Friday, May 27: Five Things the markets speak of
Directionless linked the Beach trading continues to dominate the work ahead of the holiday weekend in the US and the UK as the nature of trading in May, without momentum, investors are wary of banding on new positions aggressive.
Even with the slight increase in the rhetoric of the Fed "hawkish" dollar "big" continues to struggle to get out of its recent range among the major pairs ahead of events and data decisive commercially holiday shortened week in the US next week.
Financial markets await US employment data for May, scheduled for June 3 and a speech from the President of the Federal Reserve Janet Yellen scheduled for June 6. They are also looking at the floor Yellen more later today when speaking at Harvard University. Traders are increasingly anticipating connotation "pacifists" of the Presidency of the Fed to overshadow some rather hawkish comments of his colleagues in recent days.
Day 2 1. G7 rhetoric
The market was always going to be worried about what could be said, but they should not have been. Investors were served more of the same "nudge, nudge, wink, wink" rhetoric, peppered with a few treats.
The usual communiqué noted the downside risks to the economy World. collectively pledged to stand by Members with a coordinated response to economic conditions, while recognizing that the policy would be tailor-made according to the conditions of each country. Top of their agenda was Brexit threat to growth.
not a surprise, G7 leaders have spoken out against disorderly currency movements, called to refrain from competitive devaluation. in reality, there is not a country that will not manipulate the rate if they believe it would be beneficial to their economies.
There was little mention of US-Japanese tensions that emerged during meetings last week where the two parties disagree on what is a disordered movement in the currency market.
2. Japan remains in deflation despite negative rates
negative interest rates have supported the Japanese economy PM Abe so far in 2016. the problem for the government is that Japan's inflation readings continue to trend in the wrong direction.
The data showed that the domestic basic night-April CPI fell for the second consecutive decrease (y / y -0.3% against -0.4% E), while the May reading Tokyo slipped further into the "red" (- 0.5% fourth decline in a row, three-year low against -0.5% e).
With analysts expect the Japanese economy to contract in Q2, there is further speculation that the Abe government will postpone the second round of the increase in sales tax scheduled for April 2017. The reports of "deflation" signal suggests that the delay could be as long as two years, and an official announcement could come within days.
3. Strong week for sales of U.S. debt
U.S. sale of treasury debtYesterday completed the treble. Despite the rhetoric from the Fed this week "hawkish" It was an impressive week for sales of U.S. debt There was a high demand right along the curve (2, 5 and 7 years of debt).
+ $ 28b auction yesterday's 7-year product attracted 17% direct auction, the most in 10 months, while indirect bids - a proxy for foreign demand -Is an impressive + 65%. With NIRP dominant global procedures abroad continues to travel the world for a "positive" return. Strong demand even came as bond yields fell before the sale. The run-up in short-term yields were American products more attractive to foreign buyers
Currently, the US debt keeps its recent price hikes - 2'S :. At -4bps + 0.88%, 10 -5bps: + 1.82%, 30: -4bps to + 2.63%, 2/10 spread :. + 1bps 0.96%
4. Global Trading Flatline before Yellen
It is not a surprise to see actions world were little changed ahead of comments from Fed Janet Yellen later this morning which could offer clues on the timing of the next rise in US interest rates.
Before the open stateside, Euro indices are trading flat following a small positive, albeit slight trade Asian session. Yellen of the Fed is expected to provide midday remarks at Harvard University.
The market wants to see if it will "follow the party line" and repeat the comments of some of his colleagues that US policymakers could soon raise interest rates.
The WSJ dollar Index was up nearly 3% this month as investors considered the prospect of higher rates in June or July
Indices. Stoxx50 -0 2% in 3055, flat FTSE 6426, DAX -0.2% to 10,251, the CAC-40 -0.2% in 4470, IBEX-35 -0.2% in 041, -0.5% in FTSE MIB 18,110, SMI + 0.6% in 8278, S & P 500 Futures flat.
5. Commodities
The great story this week on the front commodity was the fact that crude prices finally broke through the psychological $ 50 handle. - a seven-month high
Until now, these gains was short-lived. the light crude (WTI) slipped 0.8% to $ 49.09 a barrel, while Brent is off -1.27% to $ 48.96. Crude prices rose nearly 3% this week, supported by a drop in US oil inventories and production.
The market focus will now downgrade OPEC and its June meeting 2. The members are not likely to set a production target, but stick with the Saudi market strategy " foreclose its rivals. "
However, on the other hand is up + 0.1% to $ 1211.68, but still rides his three-month low on the back of a "hawkish" Fed.
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