Draghi, Yellen and Greece in the News

July 16, 2015

Not much data were released in Asia and Europe today.

ECB President Draghi’s press conference at 12:30 GMT will be dominated by questions about Greece.  As expected, ECB interest rates were left unchanged by the Governing Council.  The refinancing rate, deposit rate, and marginal lending rate stay at 0.05%, -0.20%, and 0.30%.

With violent protests outside the Greek parliament, lawmakers approved the austerity for a 3rd bailout deal by a vote of 229-64.  Many from Prime Minister Tsipras’ own party voted no.  Ecofin approved an EUR 7.0 billion bridge loan for Greece, enabling the EUR 3.5 billion debt payment to the ECB due next Monday to get paid.  It’s unclear what the ECB will provide in the short run from the ELA.  Greek banks and markets remain closed.

Fed Chair Yellen reprises her Humphrey-Hawkins testimony today before the Senate Banking Committee.

The dollar mostly rose overnight, with gains of 1.0% against the kiwi, 0.6% relative to the Swiss franc, 0.5% versus the euro, 0.3% against sterling, and 0.2% versus the yen and loonie.  The Canadian currency is hovering around a 6-year low following yesterday’s Bank of Canada interest rate cut and admission that Canada experienced a recession in the first half of this year.

Share prices in Europe have rallied 1.5% in France, 1.8% in Germany, 1.4% in Italy and Spain, 0.9% in Switzerland and 0.4% in Great Britain.  Stocks in the Pacific Rim rose 0.9% in India, 0.8% in China, 0.6% in Australia and Hong Kong, 0.7% in Japan and South Korea, and 0.4% in Singapore.

West Texas Intermediate crude oil rebounded 0.6% to $51.73 per barrel.  There is considerable U.S. congressional opposition to the Iran nuclear accord.  It’s unclear if a veto could be overcome.  Comex gold slipped by a further 0.4% to $1,144.40 per ounce.

Ten-year sovereign debt yields are up three basis points in Germany, two bps in the U.K., France, and Switzerland but down by 6 bps in Australia and 2 bps in Japan.  A rise at the open is indicated likely in the 10-year U.S. Treasury yield.

Consumer prices in the euro area were unchanged on month and up 0.2% on year in June, down from a 0.3% 12-month increase posted in May and 0.5% in June 2014.  Core inflation also slipped 0.1 percentage point to 0.8%.  Energy dipped 0.1% on month and fell 5.1% on year.  All other consumer prices were collectively unchanged on month and 0.9% higher on year.  Most members had positive inflation.  Cyprus was an exception with consumer prices there tumbling 2.1% from mid-2014 to mid-2015.

Euroland’s seasonally adjusted trade surplus of EUR 21.2 billion in May was at a 2-month low.  Exports fell 1.6% on month, while imports edged 0.1% higher.  The January-May surplus of EUR 94.9 billion on a non-adjusted basis was 57.6% wider than a year earlier on export growth of 5.3% and an import rise of just 0.9%.

New Zealand’s manufacturing purchasing managers index climbed 3.2 points to a 4-month high of 55.2 in June. 

New Zealand consumer prices rose 0.4% on quarter in 2Q, the most since 3Q13.  The year-over-year inflation rate of 0.3% was up from 0.1% in 1Q, which had been the lowest since the third quarter of 1999.

Expected Australian inflation accelerated to 3.4% in July, but consumer confidence there slumped 5.0% the same month.

EU car sales were 14.6% hgiher in June than a year before.

Swiss retail sales in May fell disappointedly by 1.4% on month and 1.8% on year.  Swedish consumer confidence in June eased to a 2-month low, scoring 97.9 after 99.0 in May.

The Italian trade surplus widened to EUR 4.27 billion in May from EUR 3.63 billion the month before.  Spain’s trade deficit in May amounted to EUR 1.65 billion, slightly less than a year earlier. 

Scheduled U.S. data today include Treasury-compiled capital flows, the NAHB housing index, and the Philly Fed manufacturing index, plus weekly jobless insurance claims.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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