A quick review of the issues and events driving the markets this past week... and what's on tap for the week ahead.

Weekly Market Snapshot

May 26, 2015

"I would have to think very hard before repeating this in the current situation."

— German Finance Minister Wolfgang Schäuble, on whether he would reaffirm his 2012 statement that Greece won't default (Wall Street Journal, May 20 2015)

The week in review...


Greece: Crying Wolfgang? Negotiations on Greece's bailout continue, as do questions about the country's continued ability to make good on its debts. The four-month extension of Greece's bailout expires at the end of June: the next payment of €300 mn, to the IMF, is due on June 5, with another €991mn due by the end of that month – not counting the refinancing of €5.2 bn of Greek T-bills. Still more payments will come due in July and the following months; since it appears to be in nobody's interest to declare the battle lost, the impasse could theoretically continue past any one of these dates. Meanwhile, the ECB continues to keep Greece on a short leash by making weekly decisions about emergency loans and collateral discounts.

ECB: War on savers? Not so fast Complaints about rock-bottom deposit rates by the German Savings Bank Association, some reputable economists and some fringe political parties were answered directly in an ECB research paper asserting the ECB can only influence short-term rates. Longer-term rates, it claimed, are more important to savers, and are determined by market forces and economic conditions rather than by the ECB. Probably the most important thing about the study: that the ECB felt compelled to issue it.


Manufacturing slowdown China's manufacturing activity continued to contract in May, according to preliminary figures from a monthly survey by HSBC. The manufacturing purchasing managers' index (PMI) came in at 49.1 for May, slightly higher than April's 48.9, but still below the break-even level of 50 that differentiates expansion from contraction. Softer client demand both within and outside China were reflected in the figure, as were continued job cuts.


Growth outlook: Leading the witness The Conference Board's Leading Economic Index rose 0.7% in April, the most in nine months, notably better than expected, and faster than the previous month's upwardly revised 0.4% rise. Upside factors included the highest issuance level of homebuilding permits since June 2008. Seven of the ten components of the index contributed to the gain, including a drop in initial unemployment claims (now the lowest in 15 years) as well as low interest rates.

The Fed: The minutes flew by like hours The publication of the FOMC's April-28-29 meeting minutes was greeted by many with as combination of relief and indifference – mostly because it was read as confirming that a hike in the fed funds target rates is unlikely in June. The Fed noted the slowing pace of economic growth, despite the slight improvement in the overall employment environment.

Signs of the times:

Tourist Influx Is Helping Japan's Economy Amid Weak Local Demand – Bloomberg

India Bad Loans Seen Hitting 14-Year-High Amid Considerable Pain – Bloomberg

Draghi Call to Action Slow to Rouse Flush Corporate Treasurers – Bloomberg

US debt issuers unfazed by rate rise risk – Financial Times

Sources: Bloomberg, Wall Street Journal, Financial Times, New York Times, China Daily, Xinhua, MNI

...And the week ahead:




Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

May 24

Indianapolis 500 (auto racing)


Monaco: Grand Prix (auto racing)
Poland: presidential runoff
Spain: regional and municipal elections


May 25



Bank holiday

Japan: Trade balance

May 26

Durable goods orders, home prices in 20 US cities, new home sales, consumer confidence

Mexico: retail sales



May 27


Brazil: total outstanding loans

Dresden, Germany: G7 Finance Ministers meeting begins

China: industrial profits

May 28

Initial jobless claims, pending home sales


Eurozone: economic confidence
Spain: GDP
Italy: consumer confidence

Hong Kong: exports

May 29

GDP 1Q2015 (2nd estimate)

Canada: GDP
Brazil: GDP

Swiss, Italy, UK: GDP

Japan: consumer prices, unemployment, industrial production

May 30






The European Central Bank (ECB) is responsible for the monetary system of the European Union (EU) and the euro currency.

The International Monetary Fund (IMF) is an international organization of various member countries, established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements.

The Conference Board is a US-based business membership and research association. The Leading Economic Index (LEI) for the US is designed to signal peaks and troughs in the business cycle.

T-bills are sovereign debt with maturities of one year or shorter. The term usually refers to US debt, but is used informally to refer to other countries' short-term debt.

Sovereign debt refers to bonds issued by a national government in a foreign currency, in order to finance the issuing country's growth. Sovereign debt is generally a riskier investment when it comes from a developing country, and a safer investment when it comes from a developed country.

Gross Domestic Product (GDP) is an economic statistic which measures the market value of all final goods and services produced within a country in a given period of time.

Purchasing Managers Indexes (PMI) measure the manufacturing and services sectors in an economy, based on survey data collected from a representative panel of manufacturing and services firms.

The Federal Open Market Committee (FOMC) is a policy-making body of the Federal Reserve System (the Fed), responsible for the formulation of a policy designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.

The HSBC China Manufacturing Purchasing Managers Index is a private sector gauge of nationwide manufacturing activity. The HSBC name comes from the bank's origins as the Hongkong and Shanghai Banking Corporation.

G7 refers to Canada, France, Germany, Italy, Japan, United Kingdom, and United States.

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Previous Editions

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When will the Fed raise the Fed Funds target rate?


When will the Fed raise the Fed Funds target rate?

Not until 2016

Previous month Poll

Will the current wave of central bank easing jump-start the world's economies?

No - The real issues are structural - real progress on labor reform and regulatory excess will have more impact
No - Deflation is already taking hold, making monetary policy changes ineffective
Yes - The US model shows that monetary easing can help economies heal in the medium term
Yes, but it will take even  longer than it did in the US, and the delay will have a negative political impact