Continuing Deadlock over Greece Rattles Markets Badly
June 4, 2015
Ten-year sovereign debt yields rose 8 basis points in the U.K., 5 bps in Germany, and 4 bps in Japan. Futures put the 10-year Treasury at 2.42%, which like its German counterpart of 0.93% is at a new high for the year.
Share prices are down 2.6% in Greece, 1.8% in France, 1.7% in Germany, 1.5% in Italy, Spain and the U.K. and 1.3% in Switzerland. Equities fell 1.0% in India, 1.4% in Australia and 2.2% in Taiwan, but Japan’s Nikkei firmed 0.1%.
The dollar is currently down 0.6% against the euro after touching 1.1380. The greenback also shows overnight losses of 0.5% against the Swiss franc , 0.4% relative to sterling, and 0.2% vis-a-vis the yen, but rose 0.4% against the Aussie dollar.
West Texas Intermediate oil dropped 0.5% to $59.33 per barrel. Comex gold at $1,184.40 per ounce is steady.
Prime Minister Tsipras of Greece failed to budge from yesterday’s proposal to Greek creditors, rejecting a plan that imposes additional austerity on Greek citizens.
The Central Bank of Brazil’s monetary policy committee, Copom, hiked the Selic interest rate by another 50 basis points to 13.75%. This was the sixth consecutive meeting to tighten. Prior to late October 2014, the rate was at 11.0%, and the pre-April 2013 trough had been at 7.25%. Brazil is both in recession and experiencing decade-high inflation.
Euroland’s retail purchasing managers index rose 1.9 points to a 49-month high of 51.4 in May, thanks to a 3.2-point increase in the German retail PMI to 55.8. The French and Italian retail PMIs remained below the 50 no-change level at 48.7 and 48.3 despite advancing to their highest readings in 11 and 10 months, respectively.
Ireland’s services purchasing managers index climbed 0.8 points to a 3-month high of 61.4 and was accompanied by the best business sentiment sub-index in 15 months.
The German construction PMI dipped 0.2 points to a 4-month low of 50.8. The reading on input prices had the lowest reading in 17 months.
Australian retail sales stagnated in April, missing street expectations for a rise. Sales were 4.4% higher than in April 2014. The Aussie trade deficit widened more sharply than forecast in April, printing at A$ 3.888 billion after deficits of A$ 1.231 billion in March and $1.591 billion in February.
Finnish real GDP posted a quarter-on-quarter dip of 0.1% in 1Q, the same result as in the last two quarters of 2014. GDP was unchanged from the first quarter of last year. Dutch consumer price inflation nearly doubled to 1.1% in May. Prices rose 0.2% on month.
The Bank of England and Bank of Mexico are scheduled to make interest rate announcements later today; neither is expected to change policy.
Scheduled U.S. data releases today are quarter productivity and unit labor costs as well as weekly jobless insurance claims. The Canadian IVEY-PMI report also arrives.
Copyright 2015, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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