Monthly Archives: June 2010
Krugman Uses the “D” Word
It has only been two days since the wrap-up of the G20 meeting, but already, second-guessing has shifted into high gear. Two statements in particular caught the attention of the markets; the first of these, officially removed the concept of a global “bank tax” off the table. The second, put forward a timeline for reducing government stimulus spending. Continue reading
Less Money Needed!
There was encouraging news overnight as the ECB said it would lend banks less than analysts had predicted, showing signs that the European banking system may not be in as weak a state as the market thinks. In addition, German unemployment changed less than expected and the unemployment rate remained steady showing signs of economic stability. Euro zone CPI figures fell back to 1.4%, slightly better than analyst expectations. In the UK, consumer confidence figures fell to 6-month lows as residents prepare for budget cuts, and BOE policy-maker Adam Posen said that UK recovery is tentative and could risk sliding back into recession. Look for continued loose monetary policy unless inflation figures really heat up. In the US, the ADP employment change came in less than expected and could serve as a harbinger of Friday’s Non-Farm Payrolls report. Continue reading
European Banks Borrow Less Than Expected
The European Central Bank said today that it is making up to 131.9 billion euros ($161.5 billion) in loans available to European banks for the next three months. This is considerably less than expected and suggests that banks are in better financial shape than thought originally. Banks tomorrow need to repay 442 billion euros in 12-month funds, the biggest amount ever awarded by the ECB and a key plank in its efforts to fight the financial crisis last year Continue reading
Canada’s GDP Remains Unchanged
Statistics Canada reported that after seven straight monthly increases, GDP remained unchanged in April. Retail trade fell during the month, but these losses were offset by increases in mining, wholesale trade, the public sector and construction. Source: The Canadian Press Continue reading
Oil Falls Below $77
Oil fell to $76.79 in Europe today following yesterday’s stock market losses. News that Germany’s jobless rate declined to 7.5 per cent helped give European stocks a much-needed boost, although most Asian stock markets fell following a 2.7 per cent drop Tuesday in the Dow Jones industrial average Continue reading
EU fear of liquidity crunch exaggerated dollar falls
This week after the G20, the BIS argued that extremely low real rates have altered investment decisions, and is postponing the recognition of losses, increased risk-taking, as investors search for yield and encouraged high levels of borrowing. Continue reading
The Party’s Over!
This morning we are seeing a slew of consumer confidence figures coming out around the globe which are lower but largely in line with expectations. The Euro zone debt crisis is continuing to weigh heavily on the markets, and a leading economic index in China had its smallest gain in nearly 5 months, signaling that the Chinese economy may be slowing down. Later this morning we are expecting consumer confidence figures here in the US as well as housing price figures. These are expected to come in lower as well, as the removal of the home buying tax credit has caused demand to wane. Continue reading
China Growth Fears Push Down Bond Yields
Fears that growth in China is weakening and falling Asian stocks conspired with the on-going European debt crisis to give investors greater concern for the safety of US debt. As a result, two-year Treasury yields fell to a record low today while 10-year yields fell below 3 percent. “If you look at the Chinese stock market, it looks particularly ugly, and China has a tendency to lead in the ‘rest-of-the-world’ category,” said a trader in London. Continue reading
Japan’s Unemployment on the Rise, Spending Decreases
Analysts were caught off guard today on news that Japan’s unemployment rose to 5.2 percent in May from 5.1 percent the previous month. It was expected that unemployment would actually fall slightly to 5.0 percent in May. Continue reading
Pound Continues to Gain on Euro
The pound climbed to a 19-month high against the euro yesterday as nervous investor’s anxiously eye a deadline later this week requiring many European banks to repay loans taken out a year ago. The pound rose almost half a cent to 1.2327 euros, its highest level since the immediate aftermath of the financial crisis in November 2008. “Markets are tense going into the end of the long-term refinancing programme, along with [Wednesday's] three-month auction,” said John Hydeskov, senior currency analyst at Danske. Continue reading