U.S: Consumer spending stagnated in May as prices rose. Purchases were little changed, the weakest outcome since June 2010, after a revised 0.3% MoM gain the prior month that was smaller than previously estimated. Prices excluding food and energy rose more than forecast. (Source: Bloomberg)
U.S: Fed seen purchasing USD 300b in treasuries after QE2 as the central bank uses its USD 2.86tr balance sheet to keep interest rates low. While the USD 600b purchase program, known as QE2, winds down, the Fed said June 22 that it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as USD 300b of government debt over the next 12 months without adding money to the financial system. (Source: Bloomberg)
U.S: Consumer confidence in June falls to seven-month low as Americans grew concerned about the outlook for jobs and wages. The Conference Board's sentiment index decreased to 58.5 from a revised 61.7 in May that was higher than previously estimated. (Source: Bloomberg)
U.S: Home prices in 20 cities fell 4% YoY in April, showing the housing market remains an obstacle for the U.S. recovery. The S&P/Case-Shiller index of property values in 20 cities fell 4% YoY in April, the biggest drop since November 2009. From March to April, prices fell 0.1% MoM on a seasonally adjusted basis, the smallest decline since July 2010. (Source: Bloomberg)
US stocks rise amid Greek bailout expectations as Nike jumps
US stocks rose, sending the Standard & Poor‟s 500 Index to its highest level in three weeks, amid optimism European nations will take action to prevent a Greek default and after Nike Inc‟s earnings beat estimates. Nike rallied 10% as higher North American sales helped the world‟s largest sporting-goods company top profit projections. Caterpillar Inc, Exxon Mobil Corp and Alcoa Inc added at least 2.1%, pacing gains in companies most-tied to economic growth. Home Depot Inc climbed 2.4% after the largest US home-improvement retailer said that it is targeting about USD3.5bn in share repurchases for 2011. The S&P 500 advanced 1.3% to 1,296.67 at 4 pm in New York, rising to the highest closing level since 3 June 2011. The Dow Jones Industrial Average increased 145.13 points, or 1.2%, to 12,188.69 yesterday. More than 6.1bn shares changed hands on US exchanges at 5.12pm, 14% less than the three-month average through yesterday. (Bloomberg)
US: Consumer confidence falls to seven-month low
Consumer confidence dropped to a seven-month low in June as Americans grew concerned about the outlook for jobs and wages. The Conference Board‟s sentiment index decreased to 58.5 from a revised 61.7 in May that was higher than previously estimated, figures from the New York-based private research group showed today. Home prices fell in the year ended in April by the most in 17 months, another report showed. Unemployment hovering around 9%, deterioration in the housing market and a drop in share prices may restrain Americans‟ sentiment, raising the risk that the biggest part of the economy will stagnate. The Federal Reserve last week kept in place record monetary stimulus to help nurture the expansion through what it views is a “temporary” slowdown. (Bloomberg)
Germany: Harmonized inflation unexpectedly held steady in June as the European Central Bank prepares to raise interest rates for a second time this year. The inflation rate, calculated using a harmonized European Union method, held at 2.4% MoM from May. Prices remained unchanged from the previous month. (Source: Bloomberg)
E.U: Creditors move closer to Greek debt rollover plan. Greek creditors may be headed toward a rollover agreement involving 70% of their bonds to prevent a default and meet politicians' calls that they contribute to Greece's second rescue in as many years. Under the French proposal, half the Greek debt held by banks and insurers maturing in the next three years would be swapped for new 30-year Greek bonds. The redemptions from another 20% would be invested in a special purpose vehicle that would serve as collateral for the banks, two people familiar with the plan said. (Source: Bloomberg)
UK: Economy expanded 0.5% in first quarter, led by exports
Exports returned the British economy to growth in the first quarter as soaring food and energy costs eroded household incomes and curbed consumer spending. Gross domestic product rose 0.5% from the fourth quarter, the same as previously estimated, the Office for National Statistics said. The pace of growth from a year earlier was revised to 1.6% from 1.8%. Concern about economic growth is taking precedence over inflation as rising prices and government budget cuts put Britain on course for the biggest squeeze on living standards since the 1970s. The Bank of England kept its key interest rate at a record low this month and some officials said more bond purchases may be needed if weakness persists. (Bloomberg)
Greece: Police fire tear gas as strike overshadows budget vote
Greek police fired tear gas to disperse protesters in the center of Athens as labor unions shut down government services before a vote on austerity measures that may determine if the nation can avoid a default. Lawmakers debated Prime Minister George Papandreou‟s five-year plan of budget cuts and asset sales for a second day before a vote today at 2 pm Athens time. A crowd estimated by police to number 20,000 thronged outside Parliament in protests that descended into violence as riot police fired tear gas in battles with hooded youths who smashed windows at a McDonald‟s Corp restaurant and set two vans on fire. The vote today will be Papandreou‟s second survival test in a week and has to succeed for the cash-strapped nation to tap a fifth loan payment from last year‟s EUR 110bn (USD157bn) rescue. Failure to pass the government‟s EUR 78bn plan may lead to the euro area‟s first sovereign default.
IMF: Emerging markets will press Lagarde for IMF governance changes
Christine Lagarde won the support of emerging-market nations for her successful bid to become managing director of the International Monetary Fund by promising them greater influence at the global lender. Now she‟ll be under pressure to deliver. Lagarde, the French finance minister, yesterday was selected by the Washington-based IMF‟s board over her sole rival, Mexico‟s Agustin Carstens. She garnered endorsements from emerging economies such as India and Brazil as well as European Union countries and the US. “Lagarde had to send some signals, if not make some actual deals, with emerging market countries to be able to get in,” Kevin Gallagher, associate professor of international relations at Boston University, said in a telephone interview. “They‟re going to hold her accountable or she‟s going to have a rough time there.” In the course of an election-style campaign that took her to Brazil, China and the Middle East, Lagarde promised to boost the clout of developing nations at the IMF and to give more
management jobs to people from those countries. (Bloomberg)
China: Industrial companies' YTD profit growth slowed as the government tightened credit to curb inflation and prevent asset bubbles. Net income rose 27.9% YoY in the first five months to CNY 1.92tr (USD 297b), the National Bureau of Statistics said on its website. That compares with a 29.7% YoY gain for January-through-April. (Source: Bloomberg)
China: World’s worst property bonds plunge on Wen curbs
China‟s homebuilders, the world‟s most-indebted, are handing bond investors the worst returns among developers as curbs on speculation and efforts to control inflation drive yield premiums to record levels. Premier Wen Jiabao boosted minimum down payments for second-home purchases and introduced taxes on residential investment in Shanghai and the southwestern city of Chongqing as rising house prices helped push inflation to the highest level in almost three years in May. Nine of the world‟s 10 most debt- laden companies in the industry are Chinese, led by Poly Real Estate Group Ltd.,
South Korea: Current-account surplus widens to 7-month high
South Korea‟s current-account surplus widened to seven-month high in May as car and steelmakers boosted overseas shipments and dividend payments to foreign shareholders shrank. The surplus was USD2.26bn, compared with a revised USD1.28bn in April, the Bank of Korea said. The current account is the broadest measure of trade, tracking goods, services and investment income. South Korea‟s exports have climbed at a double-digit pace since November 2009 and hit a record in April even as the won appreciated. A slowdown in US growth and the fallout from Europe‟s sovereign debt crisis risk weighing on shipments. (Bloomberg)
Japan: Retail sales fell at a slower pace than economists estimated in May. Sales slid 1.3% YoY, the Trade Ministry said in Tokyo, the smallest drop since the March 11 earthquake. (Source: Bloomberg)
Japan: Considers JPY 230b (USD 2.8b) plan for nuclear assistance for aid to Tokyo Electric Power Co. and radiation monitoring in its planned extra budget, according to a draft outline prepared by the Finance Ministry. Prime Minister Naoto Kan's government has yet to release details of the JPY 2tr supplementary budget, which will need parliamentary approval. (Source: Bloomberg)
Hong Kong: May export growth rebounds from 17-month low on demand from Asian nations including China. Overseas shipments gained 10% YoY to HKD 280b (USD 36b. In April, shipments rose 4.1% MoM. (Source: Bloomberg)
Thailand: Manufacturing output declined for the fourth consecutive month in May as supply disruptions after the earthquake in Japan, the nation's largest trading partner, hurt vehicle production. The industrial production index fell 3.88% YoY compared with a revised 8.14% YoY decline in April. (Source: Bloomberg)
Vietnam: Trade deficit narrowed in June, boosting the government's efforts to contain the shortfall amid declining investment commitments and one of the smallest foreign reserves in Asia. The shortfall was USD 400m, compared with a revised USD1.42b in May. The deficit in the first half of the year reached USD 6.65b, the agency said. (Source: Bloomberg)
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