June 28, 2012
Sentiment is fairly negative before today’s EU summit, and after poor economic data was released in Europe. Spanish 10yr yields hit 7% again overnight, and most euro-area equity indices are in the red on the day. U.S. Treasuries are gaining, led by 7yr notes, before the Supreme Court today issues its ruling on President Obama’s Patient Protection and Affordable Care Act.
Today’s Economic Data Lineup (EST)
8:30 am: GDP Q/q, 1Q revised, est. 1.9% (prior 1.9%)
8:30 am: Personal Consumption, 1Q revised, est. 2.7% (prior 2.7%)
8:30 am: GDP Price Index, 1Q revised, est. 1.7% (prior 1.7%)
8:30 am: Core PCE QoQ, 1Q revised, est. 2.1% (prior 2.1%)
8:30 am: Initial Jobless Claims, June 23, est. 385k (prior 387k)
8:30 am: Continuing Claims, June 16, est. 3280k (prior 3299k)
9:45 am: Bloomberg Consumer Comfort, June 23 (prior -37.9)
11:00 am: Kansas City Fed Manf. Activity, June, est. 4 (prior 9)
11:00 am: Fed to sell $8-8.75b notes in 11/15/2014-6/15/2015 range
11:30 am: Fed’s Pianalto speaks in Cleveland
1:00 pm: Treasury to sell $29b 7-yr notes
7:00 pm: Fed’s Fisher speaks in Aspen, Colorado, on U.S. economy
EU Summit in Brussels; will discuss Spanish bank bailout package, common euro bonds
- U.S. GDP grew +1.9% in Q1, reflecting a gain in consumer spending which is showing no signs of slowing, despite a weakening labor market. This revised figure was in line with the governments previously calculated figures.
- The number of Americans filing for unemployment benefits remained near the highest level of the year, a sign that, as the Fed said, the labor market will not improve drastically this year.
- Orders for durable goods, as well as the number of Americans buying existing homes climbed in May, easing concerns about a slowdown in the world’s largest economy. Bookings for goods meant to last at least three years rose +1.1%.
- Barclays was fined $453.2M by the U.S. and U.K. for deliberately reporting artificially low borrowing costs back during the height of the financial crisis in 2008. According to the CFTC, “A member of senior management” instructed Barclays’ Libor staff to lower their submissions to make them match other banks and dispel concern about the lender’s health. (I will write an op-ed on this by tomorrow)
- According to the European Commission, an index of executive and consumer sentiment fell to 89.9 from a revised 90.5 in May. That happens to be the lowest reading since October 2009.
- Real disposable income in the U.K. dropped -0.9% from the prior three month, when it fell by the same amount. Consumer spending was revised to a -0.1% decline from a +0.1% increase, and GDP declined -0.3%. All of this is placing more pressure on the BOE to begin more easing.
- The number of German’s out of work rose 7K to 2.88M (seasonally adjusted), coming in higher than the 3K forecast by economists.
- South Korea’s Finance Ministry cut its GDP estimate to 3.3% for the year, down from a December estimate of 3.7%; in addition they announced $7.4B of spending to support the economy on concerns by officials for a protracted debt crisis in Europe.
“If I have the belief that I can do it, I shall surely acquire the capacity to do it even if I may not have it at the beginning.”
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