Stocks Up, and Peso Recovery Extended

June 26, 2017

Equities began the final week of the second quarter mostly on a rising note, with gains of 1.3% in Taiwan, 0.9% in China and Hong Kong, 0.6% in New Zealand, 0.4% in South Korea and 0.1% in Japan and Australia. Several markets were shut for the end of Ramadan. Share prices in Europe have advanced 1.5% in Italy, 1.2% in Switzerland, 1.1% in France, 0.8% in Germany and 0.7% in Britain.

The dollar fell 0.4% against the peso, 0.3% relative to the loonie and 0.1% vis-a-vis sterling but rose 0.4% against the yen and Swiss franc as well as 0.1% versus the euro, kiwi, and yuan. The Aussie dollar is steady.

West Texas Intermediate oil firmed 0.3% further after ending last week with a slightly better tone, but at $43.12 per barrel, the price is still rather low. Comex gold sank 1.1% to $1,242.10 per ounce, weakest since mid-May.

Ten-year German bund and British gilt yields are 2 and 1 basis points softer. Many central bankers speak today including Draghi and Kuroda.

The IFO German business climate index rose a half point to a new record high of 115.1 in June, prompting IFO officials to raise their GDP growth projections for both 2017 and 2018 and to declare that “Germany’s economy is performing very strongly.” Current conditions and future expectations each advanced.

Japanese corporate service prices slipped 0.1% for a second straight month. Their 12-month rate of increased dipped to 0.7% from 0.8%.

Japan’s index of leading economic indicators for April was revised lower as was the index of coincident economic indicators that month.

The Summary of this month’s Bank of Japan Board meeting, a pre-minutes if you will, concedes that the 2% inflation objective cannot be met in a short frame of time but advocates maintaining very accommodative QQE settings and avoiding any exit plan talks lest such spoil the effort to lift inflation expectations. While inflation remains near zero, stimulus is aiding economic growth and fiscal conditions.

The British Bankers Association estimated that mortgage approvals in May fell to an 8-month low of 40,347.

The Swiss current account surplus last quarter of CHF 11.12 billion was only half as big as in the previous quarter.

In May, producer price inflation decelerated to 4.1% in Finland and 5.3% in Spain on falling energy prices.

A political accord was reached between British Prime Minister May and the Democratic Unionist Party, a Northern Ireland regional group on whose support the Conservative minority government must get to govern.

In the Czech Republic, business sentiment improved a bit but was counterbalanced by a 10-month low in consumer confidence.

Three U.S. economic indicators will be reported today: durable goods orders, the Chicago Fed National Activity Index, and the Dallas Fed manufacturing index.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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