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Weekly Wrap Up TRADETHENEWS.COM
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Teflon Market Slides Higher as Taper Talk and Japan Policy Spur Global Gains May 13 - May 17
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- Equity markets in the US, Europe and Asia floated ever higher this week despite several rounds of less-than-impressive economic data. Bond yields rose as demand shifted toward risky assets - the US benchmark 10-year yield got very close to 2.0% for the first time since early March while other developed world benchmark yields rose as well. Analysts spent the week discussing the impact of Japanese monetary policy, and the prospects of the Fed taper and the great rotation in search of explanations. In Japan, the Abe government launched the third component of its radical economic policy, with a focus on structural reform. Talk about Fed tapering QE resurfaced early in the week, but was shoved back down by poor economic data. First quarter GDP data out of Europe showed that the continent is not finding its way out of economic malaise. In the US, April inflation reports raised some concerns about disinflation, while April Industrial production experienced its biggest decline since last October, and the Empire and Philly Fed manufacturing indices dropped into negative territory, missing expectations widely. Washington was consumed by drama emanating from the Obama Administration's IRS and Benghazi scandals. Despite such headwinds, the S&P500 and DJIA continued to forge record highs this week: the DJIA gained 1.6%, the S&P500 added 2% and the Nasdaq rose 1.8%.
- On Thursday, four weak US data reports touching jobs, housing, inflation and manufacturing favoring the skeptics about US economic recovery. The weekly jobless claims topped expectations and saw their largest w/w rise since last fall. The April housing starts widely missed expectations, with the annualized rate dropping sharply to 853K from the 1.04M rate seen in March (which was the highest rate since 2008). The negative headline April CPI was the lowest reading since December 2008, thanks to low oil prices, putting the annual figure at 1.1%, well below the Fed's 2.0% target rate. Ex food and energy the core annualized rate is still only 1.7%. Finally the May Philly Fed manufacturing surv ...
- On Thursday, four weak US data reports touching jobs, housing, inflation and manufacturing favoring the skeptics about US economic recovery. The weekly jobless claims topped expectations and saw their largest w/w rise since last fall. The April housing starts widely missed expectations, with the annualized rate dropping sharply to 853K from the 1.04M rate seen in March (which was the highest rate since 2008). The negative headline April CPI was the lowest reading since December 2008, thanks to low oil prices, putting the annual figure at 1.1%, well below the Fed's 2.0% target rate. Ex food and energy the core annualized rate is still only 1.7%. Finally the May Philly Fed manufacturing surv ...
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