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European momentum Published: 15 August 2018

The euro area grew at a faster pace than initially reported, with data published by Eurostat showing a 0.4 percent expansion in the second quarter, up from the previous estimate of 0.3 percent. Growth in Germany was 0.5 percent in the three months through June with the solid momentum driven by domestic consumption and investment. Labor data for the U.K. showed unemployment falling to 4 percent, a new 43-year low, while the pace of wage growth eased.

Bounce Published: 15 August 2018

(Bloomberg) The plunge in Turkey’s lira is taking a break today, the currency gaining as much as 6 percent against the dollar to trade at 6.5538 by 5:50 a.m. Eastern Time. In a televised address, President Recep Tayyip Erdogan said the country would boycott American electronic devices, while citizens will  "continue their path with the Turkish lira." His defiance comes as the head of Spain’s Banco Bilbao Vizcaya Argentaria SA’s Turkey unit urged the central bank to tighten monetary policy, echoing calls from other lenders and business groups. The U.S. maintained pressure on Ankara, warning there would be no negotiation until a detained American pastor is released. 

Highest Core Inflation in Decade Flattens Real U.S. Wage Growth Published: 10 August 2018

(Bloomberg) A gauge of U.S. consumer prices jumped by the most in a decade in July, eating into wage gains that have barely budged in the past four months and strengthening the case for the Federal Reserve to keep raising interest rates gradually.  The core measure of the Consumer Price Index, which excludes food and fuel, rose 2.4 percent from a year earlier, the biggest advance since September 2008, a Labor Department report showed Friday. From the prior month, both the main CPI index and core rate rose 0.2 percent -- matching expectations.

Policymakers are widely projected to lift borrowing costs when they meet in September, with many investors expecting an additional hike before the end of this year. Inflation has made progress, and the unemployment rate, at 3.9 percent in July, signals the Fed is near its maximum-employment goal.

Trade may become a source of price pressures. In picking Chinese goods to target for tariffs, the Trump administration has tried to avoid directly taxing consumer goods. But that’s getting harder to do as trade tensions escalate. A list of Chinese products due to be hit with tariffs next month includes consumer items such as digital cameras, selfie sticks and electric scooters.

Stocks Drop With Euro as Turkey Crisis Deepens: Markets Wrap Published: 10 August 2018

(Bloomberg) Global stocks declined and the lira weakened as Turkey’s economic crisis threatened to spread. The dollar rose with Treasuries after inflation data.  The S&P 500 Index erased a weekly advance after President Donald Trump doubled tariffs on Turkish steel and aluminum imports, escalating a diplomatic row that tipped the nation’s economy deeper into crisis. European and emerging-market equities slid more than 1 percent after President Recep Erdogan’s remarks failed to reassure global markets. The 10-year yield slid to 2.90 percent as data reinforced the Federal Reserve’s rate-hike intentions.  

Geopolitical tensions between the U.S. and other countries set the tone for markets this week, with the latest leg of the lira’s downward spiral triggered by a diplomatic row with America. Earlier, China responded to the Trump administration’s trade war volley with additional tariffs of its own. The ruble hit a two-year low after the U.S. announced new sanctions on Russia over a nerve-agent attack in the U.K.

Elsewhere, the pound fell for a seventh session, heading for its worst week since May, while oil erased a loss after fears about global supplies receded. Tesla shares climbed in after-market trading after CNBC reported that its board planned to meet with financial advisers next week to formalize a process to take the company private.

US Treasury yields slip after data indicates tame inflation Published: 09 August 2018

(CNBC) U.S. government debt yields held at session lows Thursday after the U.S. government reported that producer prices rose less than expected in July, one possible sign of anemic inflation in the economy.

The yield on the benchmark 10-year Treasury note was 3 basis points lower at around 2.939 percent at 9:28 a.m. ET, while the yield on the 30-year Treasury bond was also lower at 3.095 percent. Bond yields move inversely to prices.

The U.S. Labor Department said Thursday that its U.S. producer price index was unchanged in July, falling short of a 0.2 percent increase expected by economists polled by Reuters. The producer price index minus volatile food, energy and trade components, rose 0.3 percent after a similar gain in June. 

In the 12 months through July, the core PPI increased 2.8 percent after rising 2.7 percent in June. The lackluster reading comes as the economy reaches full employment and strong growth; individual reads on inflation are expected to rise as the Trump administration's tariffs on lumber, steel, aluminum and Chinese goods start to influence price pressures.

Poisoning relations Published: 09 August 2018

(Bloomberg) The U.S. announced new sanctions on Russia in response to the March 4 nerve-agent attack in the U.K., with lawmakers seeking “crushing sanctions” under a separate bill for election interference. The ruble extended its steepest slide in almost two years and government bonds slumped this morning. The largest ETFs tracking Russian stocks saw trading volumes soar after the measures were announced.

Tesla mystery Published: 09 August 2018

(Bloomberg) The biggest question on Wall Street enters a third day without an answer: Where’s the “funding secured” that Tesla Inc.’s Elon Musk tweeted about when he said he was thinking of taking the company private? Bloomberg reported that Musk had talks with SoftBank Group Corp. last year with a view to taking the electric-car maker private, but the meeting failed to progress due to disagreements over ownership. People at, or close to, 15 major financial institutions and technology firms said they weren’t aware of financing being locked-in before Musk’s tweet. Shares in the company closed down 2.4 percent at $370.34 yesterday and are slipping in pre-market trading.

Plucked? Published: 09 August 2018

(Bloomberg) Turkey’s lira fell to a new record low of 5.449 to the dollar, taking losses for the currency this year to close to 30 percent as investors fret about the outlook for the country’s economy and worsening relations with the U.S. Today’s sell-off comes after a Turkish delegation to Washington refused to commit to releasing a detained American pastor, whose arrest was the catalyst for the imposition of U.S. sanctions on its NATO ally. The situation has deteriorated so much that bankers and traders are talking about the prospect of an International Monetary Fund rescue.

Stocks Rise on Economy Optimism as Dollar Slips: Markets Wrap Published: 07 August 2018

(Bloomberg) U.S. stocks rose within striking distance of records amid optimism economic growth can continue apace even as the world’s two largest economies square off in a trade skirmish. The dollar slid the most in two weeks. The S&P 500 Index hit the highest level since Jan. 29 and the Cboe Volatility Index dipped below 11 for the first time since May. Miners lifted the Stoxx Europe 600 Index as commodities advanced. Chinese stocks led a broad rally in Asia, with the Shanghai Composite Index posting its biggest gain in two years on hopes for more policy support for investment.The gains in emerging-market equities overshadowed rising woes in Turkey, where the yield on the country’s 10-year bonds touched a record high amid a diplomatic spat with the U.S. The lira clawed its way back from a record low, only to later give up some gains.

As earnings season enters its final phase, most major U.S. companies have now reported and about four out of five have surprised to the upside. That’s pushed the S&P 500 within 25 points of a record, even as investors fret over the escalating trade war between America and China. Meanwhile, geopolitical concerns linger in the background, including confusion about the status of negotiations intended to lead to the denuclearization of the Korean peninsula and the Trump administration’s restoration of some U.S. sanctions on Iran.

Elsewhere, crude climbed after Saudi Arabian production cuts added to concern about tightening worldwide supplies. Gold advanced with industrial metals. European sovereign bonds were mostly lower, with Italian notes rising. The yen strengthened after Reuters reported that the Bank of Japan had considered raising interest rates this year. Germany’s industrial production fell more than expected in June, but the euro strengthened after a recent run of losses.

 

 

Stocks Rise on Economy Optimism as Dollar Slips: Markets Wrap Published: 07 August 2018

(Bloomberg) U.S. stocks rose within striking distance of records amid optimism economic growth can continue apace even as the world’s two largest economies square off in a trade skirmish. The dollar slid the most in two weeks. The S&P 500 Index hit the highest level since Jan. 29 and the Cboe Volatility Index dipped below 11 for the first time since May. Miners lifted the Stoxx Europe 600 Index as commodities advanced. Chinese stocks led a broad rally in Asia, with the Shanghai Composite Index posting its biggest gain in two years on hopes for more policy support for investment.The gains in emerging-market equities overshadowed rising woes in Turkey, where the yield on the country’s 10-year bonds touched a record high amid a diplomatic spat with the U.S. The lira clawed its way back from a record low, only to later give up some gains.

As earnings season enters its final phase, most major U.S. companies have now reported and about four out of five have surprised to the upside. That’s pushed the S&P 500 within 25 points of a record, even as investors fret over the escalating trade war between America and China. Meanwhile, geopolitical concerns linger in the background, including confusion about the status of negotiations intended to lead to the denuclearization of the Korean peninsula and the Trump administration’s restoration of some U.S. sanctions on Iran.

Elsewhere, crude climbed after Saudi Arabian production cuts added to concern about tightening worldwide supplies. Gold advanced with industrial metals. European sovereign bonds were mostly lower, with Italian notes rising. The yen strengthened after Reuters reported that the Bank of Japan had considered raising interest rates this year. Germany’s industrial production fell more than expected in June, but the euro strengthened after a recent run of losses.