Two Geopolitical Risks and Little Else

June 13, 2016

Brexit fear is running high after Friday’s poll pointing to a likelier vote for Britain to leave the EU.

  • Sterling fell 0.6% against the dollar.  10-year British gilts are three basis points lower.  The Ftse dropped 0.7%.

The deadliest mass shooting in U.S. history at a gay nightclub in Orlando plays into Republican candidate Trump’s hands.  He reaffirmed his call for banning all muslims from the country.

  • Gold has risen 1.0% per ounce, while West Texas Intermediate oil fell 1.1% to $48.54 per barrel.
  • Share prices in the Pacific Rim closed down 3.5% in Japan, 3.2% in China, 2.4% in Hong Kong, 2.1% in Taiwan, 1.9% in South Korea, and 1.3% in Singapore.  Stocks in New Zealand and Australia lost 0.8% and 0.9%.
  • Equities in Europe are down by 3.0% in Greece, 2.3% in Italy, 1.5% in Spain, 1.4% in France, and 1.3% in Switzerland and Germany.
  • The dollar fell 0.8% against the yen, 0.3% versus the Australian dollar, and 0.1% relative to the kiwi.
  • The dollar has strengthened 0.2% against the loonie and Swissie, and by 0.1% against the euro.
  • The 10-year U.S. Treasury yield in futures trading is 1.62%.  Comparable German and Japanese sovereign debt yields are at just 0.02% and-0.17%.

China released several economic statistics.  Foreign direct investment, down 1.0% in May, posted the first on-year drop since December.  Industrial production rose 6.0% on year in May, similar to the 5.9% January-May on-year rise and same as April’s result.  Retail sales increased 10.0% on year, down from 10.1% in April.  And fixed asset investment in January-May was only 9.6% greater than a year earlier, down from on-year increases of 10.5% in January-April, 10.0% in full 2015, and 11.4% in the first five months of last year.

Other data reported today have been minimal.

The Japanese Ministry of Finance reported a deterioration of business sentiment among all large firms to -7.9 in the second quarter from -3.2 in 1Q.  Both manufacturing and non-manufacturing shared in this slide.

Ireland’s construction purchasing managers index weakened to an 8-month low of 55.9 in May from readings of 56.4 in April and 62.3 in March.

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


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