Market Talk – June 15, 2021

Posted Jun 15, 2021 by Martin Armstrong |

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ASIA:

NATO leaders warned on Monday that China presents “systemic challenges,” taking a forceful stance towards Beijing in a communique at Joe Biden’s first summit with an alliance that Donald Trump openly disparaged. The new U.S. president has urged his fellow NATO leaders to stand up to China’s authoritarianism and growing military might, a change of focus for an alliance created to defend Europe from the Soviet Union during the Cold War.

China has accused the United States of trying to sow discord in its relations with Europe and called on European nations not to tie themselves to the US strategy. China also vowed to take action against NATO, which labeled Beijing a challenge to the security alliance.

India’s retail inflation accelerated in May, at its fastest pace in six months as fuel and food prices rose at a higher pace, putting pressure on the central bank to tame prices amid a faltering economic recovery. India’s central bank, The Reserve Bank of India earlier this month warned that high energy prices could stoke inflation while cutting the growth forecast to 9.5% from 10.5% for the current fiscal year beginning April. Annual retail inflation rose 6.30% year-on-year, up from 4.29% in April.

The major Asian stock markets had a mixed day today:

NIKKEI 225 increased 279.50 points or 0.96% to 29,441.30
Shanghai decreased 33.19 points or -0.92% to 3,556.56
Hang Seng decreased 203.60 points or -0.71% to 28,638.53
ASX 200 increased 67.20 points or 0.92% to 7,379.50
Kospi increased 6.50 points or 0.20% to 3,258.63
SENSEX increased 221.52 points or 0.42% to 52,773.05
Nifty50 increased 57.40 points or 0.36% to 15,869.25

The major Asian currency markets had a mixed day today:

AUDUSD decreased 0.00299 or -0.39% to 0.76843
NZDUSD decreased 0.00279 or -0.39% to 0.71189
USDJPY increased 0.06 or 0.05% to 110.11
USDCNY decreased 0.00066 or -0.01% to 6.40703

Precious Metals:

Gold decreased 9.02 USD/t oz. or -0.48% to 1,856.98
Silver decreased 0.193 USD/t. oz or -0.69% to 27.641

Some economic news from last night:

South Korea:

Exports (YoY) (May) remain the same at 45.6%

Imports (YoY) (May) remain the same at 37.9%

Trade Balance (May) increased from 2.93B to 2.94B

M2 Money supply (Apr) increased from 9.60% to 10.70%

Australia:

House Price Index (QoQ) (Q1) increased from 3.0% to 5.4%

New Zealand:

FPI (MoM) (May) decreased from 1.1% to 0.4%

Some economic news from today:

China:

FDI decreased from 38.60% to 35.40%

Japan :

Tertiary Industry Activity Index (MoM) decreased from 1.1% to -0.7%

India:

Exports (USD) (May) increased from 32.21B to 32.27B

Imports (USD) (May) increased from 38.53B to 38.55B

Trade Balance (May) increased from -6.32B to -6.28B

Indonesia:

Car Sales (YoY) (May) increased from 902.90% to 1,443.60%

Export Growth (YoY) (May) increased from 51.94% to 58.76%

Import Growth (YoY) (May) increased from 29.93% to 68.68%

Trade Balance (May) increased from 2.19B to 2.37B

New Zealand:

GlobalDairyTrade Price Index decreased from -0.9% to -1.3%

EUROPE/EMEA:

The European Central Bank kept its stimulus package and interest rates unchanged last Thursday despite significantly raising its economic outlook for this year and next as Covid-19 restrictions ease and the eurozone recovery ramps up. ECB president Christine Lagarde held the pandemic emergency purchase program at €1.85 trillion ($2.25tn), after a €500 billion boost in December, but said the eurozone economy was now expected to grow by 4.6 percent this year and 4.7 percent in 2022. The ECB renewed its pledge to maintain faster emergency bond-buying to sustain the Eurozone’s recovery from the pandemic-induced crisis, stating it would be “premature” to start tightening monetary policy, with continued support needed to ease economic unease.

Fitch Ratings has affirmed Sweden’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘AAA.’ The Outlook is Stable. Sweden’s ‘AAA’ rating reflects a long record of flexible and effective policymaking, underpinned by strong institutions and very strong governance indicators, which Fitch believes will support a solid economic recovery once the Covid-19 pandemic subsides. Sweden’s wealthy, high-valued added economy, sound government finances, healthy banking sector, and strong external metrics, have enabled the sovereign to absorb the pandemic shock, and underpin the Stable Outlook. The Swedish economy has weathered the pandemic well, contracting by 2.8% in 2020 compared with declines of 6.6% in the Eurozone and 3.6% (current median) across ‘AAA’ rated sovereigns.

The major Europe stock markets had a green day:

CAC 40 increased 23.17 points or 0.35% to 6,639.52
FTSE 100 increased 25.80 points or 0.36% to 7,172.48
DAX 30 increased 55.88 points or 0.36% to 15,729.52

The major Europe currency markets had a mixed day today:

EURUSD increased 0.00047 or 0.04% to 1.21268
GBPUSD decreased 0.00281 or -0.20% to 1.40825
USDCHF decreased 0.00118 or -0.13% to 0.89810

Some economic news from Europe today:

UK:

Average Earnings ex Bonus (Apr) increased from 4.6% to 5.6%

Average Earnings Index +Bonus (Apr) increased from 4.3% to 5.6%

Claimant Count Change (May) decreased from -55.8K to -92.6K

Employment Change 3M/3M (MoM) (Apr) increased from 84K to 113K

Unemployment Rate (Apr) decreased from 4.8% to 4.7%

Germany:

German CPI (MoM) (May) decreased from 0.7% to 0.5%

German CPI (YoY) (May) increased from 2.0% to 2.5%

German HICP (YoY) (May) increased from 2.1% to 2.4%

German HICP (MoM) (May) decreased from 0.5% to 0.3%

Norway:

Trade Balance (May) decreased from 17.0B to 15.5B

France:

French CPI (MoM) (May) increased from 0.1% to 0.3%

French CPI (YoY) increased from 1.2% to 1.4%

French HICP (MoM) (May) increased from 0.2% to 0.3%

French HICP (YoY) (May) increased from 1.6% to 1.8%

Italy:

Italian CPI (MoM) (May) decreased from 0.4% to 0.0%

Italian CPI (YoY) (May) increased from 1.1% to 1.3%

Italian CPI Ex Tobacco (MoM) (May) increased from 1.2% to 1.3%

Italian HICP (MoM) (May) decreased from 0.9% to -0.1%

Italian HICP (YoY) (May) increased from 1.0% to 1.2%

Euro Zone:

Trade Balance (Apr) decreased from 22.3B to 10.9B

Reserve Assets Total (May) increased from 852.14B to 885.46B

US/AMERICAS:

A federal judge has blocked Joe Biden’s $4 billion loan forgiveness program that excluded farmers based on race. The Biden Administration deemed that those funds are solely for minority farmers, despite all farmers experiencing hardships during the pandemic. Wisconsin Judge William Griesbach said that Biden’s program could not legally “discriminate on the basis of race.” “Indeed, Congress can implement race-neutral programs to help farmers and ranchers in need of financial assistance, such as requiring individual determinations of disadvantaged status or giving priority to loans of farmers and ranchers that were left out of the previous pandemic relief funding,” Griesbach stated.

The US producer price index advanced at its fastest pace in 11 years, according to the Labor Department. Producer prices jumped 6.6% in May, with the 12-month demand PPI rising 5.3%. Goods inflation rose 1.5%, while services increased 0.6%. Grains aw a huge spike at 25.7%, while oilseeds rose 19.5%, and red meats climbed 10.5%. Retail sales declined -0.7% in May, missing the estimate of an 0.5% increase. Still, spending remains significantly higher compared to May of 2020. Clothing sales alone rose over 200% YoY, electronics and appliances rose 91.3%, and restaurants saw a 70.6% uptick in sales.

Canada will begin to loosen COVID restrictions in July at the federal level. However, Canadian Prime Minister Justin Trudeau is holding firm on keeping the US-Canadian border closed to non-essential travel. Despite the urging from President Biden to lift the ban, the Trudeau administration said that more Canadians need to be vaccinated before travel can resume.

US Market Closings:

Dow declined 94.42 points or -0.27% to 34,299.33
S&P 500 declined 8.56 points or -0.2% to 4,246.59
Nasdaq declined 101.29 points or -0.71% to 14,072.86
Russell 2000 declined 6.07 points or -0.26% to 2,320.07

Canada Market Closings:

TSX Composite advanced 73.67 points or 0.37% to 20,231.32
TSX 60 advanced 6.57% or 0.55% to 1,212.02

Brazil Market Closing:

Bovespa declined 116.88 points or -0.09% to 130,091.08

ENERGY:

The oil markets had a mixed day today:

Crude Oil increased 1.27 USD/BBL or 1.79% to 72.1500
Brent increased 1.15 USD/BBL or 1.58% to 74.0100
Natural gas decreased 0.119 USD/MMBtu or -3.55% to 3.2330
Gasoline increased 0.0003 USD/GAL or 0.01% to 2.1715
Heating oil increased 0.0012 USD/GAL or 0.06% to 2.1128

The above data was collected around 14:42 EST on Tuesday

Top commodity gainers: Crude Oil (1.79%), Palm Oil (1.81%), Live Cattle (1.65%) and Bitumen (3.79%)
Top commodity losers: Copper (-4.00%), Coffee (-1.95%), Wheat (-2.15%), and Natural Gas (-3.55%)

The above data was collected around 14:47 EST on Tuesday.

BONDS:

Japan 0.050%(+1bp), US 2’s 0.1670%(+0.01%), US 10’s 1.4990%(-0.2bps); US 30’s 2.2038%(+0.01%), Bunds -0.2310% (+2.3bp), France 0.147% (+2.4bp), Italy 0.7966% (+2bp), Turkey 17.48% (+18bp), Greece 0.7510% (+0bp), Portugal 0.39% (+0.7bp); Spain 0.413% (+1.79bp) and UK Gilts 0.769% (+3bp).