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Finnish President, Sweden’s King swiftly leave Baltic Sea island as Russian navy approach

  
Analysis, Politics

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.

Link here for more.

There is not much margin for error in this ongoing tension.

sweden finland russia nato 10 June 2022

OIl – France, Britain & Germany say they condemn Iran’s actions in response to a IAEA

  
Analysis, Politics

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.

iran eu us 08 May 2022

Yellen says inflation is clearly a major problem, it’s what I’m most focused on

  
Analysis, Economy
  • 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%

  
Analysis, US Market
  • 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%

European major indices close down sharply

  
Analysis, Global Indices

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%.Europe

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.

Italy

ECB forecasts see 2022 inflation at 6.8% vs 5.1% in March

  
Analysis, Economy
  • 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

  
  Analysis

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:

EURUSD D1 09-06

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%.

China May 2022 trade balance: CNY 502.89bn (expected 448bn)

  
Analysis, Economy
  • expected CNY 448.9bn, prior was CNY 325.1bn

Exports +15.3% y/y:

  • expected +13.1%, prior was +1.9%

Imports +2.8% y/y:

  • expected 2.0%, prior was 0.0%

USD terms
China trade balance: US$78.76bn

  • expected $58.0bn, prior was $51.1bn

Exports: +16.9% y/y

  • expected 8.0%, prior 3.9%

Imports: +2.8% y/y

  • expected -9%, prior was -2%

A much improved performance for trade, inbound and outbound, for the month of May compared with April. This is a good sign for improvement ahead for the Chinese economy, which will be welcome domestically and globally.

As p[art of the data is this:

January – May oil imports down 1.7% y/y. That’s not a lot given the extent of the lockdwon impacts and is a bullish sign for oil as China’s economy incrementally reopens in the weeks and months to come.

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