July 8, 2013
Treasury yields remain near the highest levels since 2011 after last Friday’s jobs report came in better than expected, bolstering expectations that the Fed will begin tapering its asset purchase program sooner rather than later. Overall, sentiment is positive with the dollar losing ground versus its major peers, sovereign yields falling, and stocks rising. S&P 500 futures are higher by +0.4%, while across the pond the Euro Stoxx 50 is higher by +2.4%. Crude is trading down -0.6%, while gold and copper are trading +1.5% and +0.3% higher respectively.
The Week Ahead (EST)
Beyond the FOMC minute release on Wednesday, investors are focusing on weakness in the rupee and other important global trends that will determine market direction going forward.
Today’s Economic Data Lineup (EST)
11:00am: Fed to purchase $1.25b-$1.75b notes in 2/15/2036 – 5/15/2043 range
11:30am: U.S. to sell $30b 3-mo., $25b 6-mo. Bills
3:00pm: Consumer Credit, May, est. $13b (prior $11.058b)
- Supporters of deposed Egyptian President Mohamed Mursi clashed with the military today outside a main security installation, in violence that authorities said killed at least 42 people.
- A Bloomberg survey shows that JP Morgan and Goldman Sachs are among other industry leaders that believe the Fed will begin tapering its asset purchases by Sept.
- Euro-area investor sentiment deteriorated unexpectedly in July after political turmoil in Portugal helped renew tensions in the world’s capital markets. An index measuring confidence in the euro region fell to -12.6 from -11.6 in June; economists had predicted an increase to -11.4.
- German industrial production fell -1% in May, more than forecast, while exports also declined and factory orders dropped for a second month.
- French business leaders clashed with Finance Minister Pierre Moscovici at a conference in southern France over the weekend, accusing the government of over taxation and zigzagging on economic policies, a charge the minister called “inelegant” and “facile.” Attendees called on President Hollande to halt what they said were constant changes in regulations and urged him to focus on shrinking state spending before elections constrain his ability to push through difficult and unpopular measures.
- The ECB provided forward guidance at last week’s meeting, with Mario Draghi saying policy will “remain accommodative for as long as necessary.”
- According to the median estimate of 15 analysts in a Bloomberg News survey, China’s credit market squeeze will reduce credit growth by $122B. Read more on Bloomberg’s website here.
- With yen volatility nearing a four-year high, Japanese companies made the fewest acquisitions in a decade during the first half of the year. The number of deals announced during that time was 997 for a total value of $45.7B, the lowest figure since the first six months of 2004.
“Believe in yourself! Have faith in your abilities! Without a humble but reasonable confidence in your own powers you cannot be successful or happy.”
-Norman Vincent Peale