Archives of “June 2019” month

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40% of economists in WSJ survey see Fed cut in July

  
  Analysis

The latest survey from the Wall Street Journal

A monthly survey from the WSJ shows a shift towards rate cut expectations among economists. That fits in nicely with the Fed funds futures market pricing in a 81% chance of a cut in July and two-and-a-half cuts this year.
Economists almost always lag the market because of stubbornness and a desire to want clearer signals but the direction of change remains important.
Currently 40% of economists in the survey see a July cut while another 30% see a cut in September.

Lagarde: Eurozone growth has slowed, inflation is low. This requires policy coordination

  
  Analysis

Comments from the IMF leader

  • Risks to eurozone include escalation of trade tensions
  • Next EU Commission should come up with incentives for countries to pursue structural reform
  • There is a risk the eurozone could slip into a period of low growth and low inflation (isn’t that what we’re in now?)
  • Eurozone fiscal rules should be simplified, anchored to debt
We’ve heard this before. At some point there is going to be genuine reform in the eurozone but I dn’t think it’s coming soon.

Eurozone April industrial production -0.5% vs -0.5% m/m expected

  
Analysis, Economy

Latest data released by Eurostat – 13 June 2019

  • Prior -0.3%; revised to -0.4%
  • Industrial production WDA -0.4% vs -0.6% y/y expected
  • Prior -0.6%; revised to -0.7%
Yet another drop on the month for industrial activity but that falls in-line with expectations despite a notable drop in German factory activity in April. A minor data point but this feeds into overall sentiment of softer conditions in the euro area economy seen in Q2 so far.

Iran on oil tanker attacks: Suspicious doesn’t begin to describe what likely transpired this morning

  
Analysis, Crude

Iran’s foreign minister, Javad Zarif, tweets

Reported attacks on Japan-related tankers occurred while PM @AbeShinzo was meeting with Ayatollah @khamenei_ir for extensive and friendly talks.

Suspicious doesn’t begin to describe what likely transpired this morning.

Iran’s proposed Regional Dialogue Forum is imperative.

Despite the statement above, I reckon the US will no doubt start pointing the finger back to Iran in no time again much like before. Oil prices are still elevated on the day following the attacks earlier with Brent up by 3.5% to $62.05 currently.

Oil tanker which caught fire in the Gulf of Oman reportedly said to be struck by a torpedo

  
Analysis, Crude

According to a report by TradeWinds, citing industry sources

It is also being reported that two tankers were caught in the crossfire, not just one, and the crew were forced to evacuate them because of the incident. The headline will only serve to prove that Middle East tensions are still very much present and will continue to act as a tailwind for oil prices as we have seen earlier in the year.

Oil is still holding to the majority of its gains so far with both Brent and WTI up by more than 2.5% on the day. The latter is currently trading at $52.50.

Eurostoxx futures -0.3% in early European trading

  
  Analysis

Slightly softer tones observed in early trades

  • German DAX futures -0.2%
  • French CAC 40 futures -0.2%
  • UK FTSE futures -0.1%
This mainly mirrors the mood seen in US equity futures, which are down by about 0.1% to 0.2% as we begin the session. The overall risk mood is a bit softer as market participants continue to tread with caution.
I reckon the state of flux we’re seeing here will keep up until tomorrow – barring any fresh trade headlines that is – where US retail sales data will offer more clues for traders on how to go about with market direction.

Nikkei 225 closes lower by 0.46% at 21,032.00

  
Analysis, Global Indices

Tokyo’s main index slips alongside Asian stocks on softer risk mood

Nikkei 13-06

Tech stocks were the leading losers in the Nikkei today as Japanese stocks fell in general after a poorer performance by US equities in overnight trading.

Lingering global trade tensions and continued protests in Hong Kong isn’t helping with sentiment in the region but also the fact that US equity futures are down by 0.2% won’t help to alleviate the risk mood to start the European morning.
The yen is bid as a result though gains are more measured compared to what they were in early Asian trading. USD/JPY holds at 108.36 currently, off the lows earlier at 108.17.

China Daily reports economists expecting cuts to interest rates or RRRs in coming weeks

  
  Analysis

China Daily is an official English language newspaper owned by Communist Party of China

PBOC expected to cut interest rates or reserve ratio requirements
  • To counter “downside risks”
  • to maintain liquidity in the financial market
  • support infrastructure investment
We’ve been getting similar signals for various China sources (other papers, media, official comments etc) for a while now.
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