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

July 14, 2014

"The bank will continue to take measures to defend the interest of its clients."

— Email from Portugal's second largest bank, on steps taken to address debt securities payment delays, from its own parent company, that alarmed investors last week (Bloomberg, July 9 2014)

The week in review...


Portugal: So close and yet…The parent company of Banco Espírito Santo missed payments on its commercial paper to unnamed clients. Given the bank's exposure of €1.18 bn ($1.6 bn) to the parent, markets reacted with concern; yield on the country's 10-year sovereign debt rose above 4% for the first time since late March. European and US stock markets declined briefly on the news. Portugal's central bank asserted it is prepared to avoid "contagion risk" as the bank awaits the release of its parent's restructuring plan before assessing any potential losses. The events reminded investors that Europe's banking system may not be completely healed.

Greece: Bad timing The eagerly anticipated sale of fresh sovereign bonds ran right into the market's worries about Portugal.  The auction raised €1.5 bn ($2.04 bn), half the expected amount, and the average yield was 3.5%, worse than the 3% many expected.

United States

The Fed: Sticking to the script The central bank expects to complete its bond-buying "taper" just after its October meeting, as per its stated schedule, according to the minutes of its most recent FOMC meeting. The minutes characterized the schedule as a qualified vote of confidence in the economy. Financial markets took the news in stride, with the CBOE VIX volatility index only momentarily rising as high as 13 – which is a level associated more with complacency than concern.

Consumer credit: Coming around Excluding real estate debt, May saw a 7.4% annualized growth in consumer credit, to a record $3.195 tn. Most of the increase was in auto and student loans – this non-revolving credit rose at a 9.3% rate, while credit card debt rose at a 2.5% rate after jumping 12.3% in April. Revolving credit is growing faster than last year; in the first five months of 2014, it rose an annualized 4.1%, vs. 1.3% for the same period in 2013.


Currency reserves: Cash is king At an estimated $7.47 tn, total foreign currency reserves in Japan, China and the rest of Asia are larger than the rest of the world's $4.4 tn, according to recently released estimates. Asia accounted for more than 70% of the global increase in foreign currency reserves in 2013. These reserves are a mixed blessing; the flip side of increases in regional wealth is upward pressure on Asian exchange rates, putting the region's exporters at a price disadvantage and potentially slowing future export growth. 

Signs of the times:

Japan Firms Lift Investment Plans Even as Mood Weakens – Bloomberg

U.S. Companies Step Up Business Conducted in Yuan – Wall Street Journal

France Puts Euro Zone Recovery at Risk, Economists – New York Times

Crisis Haunting Spain as Loan Costs Threaten Growth – Bloomberg

Sources: Bloomberg, Reuters, Wall Street Journal, Financial Times, New York Times, Spiegel Online, Xinhua

...The week ahead:




Other Americas

Europe, UK, Africa, Mideast

Japan, Asia Ex Japan & Pac Rim

Jul 13


Brazil: World Cup (Argentina – Germany)



Jul 14



Eurozone: industrial production

China: new bank lending
Singapore: GDP

Jul 15

Fed Chair Yellen testifies at the Senate Banking Committee,
retail sales, import price index,
Baseball all-star game

Chile: interest rate decision

Germany: investor confidence
UK: inflation, producer prices, housing prices
Switzerland: producer, consumer prices
Italy: inflation
Turkey: unemployment

China: coal prices
Japan: interest rate decision

Jul 16

Fed Chair Yellen testifies at the House Financial Services Committee, industrial production, Fed Beige Book, producer prices, capital flows,

Brazil: retail sales

Eurozone: trade balance
UK: unemployment
Switzerland: ZEW survey

S. Korea: unemployment
China: home sales, power output, sale of 50 bn yuan of six-month treasury deposits

Jul 17

Housing starts, unemployment, building permits

Brazil, Argentina, Venezuela, Cuba: Chinese President Xi Jinping visits, through July 23

UK: British Open (golf), through July 20
European Union: car registrations
Eurozone: construction output
Poland: industrial output, producer prices
Russia: foreign currency and gold reserves

Hong Kong: unemployment

Jul 18

Consumer sentiment, leading economic indicators


UK: Bank of England lending trends report


Jul 19






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.

The CBOE Market Volatility Index (VIX) was introduced in 1993 by the Chicago Board Options Exchange (CBOE) to measure the implied volatility of the U.S. equity market.  The index is calculated in real time using the Standard and Poor' 100 Index (OEX) options.  The index is calculated by taking a weighted average of the implied volatilities of eight OEX calls and puts having an average time to maturity of 30 days.  Please note an investor cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses or sales charges.

The Federal Open Market Committee (FOMC) is a policy-making body of the Federal Reserve (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.
Tapering refers to the Fed's announced approach to reduce the pace of its monthly asset purchases gradually instead of ending the purchases all at once.

The Beige Book is a commonly used name for the Federal Reserve report, "Summary of Commentary on Current Economic Conditions by Federal Reserve District". It is published eight times each year, just before the Federal Open Market Committee (FOMC) meeting on interest rates, and is used to inform the members on changes in the economy since the last meeting.

The Centre for European Economic Research (ZEW) is a public-private institute associated with the University of Mannheim, Germany.

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Previous Editions

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