Posted Jun 21, 2022 by Martin Armstrong
Australia’s top central banker on Tuesday flagged a lot more policy tightening ahead as rates were still “very low” and it was important that higher inflation did not feed into public expectations and wage claims. Reserve Bank of Australia (RBA) Governor Philip Lowe warned price pressures continued to build both globally and domestically and inflation was now seen reaching 7% by the end of the year, up from a previous forecast of 6%. That would be the highest pace in decades and far above the RBA’s long-term target band of 2-3%. The official cash rate is currently at 0.85% having been lifted by 50 basis points earlier this month following an initial quarter-point hike in May.
Singapore is committing S$1.5 billion on inflation relief for businesses and households, as global prices climb faster than earlier projected and are likely to stay high. With energy prices possibly elevated into the second half of the year, certain small businesses will now get government funding of up to 70 percent for energy-efficient equipment. The new Energy Efficient Grant is aimed at the food services, food manufacturing, and retail sectors.
The major Asian stock markets had a mixed day today:
- NIKKEI 225 increased 475.09 points or 1.84% to 26,246.31
- Shanghai decreased 8.71 points or -0.26% to 3,306.72
- Hang Seng increased 395.68 points or 1.87% to 21,559.59
- ASX 200 increased 90.40 points or 1.41% to 6,523.80
- Kospi increased 17.90 points or 0.75% to 2,408.93
- SENSEX increased 934.23 points or 1.81% to 52,532.07
- Nifty50 increased 288.65 points or 1.88% to 15,638.80
The major Asian currency markets had a green day today:
- AUDUSD increased 0.00112 or 0.16% to 0.69764
- NZDUSD increased 0.00027 or 0.04% to 0.63367
- USDJPY increased 1.275 or 0.94% to 136.367
- USDCNY increased 0.00112 or 0.02% to 6.69042
- Gold decreased 2.31 USD/t oz. or -0.13% to 1,835.98
- Silver increased 0.153 USD/t. oz or 71% to 21.733
No economic news from last night:
Some economic news from today:
CPI (YoY) (May) decreased from 1.30% to 1.20%
GlobalDairyTrade Price Index decreased from 1.5% to -1.3%
Britain has been gripped by a brutal cost of living crisis, triggered largely by Russia’s war in Ukraine, which has seen the cost of everyday essentials and prices at fuel pumps throughout the country skyrocket. The UK economy shrunk by 0.1 percent in March, and economists are warning of further contractions throughout the course of this year. Inflation has soared above nine percent – a huge 40-year high – with the Bank of England last week raising interest rates by 0.25 percentage points to 1.25 percent, warning inflation is expected to peak above 11 percent later this year. Economists are becoming increasingly fearful the UK will sink into recession, with the Organization for Economic Co-operation and Development (OECD) cutting its UK growth forecast for 2023 to zero – the lowest in the G20.
Germany on Sunday announced its latest steps to boost gas storage levels to prepare for the next winter season, when it fears Russia, which has cut deliveries in recent days, could reduce or even completely halt supplies. Germany’s Economy Ministry said the new measures would include increased reliance on coal-fired power plants as well as an auction system starting in the coming weeks to incentivize industry to consume less. It also includes 15 billion euros ($15.8 billion) in credit lines for Germany’s gas market operator, via state lender KfW, to fill gas storage facilities faster, Reuters reported.
The major Europe stock markets had a green day:
- CAC 40 increased 44.57 points or 0.75% to 5,964.66
- FTSE 100 increased 30.24 points or 0.42% to 7,152.05
- DAX 30 increased 26.80 points or 0.20% to 13,292.40
The major Europe currency markets had a mixed day today:
- EURUSD increased 0.0022 or 0.21% to 1.05372
- GBPUSD increased 0.00241 or 0.20% to 1.22746
- USDCHF decreased 0.00186 or -0.19% to 0.96544
Some economic news from Europe today:
Trade Balance (May) decreased from 3.600B to 2.000B
CBI Industrial Trends Orders (Jun) decreased from 26 to 18
Current Account (Apr) decreased from -1.6B to -5.8B
Current Account n.s.a. (Apr) decreased from 8.7B to -5.4B
Rising rates are beginning to curb the home-buying frenzy in the US. Existing home sales fell 3.4% in May to a seasonally adjusted annualized rate of 5.41 million units. The National Association of Realtors noted that this is the lowest reading on record since June 2020 when the pandemic prevented many from moving. On a yearly basis, sales declined by 8.6%. However, the lack of available homes pushed prices higher; the median home price in the US is now $407,600, a 14.8% YoY increase and the highest level since the association began keeping records in the 1980s.
The C$35 billion plastic industry in Canada took a hit today after it was announced that the nation will ban single-use plastics. The federal government will prohibit imports on plastic bags, straws, cutlery, and takeout containers by the end of the year, and exports on those products will be prohibited in 2025. Data from 2019 shows that manufacturers provided 15.5 billion in grocery bags, 4.5 billion in cutlery, and 805 million takeout containers. The plastic industry in Canada employs 100,000 people, many of whom are expected to be laid off in the near future.
US Market Closings:
- Dow advanced 641.47 points or 2.15% to 30,530.25
- S&P 500 advanced 89.95 points or 2.45% to 3,764.79
- Nasdaq advanced 270.95 points or 2.51% to 11,069.3
- Russell 2000 advanced 28.34 points or 1.7% to 1,694.03
Canada Market Closings:
- TSX Composite advanced 73.66 points or 0.38% to 19,257.29
- TSX 60 advanced 3.52 points or 0.3% to 1,168.07
Brazil Market Closing:
- Bovespa declined 168.17 points or -0.17% to 99,684.5
The oil markets had a green day today:
- Crude Oil increased 0.88 USD/BBL or 0.80% to 111.060
- Brent increased 0.89 USD/BBL or 0.78% to 115.02
- Natural gas increased 0.174 USD/MMBtu or 2.59% to 6.8870
- Gasoline increased 0.0605 USD/GAL or 1.57% to 3.9066
- Heating oil increased 0.0265 USD/GAL or 0.60% to 4.4682
- Top commodity gainers: Lumber (6.69%), Natural Gas (2.59%), Coffee (2.48%) and Bitumen (1.90%)
- Top commodity losers: Oat (-3.55%), Corn (-3.57%), Steel (-2.44%) and Wheat (-4.94%)
The above data was collected around 13:31 EST on Tuesday.
Japan 0.235%(+0bp), US 2’s 3.21% (-0.039%), US 10’s 3.2996% (+2.1bps); US 30’s 3.37% (+0.029%), Bunds 1.776% (+3.3bp), France 2.3320% (+1.4bp), Italy 3.817% (+2.4bp), Turkey 18.87% (+5bp), Greece 3.962% (-2.3bp), Portugal 2.846% (+5.4bp); Spain 2.862% (+1.1bp) and UK Gilts 2.6540% (+4.9bp).