by Chris Becker
Macro Wrap
Well another interesting night on world equity, debt and currency markets. If you’ve read this morning’s first op-eds and pieces from the usual suspects here, you could be forgiven for shouting like Hudson (h/t The Lorax) that’s its game over man, game over.
Let’s recap: last night the flash PMI (purchasing managers index – a survey of the chaps and chapettes who order stuff and move stuff around in private companies, ie real economic work, as opposed to unproductive selling of (mostly) existing houses to each other) surveys for May across the core states in Europe were dire indeed. Check out Delusional Economics here for a read – including info on Spanish debt auctions, the bank audit and the ESM.
The major news was the German readings were very disappointing, which spooked markets, as German remains the only economic powerhouse remaining in Europe. It is Europe.
The situation was reflected across the Atlantic, with the Philly Fed survey also disappointing (I like to average it against the Empire State survey which also recently disappointed), and the poor data trend was confirmed by a new trend in jobless claims, and its up:
So after all that, plus the weak Chinese flash PMI yesterday – which saw Chinese equity markets tumble, again – what did risk do? It ran home to mommy, is what it did.
- US equity markets were down 2% or more across the board – that’s a bingo move right there (2% plus down moves are not harbingers of rallies)
- European equity markets down about 1%
- World bonds were bid up – including some huge bids for Spanish and Portuguese debt
- Energies were all sold off – WTI below $79, ICE below $90 a barrel
- Gold was smashed – assaulted – down almost $40USD an ounce to $1566, alongside silver (below $27)
The specific details are irrelevant really, what matters is all this is because The Bernank said “nein” to more liquidity to bolster asset markets and instead went for a limp wristed extension of Operation Twist. No soup for you. Insert favourite metaphor here.
Luckily we don’t follow the rest of the world, so SPI Futures this morning are, wait a minute, down 30 points to open around 4050 points or so.
What to expect today and tonight
Regionally there’s no big data prints today, as the local boffins continue to go ga-ga over the recent Census release. If you have time continue reading the RBA’s recent Bulletin release, some good grist for the mill there.
You can find me on Twitter here sometimes. Been bloody busy lately, sorry for lack of tweets etc.
Click here for our economic calendar.
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