Top Things to Know Today - page 15
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Top 5 Things to Know In the Market on Thursday
1. Global stocks retreat in risk-off trade
U.S. stock futures pointed to a lower open on Thursday, as a recent rally that pushed the Dow and S&P back towards record highs ran out of steam.
Elsewhere, European stock markets were broadly lower, as appetite for riskier assets faltered amid growing concerns over the health of the global economy.
Earlier, Japan's Nikkei tumbled 1%, hurt by a stronger yen. Financial markets in Hong Kong and China were closed for holidays.
2. U.S. dollar bounces off 5-week lows
The U.S. dollar pushed higher on Thursday, after falling to five-week lows against a basket of currencies in the prior session amid diminished expectations for a Federal Reserve summer rate hike.
The dollar index rose 0.2% to 93.78 after dropping to 93.41 on Wednesday, a level not seen since May 6.
Investors all but ruled out a rate hike at the Fed’s June 14-15 meeting after U.S. employment data last week showed the economy added just 38,000 jobs last month, the smallest increase since September 2010.
Market players are pricing in just a 4% chance for a rate hike later this month and 27% for July, according to CME Group's (NASDAQ:CME) FedWatch tool. September odds were at about 44%.
3. Oil turns lower after scaling new highs
Oil prices gave back some of their recent gains on Thursday, as a rally which took prices to the highest level since July prompted market players to lock in gains in a bout of profit-taking.
U.S. crude rose to an 11-month high of $51.67, before turning lower to $51.03 a barrel during morning hours in New York, down 20 cents, or 0.39%, while Brent declined 36 cents, or 0.69%, to $52.15, after hitting $52.84.
4. European bond yields hit record lows
U.K. 10-year gilt yields fell 1.3 basis points, or 1.04%, to 1.242%. It earlier touched 1.224%, the lowest level on record.
Meanwhile, German 10-year bonds fell 1.7 basis points, or 28.33%, to 0.043%, after falling to an all-time low of 0.032% earlier in the session.
Demand for safe-haven assets mounted amid concerns over the health of the global economy and amid growing uncertainty ahead of this month’s referendum on the U.K.’s membership of the European Union.
5. ECB’s Draghi warns of economic risks
Speaking in the Brussels Economic Forum, European Central Bank President Mario Draghi brought home the disconnect between monetary and fiscal policy and insisted that governments needed to do more to support the euro zone economy.
Draghi promised that the ECB would not undershoot its inflation objection for longer than is avoidable, but urged others to ensure that “output is returned to potential before subpar growth causes lasting damage.”
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Consumer Prices in Germany Edge Up in May: CPI
The CPI in Germany inched higher in May on an annual basis, avoiding a fall into a second month of deflation, the final reading from Destatis revealed on Friday.
Consumer prices rose 0.1% in May on an annual basis, after the indicator booked a preliminary increase of 0.1% for the reported month.
In April, consumer prices had surprised markets with a 0.1% decline year-on-year, recording the first month in deflation territory since January 2015.
On a monthly basis, the CPI increased 0.3% in the fifth month of the year, while analysts had expected the same reading of 0.3%.
"The development of energy prices (−7.9%) had a downward effect on the overall rise in prices in May 2016, as had been the case in the preceding months. The year-on-year price decrease, however, slightly slowed for the third consecutive month. In May 2016, the price decrease among energy products was largest for mineral oil products (−14.9%; of which heating oil: −25.0%, motor fuels: −12.0%). The prices of other energy products were down, too (for example, charges for central and district heating: −9.2%; gas: −2.6%). Only the electricity prices were higher than in the same month of the previous year (+0.9%). Excluding energy prices, the inflation rate in May 2016 would have been +1.2%," Destatis noted in the report.
The CPI measures the movement of the overall price level, and it is measured on consumer baskets based on a sample of goods and services paid for by the population in Germany, while the central bank's target rate for CPI is usually set at the level of 2%.
5 Things to Watch on the Economic Calendar This Week
1. Fed June meeting
The Fed is due to make its latest monetary policy announcement at the conclusion of its two-day Federal Open Market Committee meeting on Wednesday.
The U.S. central bank is expected to keep interest rates on hold after the employment report for May showed the slowest rate of jobs growth since September 2010.
The Fed also to publish its latest economic forecasts and Chair Janet Yellen is to speak at what will be a closely watched press conference.
2. U.S. inflation data
The Labor Department is to publish the inflation report for May at 0830ET on Thursday.
The consumer price index is expected to have risen by 0.3% last month after a 0.4% gain in April, which was the fastest increase in more than three years.
3. Central bank policy reviews
The Bank of Japan is to announce its latest monetary policy decision at the conclusion of its policy meeting on Thursday. The BoJ kept monetary policy steady in April, surprising many investors who had bet on more easing and sending the yen higher.
Investors are expecting no change from the Swiss National Bank and the Bank of England at their rate announcements later on Thursday.
4. U.K. employment report
The Office for National Statistics is to publish its latest U.K. employment report on Wednesday.
Last month data showed that the number of people unemployed fell by 2,000 in the three months to March, while the unemployment rate held steady at 5.1%.
Investors will be looking for indications that uncertainty over whether Britain will remain in the European Union or not at a referendum on June 23 is affecting the labor market.
5. U.K. inflation data
The ONS is to release figures on consumer inflation for May on Tuesday.
U.K. consumer prices fell 0.3% in April, the first decline seven months, largely due to cheaper air fares after the Easter holidays.
The BoE said last month that it expects inflation to increase in the second half of this year.
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ICM Brexit poll shows 6 point lead for leave - Guardian
Could we finally have the result?
Reuters grabbing it too.
Confirmed by The Guardian.
The pound had a jump to a new 1.4328 high in cable but is back down to 1.4224.
Update: Bloody Bloomberg and Reuters have cocked it up and the 53% is for leave not remain
What a shower.
Reuters have pulled their headline (probably took it from Bloomberg). I've spared the Bloomies reporter's blushes.
Germany's 10-Yr Bund Yield Marks First-Ever Drop Below Zero
German benchmark sovereign borrowing costs reached a new all-time low on Tuesday and dropped below zero for the first time in history, as ongoing Brexit fears fuel investors' sentiment in safe-haven assets, while purchases made under the European Central Bank's (ECB) QE scheme continued to distort the whole market.
Yields on German 10-year bunds plunged almost five basis points to minus 0.018% during the European mid-day session, after dipping to minus 0.026% earlier in the day.
Their two-year peers burned more than two basis points to minus 0.570%, the lowest since early March, while on the long-curve, 30-year bund yields lost more than seven basis points to 0.554%, the lowest since April last year.
Germany's 10-Yr Bund Yield Marks First-Ever Drop Below Zero
German benchmark sovereign borrowing costs reached a new all-time low on Tuesday and dropped below zero for the first time in history, as ongoing Brexit fears fuel investors' sentiment in safe-haven assets, while purchases made under the European Central Bank's (ECB) QE scheme continued to distort the whole market.
Yields on German 10-year bunds plunged almost five basis points to minus 0.018% during the European mid-day session, after dipping to minus 0.026% earlier in the day.
Their two-year peers burned more than two basis points to minus 0.570%, the lowest since early March, while on the long-curve, 30-year bund yields lost more than seven basis points to 0.554%, the lowest since April last year.
Top 5 Things to Know In the Market on Wednesday
1. Fed to provide updated rate hike expectations
The Federal Reserve (Fed) will announce its monetary policy decision at 18:00GMT, or 14:00ET, along with an updated said of economic projections.
Though markets dismiss the possibility of policy tightening at Wednesday’s meeting, investors will pay attention to the dot plot that reveals Fed members’ expectations for the future path of rate hikes, with particular attention on seeing if they maintain the median forecast for two increases this year.
A half an hour later, Fed chair Janet Yellen will capture the markets’ attention with her press conference, with expectations for her to maintain a relatively dovish stance.
2. U.K. unemployment hits 2005 low amid Brexit jitters
The U.K. jobless rate unexpectedly dropped further to more than a decade low in April, bolstering optimism over the state of the British economy.
Nevertheless, market participants remained cautious ahead of the June 23 referendum on the U.K.’s membership in the European Union (EU) with fears that a decision to leave, known as a Brexit, could negatively impact not only the British economy and trade, but global financial market conditions.
In this sense, the employment data was particularly encouraging as many experts believe that uncertainty over the referendum outcome had caused many U.K. businesses to put hiring and new projects on hold.
3. Oil slides to 3-week lows on bets for U.S. supply gain
Oil prices added to overnight losses in European trade on Wednesday, sliding to a more than three-week low amid speculation weekly supply data due later in the session will show U.S. crude inventories rose for the first time in four weeks last week.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. oil inventories rose by 1.518 million barrels in the week ended June 10, disappointing expectations for a decline of 1.4 million barrels.
The U.S. Energy Information Administration will release its weekly report on oil supplies at 14:30GMT, or 10:30AM ET, amid expectations for a drop of 2.3 million barrels.
U.S. crude oil futures lost 1.15% to $47.93, at 9:57AM GMT, or 6:03AM ET, while Brent oil traded down 1.44% to $49.11.
4. Chinese shares still excluded from MSCI emerging markets index
Index provider MSCI Inc said that Beijing had more work to do in liberalizing its capital markets before it could add Chinese A shares to its emerging markets index.
However, China’s securities regulator assured investors that the decision would not affect efforts to both reform and further open the country’s capital markets.
5. Global stocks trade broadly higher with Fed on tap
Global stocks traded broadly higher on Wednesday while investors awaited monetary policy decisions from not only the Fed, but also from the Bank of Japan and the Bank of England on Thursday.
Chinese shares reversed earlier losses after the MSCI decision, apparently taking heart in the security regulator’s decision to move forward with progress in capital markets.
Elsewhere in Asia, Nikkei 225 ended the session with slight gains, while Australian stocks were the exception to the general rule, trading lower under pressure from losses in the Gold, Metals & Mining and Financials sectors.
European stocks traded sharply higher in midday trade, breaking a five-day sell off while waiting for the Fed decision.
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Final Q1 French wages data comes in as expected
Final Q1 release of French wages data now out 17 June 2016
EU Market Insight: Iceland and Switzerland Paving Way for Brexit
Almost lost in the UK's pre-referendum fever is an interesting piece from Switzerland: the upper house of the Swiss parliament chose on Wednesday to back the earlier March vote by the lower house and invalidate the 1992 Swiss bid to join the European Union. Switzerland, therefore, exited the EU before it could join it, just a week before Britons go vote.
Iceland also dropped its membership application last year.
Only "a few lunatics" may want to join the EU now, Thomas Minder, counselor for the state of Schaffhausen, told the Neue Zürcher Zeitung.
"Iceland had the courage and withdrew the application for membership, so no volcano erupted," another representative of Schaffhausen, Hannes Germann, added jokingly.
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France's Macron says Brexit would make the UK "a little country on the world scale"
French economy minister Emmanuel Macron speaking in Le Monde 18 June 2016
"Leaving the EU would mean the Guernseyfication of the UK which would then be a little country on the world scale. It would isolate itself and become a trading post and arbitration place at Europe's border"