TradeTheNews.com Weekly
Market Update: Firmer Inflation and Hawkish Talk Push Rates Higher
Fri, 30 Jun 2017 16:06 PM EST
An aggressive backup in global interest rates headlined a week that also saw a
significant rebound in oil prices and bifurcated trading in US stocks. Hawkish
central bank commentary complemented hotter than expected CPI readings in
Europe, which induced a mid-week rotation out of sovereign bond markets,
driving up yields. The spread between European and US Treasury yields narrowed,
pressuring the Dollar Index, and pushing the Euro to a 1-year high. Higher
rates and encouraging CCAR announcements powered equity flows into the banks
and financials. In Washington, doubts about the fate of the Senate healthcare
bill injected more uncertainty about the Republican legislative agenda, as GOP
leaders continued to woo votes from their own caucus and were forced to push
back the vote until after the 4th of July break.
By Friday, WTI crude extended to a 7-day winning streak, adding 6.5% on the
week, and buoyed equity flows. Despite the positive sentiment in those sectors,
continued aggressive selling in the high beta, high profile technology stocks
resulted in another notable spike in NASDAQ volatility, allowing for a mid-week
dip in US stock trade. Much of the equities weakness was blamed on the
likelihood that algorithmic trading along with thin quarter end/holiday conditions
exacerbated a rotation out of big-cap tech into other areas of the stock
market. Ultimately, stock indices were lower on the week, with the DJIA off
0.2%, the S&P500 down 0.6%, and the Nasdaq falling 2%.
In corporate news, European Union regulators issued a record €2.4B fine against
Google to penalize the tech giant over improper search ordering of shopping
results. The amount surpassed the prior record €1.06B fine against Intel in
2009. FedEx and Maersk were among numerous multinationals who had operations
disrupted due to the spread of a ransomware virus known as GoldenEye or Petya.
No data breach is said to have occurred, but the event was among the largest
disruptions to ever hit global shipping. Micron delivered a solid beat on
quarterly earnings and revenue, and its CEO noted cost reduction plans and
favorable pricing were a boost to profits. Nike earnings topped Street
expectations amid strong international growth, and the sportswear giant
confirmed a new pilot program to sell a limited assortment of products on the
Amazon platform.
SUN 6/25
06/25 ISP.IT Italy approves emergency decree for Intesa acquisition, commits up
to €17B to buoy Veneto banks
MON 6/26
(DE) GERMANY JUN IFO BUSINESS CLIMATE: 115.1 (fresh record high) V 114.5E;
CURRENT ASSESSMENT: 124.1 V 123.2%E
(UK) PM May reaches governing deal to get Northern Irish DUP support for
minority government; govt to supply £1B in extra funding for Northern Ireland
as part of agreement - financial press
(US) Fed’s Dudley (dove, FOMC voter): Fed's taken very measured and careful
approach to shrinking bond portfolio - prepared remarks
(US) MAY PRELIMINARY DURABLE GOODS ORDERS: -1.1% V -0.6E; DURABLES EX
TRANSPORTATION: 0.1% V +0.4%E
(UK) Prime Min May: no EU citizen will be asked to leave after Brexit; EU
citizens lawfully in Britain will be treated as British citizens
(US) Atlanta Fed maintains Q2 GDP at 2.9%, unchanged from 6/16
(CN) China President Xi: Reform panel says offshore investment a matter of
national security, need enhanced statistics and monitoring of overseas
investments to strengthen supervision - Xinhua
TUES 6/27
(EU) ECB Chief Draghi: Sees Factors impacting inflation being temporary and
typically ones which the central bank can look through - Speaking at ECB Forum
(UK) Bank of England to raise counter cyclical buffer to 1% from 0.5% in
Novmeber - Biannual Financial Stability Report
GOOGL EU confirms issue record fine of €2.4B related to search ordering of
shopping results
(US) JUN RICHMOND FED MANUFACTURING INDEX: 7 V 5E
(US) JUN CONSUMER CONFIDENCE: 118.9 V 116.0E
(US) Fed Vice Chair Fischer: would be foolish to think all risks have been
eliminated; calls for close monitoring of rising risk appetites
(US) Sen Leader McConnell tells Senate GOP colleagues he will delay healthcare
vote until after July 4th break - CNN
(CN) China National Petroleum Corporation (CNPC) suspends fuel sales to North
Korea over concerns that it won’t get paid
WEDS 6/28
(EU) EURO ZONE MAY M3 MONEY SUPPLY Y/Y: 5.0% V 5.0%E
(EU) ECB Sources believe market misjudged Draghi comments yesterday - press
(UK) BOE Gov Carney: will debate issues around raising rates in coming months;
some removal of BOE stimulus may be necessary
(US) MAY PENDING HOME SALES M/M: -0.8% V +1.0%E; Y/Y: 0.5% V 0.5%E
FDX TNT Express operations disrupted due to computer virus; no data breach
known to have occurred; operations of all other FedEx companies are unaffected
(US) Association of American Railroads weekly rail traffic report for week
ending June 24th: 544.7K carloads and intermodal units, +3.6% y/y (24th
straight week of gains)
(US) FEDERAL RESERVE COMPREHENSIVE CAPITAL ANALYSIS AND REVIEW (CCAR): 34 OF 34
CAPITAL PLANS APPROVED
APRN Confirms 30M share IPO priced at $10/shr v $10.00-11.00/shr indicated range
THURS 6/29
(DE) GERMANY JULY GFK CONSUMER CONFIDENCE: 10.6 V 10.4E (highest since 2001)
(DE) GERMANY JUN CPI SAXONY M/M: 0.2% V -0.1% PRIOR; Y/Y: 1.7% V 1.6% PRIOR
(ES) SPAIN JUN PRELIMINARY CPI M/M: 0.0% V 0.0%E; Y/Y: 1.5% V 1.6%E
(EU) EURO ZONE JUN BUSINESS CLIMATE INDICATOR: 1.15 V 0.94E, FINAL CONSUMER
CONFIDENCE -1.3 V -1.3E
(CZ) CZECH CENTRAL BANK (CNB) LEAVES REPURCHASE RATE UNCHANGED AT 0.05%; AS
UNCHANGED AT 0.05%
(DE) GERMANY JUN PRELIMINARY CPI M/M: 0.2% V 0.0%E; Y/Y: 1.6% V 1.4%E
(US) Q1 FINAL GDP PRICE INDEX: 1.9% V 2.2%E; CORE PCE Q/Q: 2.0% V 2.1%E
(US) Q1 FINAL GDP ANNUALIZED (3RD READING) Q/Q: 1.4% V 1.2%E; PERSONAL
CONSUMPTION: 1.1% V 0.6%E
(US) Fed's Bullard (non-voter, dovish): Sees a small effect on inflation if
unemployment falls - comments in London
MU Reports Q3 $1.62 v $1.49e, Rev $5.57B v $5.37Be; Expects healthy industry
demand to persist into 2018
NKE Reports Q4 $0.60 v $0.49e, Rev $8.68B v $8.61Be
(JP) JAPAN MAY NATIONAL CPI Y/Y: 0.4% V 0.5%E ; CPI EX FRESH FOOD (CORE) Y/Y:
0.4% (2-year high, 5th straight month of increase) V 0.4%E
(JP) JAPAN MAY JOBLESS RATE: 3.1% V 2.8%E (5-month high)
(CN) CHINA JUNE MANUFACTURING PMI (GOVT OFFICIAL): 51.7 (3-month high) V 51.0E;
NON-MANUFACTURING PMI: 54.9 (3-month high) V 54.5 PRIOR
FRI 6/30
(FR) FRANCE JUN PRELIMINARY CPI M/M: 0.0% V 0.0%E; Y/Y: 0.7% V 0.7%E
(DE) GERMANY JUN UNEMPLOYMENT CHANGE: +7K V -10KE; UNEMPLOYMENT RATE: 5.7%E V
5.7%E
(UK) Q1 FINAL GDP Q/Q: 0.2% V 0.2%E; Y/Y: 2.0% V 2.0%E
(EU) EURO ZONE JUN CPI ESTIMATE Y/Y: 1.3% V 1.3%E; CPI CORE Y/Y: 1.1% V 1.0%E
(IT) ITALY DEBT AGENCY (TESORO) SELLS TOTAL OF €6.35B V €5.5-6.5B INDICATED IN
5-YEAR AND 10-YEAR BTP BONDS
(JP) Bank of Japan said to be considering lowering inflation outlook in July -
press
(US) MAY PCE DEFLATOR M/M: -0.1% V -0.1%E; Y/Y: 1.4% V 1.5%E
(US) MAY PERSONAL INCOME: 0.4% V 0.3%E; PERSONAL SPENDING: 0.1% V 0.1%E
(US) MAY PCE CORE M/M: 0.1% V 0.1%E; Y/Y: 1.4% V 1.4%E
(US) Atlanta Fed cuts Q2 GDP to 2.7% from 2.9% on 6/26
(US) New York Fed Nowcast: maintains Q2 GDP forecast at 1.9%, unchanged from
6/23; raises Q3 GDP forecast to 1.6% from 1.5% on 6/23
(US) Weekly Baker Hughes US Rig Count: 940 v 941 w/w (-0.1%) (first decline in
24 weeks)
