by Chris Becker
Macro Wrap
A quick update this morning on what happened Friday night, not that the market cared – all eyes were/are on Greece, not data!
Delusional Economics will have a wrap of the Greek action, but as he explained to me late last night, the real action remains in Italy and Spain – Greece is the sideshow, and is fulfilling a welcome role for the Troika so we don’t notice the nearly outright depressions in the much, much bigger EU nations.
What data did we get?
In Europe, the UK released their April merchandise trade figures, which were just woeful – with imports down 2.5% for the month, and exports slumping 8.6%! There is a definite deterioration there – but the same can’t be said, in aggregarate, where April EMU trade figures showed a yearly increase in exports, whilst imports slowed down over the month sharply (down 3%) This is not the sort of rebalancing required right now.
The real action was in the US, with the Empire State Manufacturing Survey (I like to average this out with the Philly Fed outlook, but even so, the print was only 2.3, less than half the bottom range of consensus. This is not good news:
And was followed by a very flat May industrial production print, down 0.1% (consensus was flat, so a wash really), but manufacturing continues to contract. Leading indicators in the US are pointing to a slowdown, with a sub-2% GDP probable soon, and no further recovery in headline job numbers the base case, for mind.
But markets don’t care about fundamentals – until they do. So on Friday, the mood was ebullient – particularly in the US – where the case of bad news is good news, because that means milkie wilkies.
What to expect today and tonight
Locally and regionally its a quiet day – thank Dog, I’m buggered after staying up all night just in case of volatility
There’s May car sales for Australia today, NZ PSI and their Westpac (which is our Westpac) Consumer Confidence report. Nothing else, and with the Greek election in the bag, and the windbags pontificating on the future of Greece, the bailouts, the life, uninverse and everything (and no, its not to get back to surplus, FFS) the SPI futures are up around 20 points for the ASX200 open at around 4080 points.
Still got time to get to eBay too – AUD is up above 1.01 again.
Here’s a Friday night quick snapshot – enjoy your day!
Bonds:
- US 10 year Treasuries yields fell back to 1.57%, whilst German 10 year bunds were also bid up, yields falling 5 points to 1.43%
- Spanish and Italian bonds recovered smartly – down 5 and 20 points (back below 6% for now) respectively
- Aussie 10 years were at 2.98% and will probably crack 3% again today on the general risk on mood
Currencies:
- US Dollar Index is down .36 points this morning, mainly due to the Pound Sterling, not Euro which is interesting. The Euro strengthened on the Greek election result but is only up slightly at 1.2638
- The big move was in the “I’m not a safe haven, but a speculators delight” Australian dollar which has jumped nearly 1 cent to be well over 1.01 against the USD this morning.
Equities:
- The Eurostoxx 50 finished up 1.5% on a completely green board on European bourses. T
- The German DAX was up nearly 1.5%, with the FTSE 100 flat on the trade figures
- In the US the Dow was up 0.9%, the broader S&P500 up 1% and the NASDAQ up 1.3%
Commodities:
- Commodities were relatively weak WTI Crude was flat at just over $84USD per barrel, ICE Brent up 0.4% to $97.61USD
- Gold (USD) as I mentioned in Trading Week (my last one in its current format by the by) has “broken out” kind of – its at $1628USD this morning – I would like to see a break above $1635 or so and some more momentum before shutting the gate. Other precious metals (except silver) were down
- Iron ore continues to bounce off the $130 support level, but paused on Friday at $135 per metric tonne.
You can find me on Twitter here.
Click here for our economic calendar.
Disclaimer: The content on this blog should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation, no matter how much it seems to make sense, to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The author has no position in any company or advertiser reference unless explicitly specified. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult someone who claims to have a qualification before making any investment decisions.