New York: May 18 14:06 | London: May 18 19:06 | Tokyo: May 19 3:06
Weekly Wrap Up TRADETHENEWS.COM STAFF
Risk-On Rally Pauses as Officials Discuss QE Fallout September 17 - September 21
- Markets largely moved sideways this week, consolidating last week's big risk-on rally. Analysts, Fed officials, politicians and market participants around the globe mulled the implications of massive central bank intervention, including when and if inflation would strike. Meanwhile, both the DJIA and the S&P500 are hovering around five-year highs after months of expansion. The Bank of Japan joined the party on Wednesday, expanding the size of its standing asset purchase program by ¥10 trillion (roughly $130B) and warned that Japan's economy has moved "deeper into deceleration." In Europe, a squabble between the Spanish government and the government of independent region Catalonia over tax and austerity issues threatened to postpone further a potential official request for an EU bailout. Spanish officials continue do deny that they were even mulling a request, while German Finance Minister Schaeuble said that Spain doesn't need a bailout anyway. In Greece, talks between Athens and the Troika dragged on, with both sides roughly €2.5B apart on the proper amount of austerity in the next round of cuts. Peripheral yields remained mostly lower, however, and both Spain and Portugal took advantage of the new atmosphere to sell longer-term debt at lower yields. The euro came off its post-ECB bond-buying announcement sugar high this week, with EUR/USD dropping from highs around 1.3170 to bottom out right around 1.2920. The China September flash manufacturing PMI, which was more or less even with the August reading, was either a positive sign of bottoming or a concerning lack of improvement, depending on the analyst. Note that on Friday, a PBoC advisor warned that China's Q3 and Q4 GDP would come in a little below the official 7.5% target and that the slowdown might last into 2013. In a similar vein, Brazil and Italy both took down official GDP forecasts for 2012. There were several more positive US housing data points, with existing home sales and building permits exceeding estimates, and the NAHB's September market index bounced to its highest level since June ...