Friday, August 15, 2014

Main Points for Today

•     Bad economic news leads to market euphoria
–    Eurozone GDP disappoints all around:  Germany contracts, France stagnates
–    US jobless claims higher than expected, contradicting recent better labor news
–    RESULT:  Bund yields hit record lows, US Treasuries rally, stocks up, credit up
•     Market may have been aided by consolatory Putin comments
–    Said he wants to end Ukraine conflict “as soon as possible”
–    But Russian armor seen heading into Ukraine, US troops headed to Poland, Baltics
•     EM FX generally higher as carry trades come back
–    Return of the search for yield brings investors back to the EM FX market
–    Eastern European currencies do particularly well
•     Commodity currencies gain despite lower commodity prices
•     Today:
–    UK:  2nd estimate of Q2 GDP. Forecast is same as initial estimate (+0.8%)
–    US: Industrial production, PPI for July; Empire State manufacturing survey, U of M consumer confidence for Aug. Forecasts are mixed, leaving no clear impetus for USD
–    Canada:  Long-awaited correction to July employment report


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