The May CPI rose .2% m/o/m both headline and core as expected. This brings the y/o/y gain to 2.8% and the core rate to 2.2%. That core rate is one tenth from matching a 10 yr high. Energy prices jumped by 12% y/o/y led by gasoline. Food prices were up by 1.2%. Services inflation ex energy, the persistent push on higher prices, was up .3% m/o/m and 3% y/o/y driven …
Interesting Times
We of course hope that yesterday was the first step to ending the nuclear threat of North Korea but maybe it was also a good taste of capitalism for Kim Jong Un as he walked the streets of Singapore. Economic opportunity, private property and freedom of choice after 70 years of repression would be great to see in North Korea. The South Korean Kospi was flat overnight …
Bond auctions and what they say
The 3 yr note auction was mediocre with a yield of 2.664%, exactly where the when issued was trading just prior. The bid to cover of 2.83 was below the one year average of 2.93. And, dealers got left with 39.4% of the auction, a touch above the 12 month average of 37% with direct and indirect bidders taking the rest. The 10 yr auction was better. The yield of …
An interesting week to come
The Italian markets heard exactly what they wanted to hear from the Italian Finance Minster Giovanni Tria who spoke yesterday. "The position of the government is clear and unanimous. There is no question of leaving the euro...It's not just that we do not want to leave, we will act in such a way that the conditions do not get anywhere near to a position where they …
China/Europe
The trade data out of China in May was better than expected. In yuan, exports rose 3.2% y/o/y, double the estimate and imports jumped by 15.6%, nearly twice the forecast. Because of the strength in the dollar, exports were up by almost 13% in dollar terms with the trade surplus with the US rising to $24.6b vs $22.2b in April. We of course wait for some deal or …
Brazil/Italy
The Brazilian stock market is getting blasted today, now down almost 6% and the Real is lower by 2.7%. This is also dragging down some other EM currencies like the South African Rand, and Mexican Peso (worries about NAFTA). Brazil is coming off a brutal week of strikes which hurt their economy at the same time political worries ahead of their fall election are picking …
Tattoos & piercings are fine and same if you’re a felon
Initial jobless claims totaled 222k, 2k more than expected and little changed with the 223k seen last week (revised up by 2k). The 4 week average did tick up to 226k from 223k because a 211k print 5 weeks ago dropped out of calculation. Continuing claims, delayed by a week, rose 21k after falling by 22k last week. The bottom line is still the same and we all know …
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Bonds/Sentiment/German data soft again
With another selloff in German, French and UK bonds, the US 10 yr yield is knocking on the 3% door again at 2.99%. Italian bonds are bouncing a touch with the 2 yr yield down by 5 bps but that comes after yesterday's jump of 36 bps. The 10 yr yield is down by 2.5 bps. Yesterday's selloff in European and US bonds spilled over into Asia with yields there too up across …
Trade/Jack/Productivity
The April trade deficit narrowed to $46.2b from $47.2b in March. That was about $3b less than expected and as a result should lead to a rise in Q2 GDP forecasts by a few tenths. Exports were up .3% m/o/m to a new record high, helped by our new energy export business, while imports fell by .2%. The possibility of and now implementation of some tariffs will filter thru …
The ECB story yesterday confirmed today
Italian bonds are weaker again with the 2 yr yield up 17 bps to 1.18% and the 10 yr yield is up by 6 bps to 2.85%. There is not however any flight to safety in German, French, UK and US bonds because of the response to the story yesterday that June was a live meeting for the ECB in terms of discussing the end of QE. The ECB Chief Economist Peter Praet confirmed …
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Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.