Eurozone Slowdown Have Yet

Fundamental Analysis EUR "Equity markets are driven by two things: fundamentals and sentiment." - Lorne Baring, managing director at B Capital SA European stocks climbed on Friday after a report showed U.S. consumer confidence increased to the highest level in four years in May. USD "Confidence has been boosted by lower gasoline prices." - Paul Dales, a senior economist at Capital Economics Ltd. U.S. consumer confidence rose by more than expected in May as consumers became more optimistic on the outlook of the country's economy. GBP "The April producer price data … do little overall to reduce the uncertainty as to whether or not the Bank of England will eventually do more Quantitative Easing." - Howard Archer, an economist at HIS Global Insight U.K. producer prices rose by more than ...

Crude ended a six-day drop that was the longest since 2010 after the US jobless claims fell last week to a one-month low, yet concerns over energy demand persist after China’s slowing growth was confirmed by the trade balance data. Investors continue to be cautious as Greece’s political deadlock is still a major concern for markets since it puts the eurozone unity at risk and threatens the US recovery and China’s slower growth. China’s slowing growth was confirmed today by the trade balance report, which showed that exports were weaker-than-expected in April while imports unexpectedly stalled raising fears of a bigger slowdown in energy demand. However the jobless claims report eased of the pessimism that prevailed on markets this week, pushing the euro slightly higher around the 1.2955 ...

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 ...

Market wrap A disappointing US payrolls report hurt sentiment, pushing equities, risky currencies, commodities and interest rates lower. Only 115,000 jobs were added in April versus 160,000 expected. There were, however, positive back revisions and the unemployment rate fell from 8.2% to 8.1%, initially causing some confusion in markets before judgement was passed it was a weak outcome. Also reported was lower Eurozone manufacturing activity, adding to the negative market tone. The S&P500 closed down 1.6% and the CRB commodities index fell 1.4%. US 10yr treasury yields closed 5bp lower at 1.88%, earlier making a 3 Feb low at 1.87%. Australian 3yr bond yields fell 6bp. A few hours ago, results from European elections were announced. France has a new (socialist) president, and Greece's two ...

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 ...

As expected the RBA cut its growth and inflation forecasts for 2012 and 2013 in its quarterly statement on monetary policy, noting that earlier predictions were overly optimistic. Yet, the report was not as dovish as the market was expecting, thus the aussie jumped almost 30 pips immediately following its release. Domestically, the report towed a familiar line in terms of a two speed economy with the mining sector on one side and the rest of the economy on the other. The bank noted that the assumed high level of AUD and a weak short-term outlook for building construction are expected to weigh on non-mining sectors of the economy. Australia's labour market is a prime example of this, with softness in most parts of the economy being somewhat offset by increases in employment in the mining ...

Weekly Economic and Financial Commentary U.S. Review First-Quarter GDP Growth Slows The U.S. economy grew at a 2.2 percent annual rate in the first quarter, somewhat slower than the consensus had expected. Consumption remained the primary driver of growth as business spending slowed and the government sector continued to scale back spending. In our U.S. review section this week, we discuss the GDP report in the context of the big miss in durables and consider what it means for business spending going forward. We also look at a very small change in the Fed statement this week that reflects an improving view on the troubled housing sector. Business Spending Poised for a Slowdown? Durable goods orders for March were ugly. The 4.2 percent drop was the largest decline since the U.S. ...

U.S. Review Look Past the Monthly Volatility and See the Trend This week of economic releases painted a somewhat mixed picture, but the underlying trend still reflects an economy that is growing at a modest pace. The milder-than-usual winter likely brought some activity forward and below-consensus readings are due in part to payback. Housing starts, existing home sales and industrial production all posted disappointing readings in March that are likely not indicative of the underlying trend. Headline retail sales, however, came in more than double the consensus estimate in March, ending the first quarter on a positive note. Early Spring Brings Payback Period The full week of economic releases painted a somewhat mixed picture, but the underlying trend still reflects an economy ...

The Great Britain pound climbed today after a report showed that UK retail sales grew last month, following a decline in the previous month. The report made Britain’s assets more attractive to investors, who were worried about the economic slowdown in the United Kingdom. British Retail Consortium reported that retail sales were up 1.3 percent on a like-for-like basis in March from a year ago. The increase followed the drop by 0.3 percent in the previous month. Stephen Robertson, the Director General at BRC, warned against being too exited by the positive data: It’s worth remembering the sales comparison is against the weakest month of last year, largely caused by the movement of Easter in the calendar, and we’ll have to see whether this is additional spending or just shopping which ...