Market Talk – June 17, 2021

Posted Jun 17, 2021 by Martin Armstrong |

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ASIA:

China’s economy steadied for a second month, a sign that the post-pandemic recovery is in a more stable phase and that growth is slowly rebalancing toward the consumer. Industrial production rose 6.6% in May on a two-year average basis — which strips out the impact of last year’s pandemic — while retail sales grew 4.5%, about half of its pre-pandemic rate. Investment in fixed assets such as property and land was 4.2% on that basis in the five months through May, according to the National Bureau of Statistics. All of the figures were roughly in line with the previous month, suggesting the economy’s growth has stabilized.

India’s central bank, the Reserve Bank of India, is unlikely to react yet to multi-month high retail prices as economic recovery remains its prime focus amid the deadly second wave of the pandemic, Reuters reported. The annual retail inflation rate rose 6.30% year-on-year in May, up from 4.29% in April and sharply above analysts’ estimate of 5.30%. The wholesale price inflation rate rose 12.94%, its highest in at least two decades. The central bank earlier this month reiterated its commitment to keeping monetary policy accommodative as long as necessary to revive and sustain growth on a durable basis.

The major Asian stock markets had a mixed day today:

NIKKEI 225 decreased 272.68 points or -0.93% to 29,018.33
Shanghai increased 7.28 points or 0.21% to 3,525.60
Hang Seng increased 121.75 points or 0.43% to 28,558.59
ASX 200 decreased 27.20 points or -0.37% to 7,359.00
Kospi decreased 13.72 points or -0.42% to 3,264.96
SENSEX decreased 178.65 points or -0.34% to 52,323.33
Nifty50 decreased 76.15 points or -0.48% to 15,691.40

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00675 or -0.89% to 0.75450
NZDUSD decreased 0.00747 or -1.06% to 0.69951
USDJPY decreased 0.51 or -0.46% to 110.26
USDCNY increased 0.02467 or 0.38% to 6.46371

Precious Metals:

Gold decreased 40.14 USD/t oz. or -2.22% to 1,771.81
Silver decreased 1.12 USD/t. oz or -4.14% to 25.848

Some economic news from last night:

China:

House Prices (YoY) (May) increased from 4.8% to 4.9%

Japan:

Reuters Tankan Index (Jun) increased from 21 to 22

Foreign Bonds Buying decreased from 664.8B to 410.6B

Foreign Investments in Japanese Stocks decreased from 94.7B to -33.2B

Singapore:

Non-Oil Exports (YoY) (May) increased from 6.00% to 8.80%

Non-Oil Exports (MoM) (May) increased from -8.80% to -0.10%

Trade Balance increased from 5.412B to 5.754B

Unemployment Rate (Q3) decreased from 3.3% to 2.9%

Australia:

Employment Change (May) increased from -30.6K to 115.2K

Full Employment Change (May) increased from 33.8K to 97.5K

Participation Rate (May) increased from 66.0% to 66.2%

Unemployment Rate (May) decreased from 5.5% to 5.1%

New Zealand:

RBNZ Offshore Holdings (May) decreased from 44.90% to 44.20%

GDP (QoQ) (Q1) increased from -1.0% to 1.6%

GDP (YoY) (Q1) increased from -0.8% to 2.4%

GDP Annual Average (Q1) increased from -2.9% to -2.3%

GDP Expenditure (QoQ) (Q1) increased from -1.5% to 1.4%

Some economic news from today:

Hong Kong:

Unemployment Rate (May) decreased from 6.4% to 6.0%

Indonesia:

Deposit Facility Rate (Jun) remain the same at 2.75%

Lending Facility Rate (Jun) remain the same at 4.25%

Interest Rate Decision remain the same at 3.50%

Loans (YoY) (May) increased from -2.28% to -1.28%

EUROPE/EMEA:

UK inflation jumped to 2.1 percent in May, its highest level since before the pandemic, as much of the economy reopened from lockdown. A surge in fuel costs and rising clothing prices helped drive the Consumer Price Index to 2.1 percent in May, the highest since July 2019, up from 0.5 percent year-on-year and from the 1.5 percent recorded in April. Motor fuels surged 17.9 percent over the past 12 months, their biggest increase for more than four years, the ONS said, while clothing prices rose 2.3 percent, the most significant jump since 2018, as retailers scaled back discounting in the month after customers returned to shops.

The major Europe stock markets had a mixed day:

CAC 40 increased 13.61 points or 0.21% to 6,666.26
FTSE 100 decreased 31.52 points or -0.44% to 7,153.43
DAX 30 increased 17.10 points or 0.11% to 15,727.67

The major Europe currency markets had a mixed day today:

EURUSD decreased 0.00949 or -0.79% to 1.18962
GBPUSD decreased 0.00916 or -0.65% to 1.38973
USDCHF increased 0.00952 or 1.05% to 0.91843

Some economic news from Europe today:

UK:

Car Registration (MoM) (May) increased from -50.1% to 10.7%

Car Registration (YoY) (May) decreased from 3,176.6% to 674.1%

Italy:

Italian Car Registration (MoM) (May) increased from -14.5% to -1.6%

Italian Car Registration (YoY) (May) decreased from 3,276.8% to 43.0%

Italian Trade Balance (Apr) increased from 5.190B to 5.870B

Italian Trade Balance EU (Apr) increased from 0.38B to 1.01B

Swiss:

Trade Balance (May) increased from 3.773B to 4.948B

SNB Interest Rate Decision remain the same at -0.75%

Germany:

German Car Registration (YoY) (May) decreased from 90.0% to 37.2%

German Car Registration (MoM) (May) increased from -21.4% to 0.4%

France:

French Car Registration (MoM) (May) increased from -23.2% to 0.4%

French Car Registration (YoY) (May) increased from 568.8% to 46.4%

Spain:

Spanish Trade Balance decreased from -0.40B to -1.30B

Norway:

Interest Rate Decision remain the same at 0.00%

Euro Zone:

Construction Output (MoM) (Apr) decreased from 4.14% to -2.17%

Core CPI (MoM) (May) decreased from 0.5% to 0.2%

Core CPI (YoY) (May) increased from 0.7% to 1.0%

CPI (MoM) (May) decreased from 0.6% to 0.3%

CPI (YoY) (May) increased from 1.6% to 2.0%

CPI ex Tobacco (MoM) (May) decreased from 0.6% to 0.3%

CPI ex Tobacco (YoY) (May) increased from 1.6% to 1.9%

HICP ex Energy & Food (YoY) (May) increased from 0.8% to 0.9%

HICP ex Energy and Food (MoM) (May) decreased from 0.5% to 0.2%

ECB LTRO decreased from 330.5B to 109.8B

US/AMERICAS:

Yesterday, The policymaking Federal Open Market Committee (FOMC) unanimously left its benchmark short-term borrowing rate calibrated near zero. The FOMC stated inflation was “largely reflecting transitory factors” and brought forward the time frame to decide when it will next raise interest rates. However, the central bank has not mentioned when it will start cutting back on its aggressive bond- buying program. Markets reacted to the Fed news, with stocks falling on Wednesday and government bond yields higher as investors anticipated tighter Fed policy ahead, including the likelihood that the bond purchases will slow as soon as this year.

US inflation, which measures the rate at which the prices for goods and services increase, continued to surge in May as prices for used cars and energy picked up. Consumer prices jumped 5% in the 12 months to the end of May, marking the biggest year-on-year increase since August 2008, according to recent figures from the US Labor Department.

The Supreme Court voted this Thursday to maintain Obamacare. Justice Stephen Breyer ruled that states wishing to overturn the law did not provide proper evidence that they were harmed by the healthcare program. The program, formally known as the Affordable Care Act, was implemented in 2010 while current President Biden was acting as vice president under Obama. This marks the third time since 2010 that the US Supreme Court voted to uphold the program.

US Market Closings:

Dow declined 209.96 points or -0.62% to 33,823.71
S&P 500 declined 1.76 points or -0.04% to 4,221.94
Nasdaq advanced 121.67 points or 0.87% to 14,161.35
Russell 2000 declined 25.77 points or -1.11% to 2,288.92

Canada Market Closings:

TSX Composite declined 58.09 points or -0.29% to 20,172.87
TSX 60 declined 1.19 points or -0.1% to 1,211.76

Brazil Market Closing:

Bovespa declined 1,350.09 points or -1.04% to 127,909.4

ENERGY:

The oil markets had a negative day today:

Crude Oil decreased 1.71 USD/BBL or -2.37% to 70.4400
Brent decreased 1.74 USD/BBL or -2.34% to 72.6500
Natural gas decreased 0.018 USD/MMBtu or -0.55% to 3.2330
Gasoline decreased 0.0442 USD/GAL or -2.05% to 2.1120
Heating oil decreased 0.0489 USD/GAL or -2.32% to 2.0545

The above data was collected around 13:03 EST on Thursday

Top commodity gainers: Coal (1.36%), Feeder Cattle (0.24%), Rice (0.65%) and Milk (0.46%)
Top commodity losers: Palladium (-10.15%), Platinum (-5.64%), Soybeans (-4.56%), and Corn (-5.09%)

The above data was collected around 13:09 EST on Thursday.

BONDS:

Japan 0.060%(+1bp), US 2’s 0.2093%(+0.00%), US 10’s 1.4888%(-8.02bps); US 30’s 2.0860%(-0.12%), Bunds -0.1990% (+4.7bp), France 0.152% (+1.5bp), Italy 0.8215% (+4.37bp), Turkey 17.51% (+15bp), Greece 0.8020% (+5.9bp), Portugal 0.421% (+3.9bp); Spain 0.4280% (+2.75bp) and UK Gilts 0.768% (+2.7bp).