Recap 5-31-12

Main Items:

  • US ADP Employment increased 133k in May vs 150k exp and 119k prev
  • Chicago PMI declined to 52.7 vs 56.8 exp and 56.2 prev
  • Initial Jobless Claims increased to 383k last week vs 370k exp and prev
  • Japan’s finance minister said the yen was out of line with the country’s economic fundamentals.

Overseas:

  • EU CPI Estimate declined to 2.4% YoY in May vs 2.5% exp and 2.6% prev
  • German Unemployment was flat in May vs -7k exp. Unemployment declined to 6.7% vs 6.8% exp and prev
  • Swiss GDP rose 0.7% QoQ in 1Q vs 0% exp and 0.1% prev

Upcoming Data:

  • Thurs Continued: Australia PMI, China PMI, HSBC PMI, South Korea PMI
  • Fri: EU PMI, Swiss PMI, UK PMI, Italian Unemployment, EU Unemployment, Canadian GDP, US Payrolls, Unemployment Personal Spending, ISM
  • Sat: China Non-mfg PMI
  • Mon: EU Sentix Investor Confidence, EU PPI
  • Tues: RBA, Italian Service PMI, BoC, ISM Non-Mfg, Australia GDP
  • Wed: UK PMI Construction, EU GDP, ECB, US Unit Labor Costs, Australia Employment
  • Thurs: French Unemployment, Swiss Unemployment, Swiss CPI, UK PMI Services, BoE, US initial jobless Claims, Japan Trade Balance

Commentary:

Despite getting burned yesterday, I still think there’s a decent chance we see a risk rally tomorrow. Stocks are short term oversold as we start the month. And given the weak data today, whisper expectations for tomorrow is likely lower. Note also that we haven’t made a lower low in 2 weeks.

Separately, Draghi said to the EU parliament today:
“Everybody winds up doing the right thing at the highest possible cost and price,”

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2 thoughts on “Recap 5-31-12

  1. front eurodollars are holding bid quite well and libor has been unchanged for over a couple weeks. seems pretty amazing that the interbank mkt is so well behaved during all the negative news that the front eurodollars are due for a rally.

    1. Indeed – it seems that the massive central bank liquidity operations were successful in capping interbank yields. And the problem has gone from both liquidity and solvency to just solvency now. Which makes me wonder if the libor futures are now less useful as an indicator for market stress.

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