Market Weekly Wrap-up: June 27th – July 1st
– Global equity markets surged this week as the Greek government managed to pass a five-year austerity plan, and data from select US manufacturing reports suggested that the recent soft patch will not turn into another economic downturn. In Greece, domestic political squabbling provided some volatility ahead of parliamentary votes on Wednesday and Thursday, but in the end the Greek ruling party carried the day and forced through its medium-term plan, clinching the release of the next tranche of IMF financial aid and averting an immediate default. European governments made progress on encouraging domestic banks to agree to roll over Greek debt into longer maturities, although investors have few illusions about Greece’s long-term viability as yields on Greek government debt remains disturbingly high. In the US, the June ISM Manufacturing and Chicago PMI reports beat expectations by healthy margins, suggesting that the recent slump in manufacturing may be a temporary phenomenon. QE2 expired on Thursday without causing any major ripples in the Treasury market, although there were notably weak auctions for 2-, 5- and 7-year notes, pushing yields higher. Fed Governor Bullard praised quantitative easing for preventing a Japan-style crisis in the US economy and explained that the effects of QE2 lag implementation by 6 to 12 months. Oil futures moved up from the six-month lows seen in the wake of the IEA’s reserve release announcement last week, with front-month WTI crude closing out the week just shy of $95. Spot gold ended below $1,500 for the second consecutive week, hitting six-week lows around $1,485 as risk appetite picks up once again. Stock markets posted impressive gains; for the week the S&P rose 5.6%, the Dow gained 5.4% while the NASDQ surged 6.2%.
Great Calls From This Week
Forex:
06/27 03:56ET EUR/USD: (IT) Hearing vague dealer chatter that Fitch could revise Italy’s sovereign outlook to Negative from Stable
**Reminder: on Jun 21st Fitch stated that it had no plans to change outlook on Italy from its current outlook (Stable)
**Note: Both S&P and Moody’s have revised their outlook on Italy to Negative over the last five weeks.
Result: TTN pointed out that only last week Fitch stated that it had no plans to change the outlook on Italy and that the rumor was unsubstantiated
Equities:
06/28 13:24ET NKE: Raises long-term guidance, sees FY15 Rev $28-30B v $27B prior guidance – analyst day
Result: Stock traded more than a point after the post and heading into the close
Hear It Live Next Week
Tuesday: May Factory Orders
Wednesday: ISM non manufacturing
Thursday: Same Store Sales, June ADP employment, Fed’s Hoenig
Friday: June Non farm payrolls, Unemployment Rate, Consumer Credit
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