Relentless Market Pessimism

June 14, 2016

A slew of opinion polls in the U.K. elevate the risk of a vote to leave the European Union as a major newspaper endorses that choice.

The Federal Open Market Committee begins a two-day meeting today.  The Fed will release new macro forecasts after the meeting ends, and Janet Yellen will preside over a press conference.

The Orlando shootings promise to put the U.S. presidential campaign on an even nastier level.

10-year sovereign debt yields fell by six, four and one basis points in Great Britain, Germany and Japan.  In futures trading, the 10-year Treasury yield slid to 1.58% compared to 1.84% at the end of May.

West Texas Intermediate crude oil dropped 1.2% to $48.29 per barrel.  Comex gold is 0.2% softer at $1,284.60 per ounce.

Japan’s Nikkei dropped 1.0% and fell below the 16K level to 15,859.  Other stock markets around the Pacific Rim are down 2.1% in Australia, 1.2% in New Zealand, 0.6% in Singapore, and 0.5% in Hong Kong.  In Europe, share prices have dropped by 1.5% in France, 1.3% in Greece and Switzerland, 1.2% in the U.K., 1.0% in Spain and Italy, and 0.7% in Germany.

The dollar appreciated 0.7% against the kiwi, 0.6% versus the euro and sterling, 0.5% relative to the Aussie dollar, 0.2% vis-a-vis the loonie, and 0.1% against the yuan and Swissie.  The yen climbed 0.2% against the dollar.

British consumer prices rose 0.2% on month and 0.3% on year in May, a tenth percentage point less than expected.  0.3% matched the on-year pace in April.  Retail prices recorded a 1.4% on-year rise.  Producer output prices fell 0.7% in the year to May, same as in April, but rose 0.5% among core items in the index.  Producer input prices dropped 3.9% on year despite a 2.6% monthly jump.

The U.K. government’s house price index in April decelerated to a 8.2% 12-month rate of increase from 8.5% in March but was still higher than February’s 7.7% pace.

Industrial production in the euro area rebounded 1.1% in April after drops of 1.2% in February and 0.7% in March. April output exceeded the 1Q mean by 0.2% and its year-earlier level by 2.0%.

Employment in Euroland advanced 0.3% in the first quarter of 2016, the third quarterly increase of that size in a row, and was 1.4% greater than its year-earlier level.

Switzerland’s producer price/import price index rose faster than forecast in May, gaining 0.4% on month but posting a 1.2% on-year decline nonetheless.

Italian and Spanish consumer prices fell 0.3% and 1.0%  in the year to May, while Sweden’s and Finland’s CPI in the same span went up by 0.6% and 0.3%.

South Africa’s current account deficit to GDP ratio widened to -5.0% last quarter from -4.6% in the final quarter of 2015.

Small business sentiment in the United States improved to a 4-month high reading of 93.8 in May from 93.6 in April.  Still to come:  U.S. retail sales and import prices.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

 

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