
COMMENTS: Euro retreated after recent rally. Minor resistance is at session highs on $1.4190/00. Stronger level is near channel line from Apr 28, coming at $1.4340. Break above that level points to further rise up to Dec 17 highs on $1.4440. Strong support comes at Jun 02-03 lows on $1.4100. Below losses may widen to $1.4040, then – to $1.3860 (lower bound of the channel).

High Low Close
EUR/USD 1.4335 1.4106 1.4161
GBP/USD 1.6658 1.6239 1.6315
USD/JPY 96.40 95.38 95.97
USD/CHF 1.0745 1.0601 1.0699

EUR/JPY 137.96 135.29 135.91
EUR/GBP 0.8693 0.8576 0.8677
GBP/JPY 160.44 155.69 156.59
GBP/CHF 1.7708 1.7398 1.7459

Change % Change Last
Nikkei +37.36 +0.38% 9,741.67
Topix +0.94 +0.10% 914.50
CAC -68.39 -2.02% 3,309.65
FTSE -93.60 -2.09% 4,383.42
DAX -89.53 -1.74% 5,054.53
Dow -64.99 -0.74% 8,675.88
NASDAQ -10.88 -0.59% 1,825.92
S&P -12.97 -1.37% 931.77
10yr Note -0.9300 -0.255% 3.551%
NYMEX Crude Oil -2.43 -3.54% 66.12
Gold -18.80 -1.91% 965.60

09:00 EU(16) Retail sales (April) adjusted 0.2% -0.6%
09:00 EU(16) Retail sales (April) adjusted Y/Y -2.9% -4.2%
11:00 UK BoE meeting announcement 0.50% 0.50%
11:45 EU(16) ECB meeting announcement 1.00% 1.00%
12:30 EU(16) ECB press conference
12:30 USA Jobless claims (week to 30.05) 617K 623K
12:30 USA Productivity (Q1) revised 1.3% 0.8%
12:30 USA Unit labour cost (Q1) revised 2.8% 3.3%
13:00 Canada BOC meeting announcement 0.25% 0.25%
20:30 USA M2 money supply (25.05), bln - +12.2