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European indices close the day with gains

  
Analysis, Global Indices

German Dax lags (unchanged on the day)

The major European indices are closing the day with gains. The exception is the German DAX which is closing near unchanged levels. The provisional closes are showing:
  • German DAX, unchanged
  • France’s CAC, +0.3%
  • UKs FTSE 100, +0.3%
  • Spain’s Ibex, +0.9%
  • Italy’s FTSE MIB, +0.2%.
In other markets as European traders look to exit:
  • Spot gold is down $-13.82 or -0.73% at $1864
  • spot silver is up one cent or 0.04% at $27.92.
  • WTI crude oil futures are up $0.46 or 0.65% at $71.36. That is off the intraday high of $71.78, but above the low at $70.65.
  • Bitcoin remains above the $40,000 level at $40,713.35
In the US stock market, the Dow industrial average is moving lower. The latest casualty is J.P. Morgan which is now down -2% after comments from CEO Jamie Dimon.
  • Dow -220 points or -0.63% at 34261.54
  • S&P -11 points or -0.26% at 4236.31
  • NASDAQ +33 points or 0.24% at 14102.43
In the US debt market, yields are higher with the 10 year up 3.88 basis points and

German Dax lags (unchanged on the day)
The benchmark 10 year yields in Europe are also higher with Spain 10 year up 3.4 basis points leading the way:

European yields are higher
IN the forex, the NZD remains the strongest and the JPY is the weakest. The USD is mixed with gains vs the JPY and CHF, and declines vs the EUR, CAD, NZD and AUD. The USD is near unchanged verse the GBP.

J.P. Morgan’s Dimon: Is prepare for higher rates, more inflation

  
  Analysis

Dimon speaking at Morgan Stanley conference

Staying on the inflation theme, JP Morgans Jamie Dimon speaking at Morgan Stanley conference says that the bank is prepared for higher rates and more inflation.
In a somewhat surprise critical comment about his company, he says:
  • JP Morgan did not have imagination to do what Square did
  • The banking system is going to be in tough shape
  • Will have to fight hard amid tough competition
JP Morgan stock is trading down -$2.77 or -1.73% to $157.52 after his comments.
PS. The NY Fed survey for May shows inflation expectations 1 year and 3 year ahead rose sharply.

Eurozone April industrial production +0.8% vs +0.4% m/m expected

  
Analysis, Economy

Latest data released by Eurostat – 14 June 2021

  • Prior +0.1%; revised to +0.4%
  • Industrial production WDA +39.3% vs +37.4% y/y expected
  • Prior +10.9%; revised to +11.5%

A solid beat and upward revisions as well, so overall that’s a good report as euro area industrial output shows a decent climb in April.

Production of durable goods was up 3.4%, capital goods 1.4%, and intermediate goods 0.8%. The only downside was non-durable goods, which fell 0.3% in April.

Heads up: UK PM Johnson to make statement on virus restrictions later today

  
  Analysis

The statement is expected at 1700 GMT

There has been talk since the weekend that Johnson will delay the end of restrictions in the UK amid fears of virus variants, which he says is a “serious concern”.
The initial plan was to reopen everything “no earlier than 21 June” i.e. next week but that timeline may be pushed back now. Still, it is a bit of a minor hiccup after the progress made by the UK economy in the past two months.

ECB’s Lagarde: It is too early to debate the end of PEPP purchases

  
  Analysis

Remarks by ECB president, Christine Lagarde, to Politico

  • Hopes to present strategy review results by the end of summer
  • We are on the road to recovery, squarely on the way to pre-pandemic levels
  • Likely to be back there in Q1 2022
  • Thinks that ECB has delivered in terms of policy support
In her own words, “not to brag about it, but we sure delivered” when asked on how the ECB has dealt with the whole pandemic response since last year.

WSJ report on why the Fed could remove monetary policy support sooner than expected

  
  Analysis

The Federal Reserve’s Federal Open Market Committee (FOMC) meeting is this week, June 15 and 16.

The Wall Street Journal have a piece up opining about the Fed goal of maximum employment and why hitting it could come sooner than expected:
  • 2.6 million people retired since February 2020, according to estimates from the Dallas Fed. 
  • Cleveland Fed President Loretta Mester said June 4 on CNBC. “Typically, when people retire, they don’t come back into the labor force.”
  • Treasury Secretary Janet Yellen … said on June 5 that while employment remains more than 7 million jobs below pre-pandemic levels, increased retirements could mean “we don’t need to regain quite that many to get back to full employment.”
  • While current Fed officials have been less explicit in their public comments, they have signaled a similar openness. 
Last week most of the ‘Fed focus’ was on the inflation data, the other leg of the Fed’s twin goals. Most at the Fed are dismissing inflation rising as transitory. Still, core inflation hit a 30 year high in last week’s CPI data,so there may be some butt-clenching going on around the FOMC table.
Could be something to else to listen out for from the Fed this week.
Link to WSJ here for more detail (may be gated).
Cleveland Fed President Loretta Mester
Cleveland Fed President Loretta Mester
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