Risks Are Increasingly To The Upside

The Weekly Bottom Line : 19/05/2012 HIGHLIGHTS OF THE WEEK United States - Global economic concerns ratcheted up this week. Widespread discussion of a Greek exit continued, Spanish banks faced rating downgrades and periphery sovereign debt yields moved higher. - Financial markets have responded to these global worries with increased risk aversion. The S&P is poised to end the week 3% lower, and 10-year treasuries are yielding just 1.7%. - U.S. economic data has proved somewhat more encouraging, but growth is still struggling to breakout beyond a moderate pace. This has kept the possibility of additional monetary stimulus alive even if the threshold remains quite high. Canada - Recent economic indicators are showing a resurgence of strength in the Canadian economy. Strong ...

(Reuters) - Gold steadied in Europe on Thursday after falling to a four-month low in the previous session, as an uptick in the euro after Spain moved to clean up its banks and Europe's bailout fund approved a key payment to Greece took some pressure off prices. While the euro zone debt crisis is continuing to simmer, moves to address some of its problems are improving appetite for assets seen as higher risk, like stocks and commodities, as well as the single currency. Spot gold was at $1,589.40 an ounce at 05.26 a.m. EDT against $1,590.45 late on Wednesday, when it fell as low as $1,579.30 an ounce, its weakest since early January. Prices have fallen 3 percent this week as concerns over the euro zone debt crisis pressured the euro and other risk assets. While investors bought gold as a ...

The Week Ahead Highlights UK Q1 GDP to put the brakes on more QE French political risk comes to a head Italy and Spain turn attention to fiscal targets BOJ to back up rhetoric with action FOMC still in wait-and-see mode Market Moves UK Q1 GDP to put the brakes on more QE The major data release in the UK this week will be the preliminary Q1 GDP reading. There is considerable uncertainty around this figure due to some strong data in the services sector, especially retail sales, balanced by some disappointments in the manufacturing and construction sectors. Retail sales for March rose 1.5%, more than the 0.4% expected. This was mostly due to the effects of good weather boosting demand for clothes, footwear and gardening equipment. This helped to reverse some of the ...

The European Central Bank held interest rates at a record low of 1 percent on Wednesday, resisting German pressure to flag an exit from its crisis-fighting mode while support measures take full effect and support an increasingly shaky recovery. A batch of grim economic indicators and renewed concerns about the public finances in Spain - the euro zone's fourth-largest economy - have fuelled worries that the euro zone is in recession and that the sovereign debt crisis may flare up again. "Downside risks to the economic outlook prevail," ECB President Mario Draghi told a news conference after the bank held rates, as expected. Germany's powerful Bundesbank has led a push by central bankers from the euro zone's core for the ECB to begin preparing an exit from crisis measures that have seen ...

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) WORLD Currency markets were mostly indecisive during the Asia session despite the brief episode of dollar buying when Richmond Fed President Lacker explained why he dissented again at Tuesday’s FOMC. Even before this, Lacker had revealed his preference for a rate hike in 2013, but this time the FX reaction was more apparent. We see this as a sign that Fed policymaking has overtaken Greece-related issues, and now occupies centre stage in the minds of investors. As a result, the behaviour of US yields seems likely to become an increasingly important driver of FX markets. Oil continues to exert a secondary influence. Newswires reported that discussions are underway to release crude from the strategic oil reserves of developed economies, but that ...

(Reuters) - Oil eased in volatile trading towards $123 a barrel on Tuesday as concerns over global economic growth trumped the supply risks and tension associated with Iran's controversial nuclear work. Brent crude fell 66 cents to $123.12 a barrel by 1009 GMT after climbing to a daily high of $124.39. U.S. crude slid 62 cents to $106.09. "On the one hand, the market is trading already on the expensive side. Given mixed economic data, the upside potential for prices from here should be limited," said Tobias Merath, head of Global Commodity Research at Credit Suisse Private Banking. "At the same time, geopolitical risks are a growing concern, preventing prices from easing. Overall, we think price risks are slightly skewed to the upside due to strong technical momentum and a positive ...

(Reuters) - Asian shares fell on Monday, as investors turned cautious about riding further on liquidity-driven optimism without seeing more evidence of firmer global growth and on concerns about the impact of a slowing Chinese economy. Market sentiment has been improving since late last year as major central banks around the world flooded the financial system with ample funds to stave off fears of a credit crunch, allowing money to flow into a broad range of assets. But while recent U.S. data suggesting a recovery has prompted investors to shift their focus towards economic fundamentals and away from long-running troubles in the euro zone, they remain watchful of developments in the debt crisis and also rising oil prices. "Markets seem to be in a holding pattern. Investors are waiting ...

The Weekly Bottom Line : 11/02/2012 HIGHLIGHTS OF THE WEEK United States Negotiations between Greece and its international lenders kept financial markets switching the risk button on and off throughout the week. A parliament vote on further austerity measures has been scheduled for Sunday; if it fails, Greece could default in March. In the U.S. initial jobless claims declined, bringing total claims down to levels not seen since September 2008. A $25 billion deal between the White House and five leading commercial lenders was announced on Thursday. It will help underwater homeowners to refinance their loans. It is a positive step, but arguably one with limited macroeconomic impact. Canada Canada's trade surplus more than doubled in December, on the back of a sharp 4.9% ...

A few months ago economists were all but certain the U.S. economy would slow sharply at the start of this year, with many warning that recession risks were growing. That pessimism has been shaken off by a string of surprisingly solid data that paint a picture of an economy with building momentum. The jobs market is picking up, manufacturing is accelerating and the service sector is also flexing its muscle - good news for President Barack Obama, who faces an election battle in November. "We were among those people that had been expecting growth to slow. It now seems a lot less likely," said Jeremy Lawson, an economist at BNP Paribas in New York. The main reason for this newfound optimism is rising employment, which should help support the consumer spending that drives two-thirds of U.S. ...