The best chart to visualize the Euro madness 👇 During comparable time as under single currency Italian Lira lost 83% against German Mark, now they are pegged. I almost feel sorry for Lagarde & Co. trying to fix the unfixable.
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rssFinnish President, Sweden’s King swiftly leave Baltic Sea island as Russian navy approach
Via UK media:
- President of Finland and his wife abruptly flew out off the Baltic island chain
- Strategic Åland islands are a demilitarised and vulnerable region of Finland
- Hours before Putin had issued veiled threat about retaking Russian lands
- Russian navy had been spotted in the Baltic near the undefended islands
- The Baltic has been very tense since Finland and Sweden applied to join NATO
And:
- innish President Sauli Niinistö and wife Jenni Haukio… had been due to have dinner with Sweden’s King Carl Gustav XVI and Queen Silvia but that was cancelled.
- Sweden’s royal pair stayed on and attended the opening of an evening concert but left part-way through
And:
- Local news sites reported Russian frigates had begun a drill in the Baltic Sea off the enclave of Kaliningrad. Nato are also conducting exercises in the region.
There is not much margin for error in this ongoing tension.
OIl – France, Britain & Germany say they condemn Iran’s actions in response to a IAEA
France, Britain and Germany:
- condemn Iran’s actions in response to an IAEA board resolution, they say Iran aggravates the situation and complicate efforts to return to the nuclear deal
- Iran’s actions exacerbate the situation and complicate efforts to restore full implementation of the 2015 nuclear deal.
- Iran’s actions cast further doubt on its commitment to a successful nuclear deal outcome.
Background is that IAEA Director Grossi said Iran told IAEA it plans to disconnect 27 IAEA cameras as of today. Grossi says not restoring monitoring in the next 3 or 4 weeks could be fatal for the Iran nuclear deal.
Yellen says inflation is clearly a major problem, it’s what I’m most focused on
- I don’t think we’re going to have a recession, there is nothing to suggest a recession is coming
- says she believes there is a path through this to a soft landing
- oil prices could go higher
there’s recession risk of course, I don’t think that it’s the most likely outcome
See risks of higher energy and food prices
This from Wednesday US time along the same lines:
US stock indices close at session lows NASDAQ down -2.75%
- Dow industrial average -638.11 points or -1.94% at 32272.78
- S&P index -97.97 points or -2.38% at 4017.81
- NASDAQ index -332.04 points or -2.75% at 11754.24
- Russell 2000-40.15 points or -2.12% at 1850.85
The top 3 Dow decliners were:
- Boeing, -4.19%
- Walt Disney, -3.8%
- Apple -3.6%
The only gainer in the Dow 30 was Home Depot which rose 0.82%.
Big losers today included:
- Novavax, -17.22%.
- Moderna, -9.76%
- Block, -9.69%
- Beyond Meat, -8.74%
- Alibaba, -8.13%
- Nio, -7.7%
- DoorDash -7.14%
- Roblox, -6.98%
- GameStop -6.93%
- AirBnB, -6.5%
Big gainers included:
- chewy, +2.83%
- Fortinet, +0.99%
- Costco, +0.87%
- Home Depot, +0.82%
- Whirlpool, +0.15%
- Bristol-Myers Squibb, +0.03%
Thought For A Day
European major indices close down sharply
The m Germanyajor European indices are all closing lower on the day. The declines are led by the German DAX which is down -1.7% and Italy’s FTSE MIB which is down by a similar amount. A look at the closing levels shows:
- German DAX, -247.19 points or -1.71% at 14198.81
- France’s CAC -90.17 points or -1.4% at 6358.47
- UK’s FTSE 100 -116.81 points or -1.54% at 7476.20
- Spain’s Ibex, -131.5 points or -1.49% at 8711.21
- Italy’s FTSE MIB -122 points or -1.75% at 23813
In the European debt market, benchmark 10 year yields moved sharply higher with the Italian 10 year rising by 22 basis
points to 3.696%.
Looking at the Italian 10 year yield, it traded to the highest level since November 2018, and is entering a swing area between 3.679% and 3.850%. The 50% midpoint of the move down from the 2012 high yield comes in at 3.891%. Since the low yield in January 2021 near 0.472%, the yield has moved up 324 basis points.
ECB sources: some ECB policymakers wanted a 50 basis point hike in July
The regular ECB sources comments are coming out. They say:
- Some ECB policymakers at Thursday’s meeting wanted a 50 basis point hi already in July
- Large majority of ECB governing Council was against making announcement on fragmentation fighting tool
The EURUSD remains nearer the low extremes since May 23.
EURUSD still trades nearer the lower extremes
ECB forecasts see 2022 inflation at 6.8% vs 5.1% in March
- 023 forecast 3.5% vs 2.1% in March
- 2024 forecast 2.1% vs 1.9% in March
Core HICP:
- 2.2% in 2022
- 2.8% in 2023
- 2.3% in 2024
GDP:
- 2022: 2.8% vs 3.7% in March
- 2023: 2.7% vs 2.8% in March
- 2024: 2.1% vs 1.6% in March
Inflation is projected to be slightly above target in 2024 at the end of the forecast period. The statement indicates the ECB will stick to gradual hikes for longer than the market believes.
The risk is that falling growth tanks demand. Those GDP forecasts look awfully rosy to me.
ECB the highlight of the agenda in Europe today
The euro is holding steadier ahead of the ECB policy decision later today, being the only currency to outperform the dollar in trading yesterday. That said, the gains are more measured and EUR/USD remains in consolidation ahead of the key risk event:
Risk tones were more sluggish yesterday as equities retreated, continuing the back and forth mood this week. That comes as Treasury yields rose once again with 10-year yields back above the 3% (currently at 3.038%). European bond yields also remain perky ahead of the ECB, awaiting tips about what the central bank may decide in July. 10-year German bund yields are at their highest since 2014, above 1.35%.