Fresh Worries about Iraq and Ukraine

June 25, 2014


Risk-off psychology staged a return.  Stock prices and sovereign debt yields are lower.  So are emerging market currencies like the Indonesian rupiah.  However, the dollar is generally steady, and oil and gold prices are higher.

  • Sunni rebels control more of Iraq territory.
  • The cease-fire in Ukraine was violated by pro-Soviet rebels.
  • U.S. 1Q GDP is expected to be revised to a bigger contraction of nearly 2%.
  • The New York Federal Reserve President implied that a fed funds rate hike will happen by mid-2015.
  • Britain’s distributive trades index fell sharply to +4 in June from +16 in May.
  • Lower readings for June were reported in French business sentiment (98 after 99) and Italian consumer confidence (105.7 after 106.2).

The dollar is unchanged against the yen, loonie, euro and Swiss franc.  It edged up 0.1% versus the Aussie dollar, yuan, and sterling. The kiwi rose 0.2%.

Japan’s Nikkei fell 0.7% in spite of the highest rate of service-sector producer price inflation (3.6% in May) since January 1991.

In European bourses, the Paris Cac, British Ftse, Spanish Ibex and German Dax are down by 0.8%, 0.7%, 0.7% and 0.5%.  Stocks fell 0.6% in Australia, Indonesia and South Korea and by 0.5% in China.

Ten-year British gilt and German bund yields dropped by 3 and 1 basis points.  The U.S. Treasury yield is indicated likely to dip as well.

Gold is up 0.6%.  Oil is up 0.5%.

The UBS gauge of Swiss consumption increased to 1.77 in June from 1.68 in May.

German consumer confidence improved to a 7-year high of 8.9 from 8.6.

Dutch real GDP contracted 0.6% last quarter and showed no on-year growth.

Italian retail sales rose 0.4% on month and 2.6% on year in April.

South Korean consumer sentiment rose two points to 107 in June.

Commerce Department officials attempted to quash speculation that a 40-year ban on U.S. oil exports is about to be lifted.

In Japan, there seems to mounting support for a cut of corporate taxation to below 30%.

U.S. durable goods orders, like GDP, get released today.  Both measures are expected to disappoint.

Copyright 2014, Larry Greenberg.  All rights reserved.

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