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But Pmis PointTitle:
Greek Chaos Continues But Solution Ultimately Found
- While waiting for the Greek election on 17 June we are likely to see continued high uncertainty and continued high stress in the markets. Things are likely to get worse before they get better.
- Amid this uncertainty, Greek citizens are likely to withdraw more money from their banks and this could escalate into a real bank run.
- A major game of chicken has started between the EU on the one hand and Greek politicians on the other.
- The EU is likely to stand firm on its demands for Greece to deliver austerity and give only a few concessions. The rethoric from the left coalition party Syriza is likely to continue to be fiercely against the EU as it is aiming to become the biggest party and get 50 bonus mandates for this.
- We look at three different post-election scenarios. ...
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Weekly Economic and Financial Commentary : 19/05/2012
U.S. Review
To QE3 or Not To QE3: That is the Question
- Some market participants are beginning to speculate about another round of quantitative easing. Although recent growth indicators have not been particularly stellar, the economy is still growing. Moreover, core CPI inflation in the neighborhood of 2 percent means that the threshold for more QE is relatively high.
- Overall, indicators were positive during the week. Housing starts increased by 2.6 percent in April, the Empire Manufacturing index improved to 17.09 in May from a 6.56 print in April and retail sales printed a 0.1 percent increase in April, in line with expectations.
To QE3 or Not To QE3: That is the Question
QE3 seems to have more lives that a cat; it comes back into the forefront of the U.S. economy discussion ...
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Dukascopy Morning Forex Overview : 08/05/2012
Fundamental Analysis
EUR
" show that despite the crisis in the euro area, Germany is growing and benefiting from a revival in international trade."
- Klaus Baader, senior economist at Societe Generale SA
German factory orders rose by more than forecast in March, a sign Europe’s largest economy is weathering the debt crisis.
USD
"From where we sit right now, we think the economy looks fundamentally stronger."
- Marisa Di Natale, an economist at Moody’s Analytics in West Chester
U.S. stocks closed mixed on Monday after Francois Hollande was elected as a French president and Greek voters turned to antibailout parties.
GBP
"… the challenging economic backdrop suggests that a significant acceleration in prices or activity is unlikely in the near term."
- Robert Gardner, Nationwide’s ...
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Gloom builds for euro zone, United States
(Reuters) - The euro zone economy worsened markedly last month and U.S. employers cut back on hiring, according to two reports on Friday that dampened hopes for gradual recovery on either side of the Atlantic.
In Europe, the purchasing managers indexes (PMIs), which primarily cover services, suggested a recession across the continent's currency union could now extend to mid-year and be deeper than previously thought.
The gloomy surveys clashed with the picture painted by European Central Bank President Mario Draghi, who on Thursday spoke of a gradual recovery taking place in the euro zone during the course of the year - although he did speak about risks.
In the United States, a government report showed employers added a disappointing 115,000 workers to payrolls last month and, ...
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Weekly Economic and Financial Commentary : 04/05/2012
U.S. Review
Modest Growth on a Broadening Base
- The underlying tone of the recent economic reports remains consistent with modest economic growth. Consumer spending ended the first quarter on a solid note and spending is now on track to grow at a 2 percent pace in the second quarter.
- Reports from the regional manufacturing surveys showed some weakness but the National ISM report came in stronger than expected. The nonmanufacturing survey, however, came in below expectations.
- Nonfarm employment rose by 115,000 jobs in April and the unemployment rate fell 0.1 percent to 8.1 percent.
Modest Growth on a Broadening Base
This week's ISM report came in better than expected, rising 1.4 points to 54.8 in April, which greatly relieves fears built up from the weaker factory orders ...
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ECB Meeting: No Cut in June
The ECB kept the leading interest rate unchanged at 1% as widely expected and did not discuss rate changes at today's Governing Council meeting. There was no change in the use of non-standard measures.
Overall, the tone at the press conference was slightly 'hawkish' compared with consensus expectations. The ECB still considers monetary policy to be very accommodative and there were no 'signals' of further stimuli.
The deterioration in PMIs in April has not caused a change in the ECB's growth outlook, which remains a gradual recovery in the second half of the year. The ECB President acknowledged that the downbeat PMIs highlight the prevailing uncertainty.
Mario Draghi underlined that when he recently referred to the need for a 'growth compact' this was not a call for short-term stimuli ...
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ECB Preview: Mixed Growth Signals Not Enough to Trigger Rate Cut
ECB Preview: Mixed Growth Signals Not Enough to Trigger Rate Cut
- Recent economic data is mixed, but not so weak that it will trigger a rate cut, in our view. The ECB remains in “wait-and-see” mode as it assesses the impact of the two 3Y LTROs. We expect the ECB to keep rates unchanged until early mid-2014.
- In our view, Mario Draghi's new outspoken focus on growth is not an early signal of a June cut, but rather a hint to the euro area political leaders that the ECB will support public investments in infrastructure projects.
- Headline inflation has remained stubbornly high due to higher energy prices and indirect taxes. This diminishes the likelihood of a rate cut. In the coming months inflation is likely to climb back to the March level. Inflation should remain above target ...
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US: Super Strong ISM
US: Super Strong ISM
- The US ISM index surprised on the upside rising to 54.8 in April from 53.4 and the details were strong. This comes despite negative seasonal distortions.
- Both the new orders and employment indexes rose while inventories declined. New orders are now at their highest level since April 2011. Furthermore, fundamentals are supportive for additional improvement in the ISM index in the coming months.
- Today's release combined with yesterday's positive Senior Loan Officer survey leaves us confident that the weakness in Q1's business investment was a one-off.
Details
The ISM increased to 54.8 from 53.4 suggesting manufacturing production growth staying around the hefty 7% AR seen over the past three months. We had expected a decline in the index given ...
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Market Drivers - Currencies : 30/04/2012
Today's Comment
The early FX market is somewhat calm these days because of 'golden week' in Japan. This may result in some hunt for stop/loss in a thin market with resulting extra intraday volatility.
Today, the focus of attention is on GDP from Spain, Chicago PMI as well as PMIs from China tonight. Especially the PMIs from China will be interesting. Our macro-economic research team states:
We anticipate an increase in the PMI index due to improvement in industrial production, retail sales and lending growth in March and that the PMI indices still look rather robust.
We see it as an expression that economic growth is close to bottoming out this time around and that the government, as indicated on several occasions, will stimulate the economy through fiscal and monetary policy to a ...
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