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
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June 23, 2014

"There is uncertainty about the path of interest rates… because there’s uncertainty about the path of the economy"

— - Fed Chair Janet Yellen, at the press conference following the FOMC meeting (Wall Street Journal, June 18, 2014)

The week in review...

AMERICAS

US: Slower is better The Fed cut its growth forecast for 2014 from 2.9% to 2.2% but took another $10 bn out of its bond-buying program - a relief to those worried that the Fed would hike rates sooner than previously indicated.

Argentina: Debtor's prism For the owners of Argentina's bonds who haven't yet relinquished their claims, the US Supreme Court ruling affirming their right to collect and granting access to record that will help was welcome. But the stakes are arguably higher for Argentina’s government, which is short on the cash to pay up, and is contemplating another default – which could curtail what little access the country now has to international debt markets.

EUROPE

UK: Quick turn With inflation reaching 1.5% in May, lowest since Oct 2009, markets are re-reading Bank of England (BoE) Governor Mark Carney’s June 12 speech, in which he said a rate increase could come “sooner than investors expect.” BoE Deputy Governor Charlie Bean appeared to clear the way by calling any rate hike an indication that the economy is returning to normal. The British pound moved up from 1.6836 to 1.7039, with yields on UK 2-year notes up 35 basis points (bp) to 0.89% so far this year. The move could make the BoE the first major central bank to tighten since 2008.

Argentina: Debtor's prism For the owners of Argentina's bonds who haven't yet relinquished their claims, the US Supreme Court ruling affirming their right to collect and granting access to record that will help was welcome. But the stakes are arguably higher for Argentina’s government, which is short on the cash to pay up, and is contemplating another default – which could curtail what little access the country now has to international debt markets.

CHINA

Ratings reform A new move to enhance financial risk prevention: the Ministry of Finance will start a pilot program to rate local government bonds. The system accompanies granting permission to four local governments – Beijing, Jiangxi, Ninxia and Qingdao – to issue bonds directly. This may also help market transparency, allowing bond prices to reflect the new rating.

Economic progress Retail sales rose 12.5% in May year on year, to 2.12 tn yuan ($341 bn), an improvement from the previous month. Industrial production also rose, up 8.7% year on year. But fixed-asset investment growth slowed to 17.2% Feb through May, vs. 17.3% between Jan-April.

SIGNS OF THE TIMES:

Japan's Exports Decline in May on Weak U.S., Asian Demand – Bloomberg

U.K. Yuan Clearing Deal to Spur Trade, City of London Corp. Says – Bloomberg

German Investor Mood Drops Even as ECB Boosts Stimulus –Bloomberg

Housing Starts in U.S. Exceed 1 Million Pace for Second Month – Bloomberg

US share buybacks and dividends hit record –Bloomberg

Sources: Bloomberg, Reuters, Wall Street Journal, Financial Times, New York Times, Federal Reserve, Bank of England

...THE WEEK AHEAD:

GLOBAL ECONOMIC CALENDAR: June 22 – 27

 

U.S.

Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

Sun
Jun 22

 

 

 

Japan: Mfg PMI
China: Mfg PMI

Mon
Jun 23

Existing home sales

Argentina: GDP

Eurozone: PMIs
UK: housing prices

Hong Kong: CPI
Taiwan: Industrial production
Vietnam: CPI

Tue
Jun 24

Case-Shiller housing prices, consumer confidence, new home sales

Mexico: CPI, international reserves
Venezuela: GDP

 

 

Wed
Jun 25

Durable goods orders, GDP, personal consumption

Brazil: total outstanding loans

 

Taiwan: interest rates

Thu
Jun 26

Jobless claims, personal income and spending,

Brazil:  unemployment

Sweden: PPI

New Zealand: trade balance
Japan: jobless rate, CPI, retail trade
Hong Kong: exports
Singapore, South Korea: Industrial production

Fri
Jun 27

Consumer confidence

Brazil:  inflation

Sweden: retail sales
Norway: unemployment
UK: GDP
Eurozone: consumer confidence

Thailand: foreign reserves

Sat
Jun 28

 

 

 

 


Definitions:

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.

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

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. PMI greater than 50 indicated economic expansion; below 50, contraction.

Consumer and Producer Price Indexes(CPI,PPI) measure the average change in consumer and producer prices over time in a fixed market basket of goods and services.

The S&P/Case-Shiller Home Price Indices are the leading measures for the US residential housing market, tracking changes in the value of residential real estate both nationally as well as in 20 metropolitan regions.

A basis point (bp) is one one-hundredth of one percent (1/100% or 0.01%).

The Federal Open Market Committee (FOMC) is a policy-making body of the Federal Reserve Board ("Fed") system 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.


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Previous Editions

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Poll

Which Asian country will have the strongest growth in the coming year?








Poll

Which Asian country will have the strongest growth in the coming year?

Japan, as Shinzo Abe's policy initiatives take hold
(19%)
India, as Narendra Modi's new government enacts changes
(33%)
China, as Xi Jinping's reforms promote a stronger financial sector
(15%)
South Korea, as President Park Geun-hye's plan to boost growth bears fruit
(33%)



Previous month Poll

Go for growth: Where will a global recovery be strongest this year?

Europe, as countries emerge from bailouts
(43%)
US, as consumers regain optimism
(40%)
Japan, as stimulus programs begin to bear fruit
(7%)
China, as reform and pro-growth policies continue
(10%)