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Financial Markets Review – 17th June 2016

Monday 13 June

  • May inflation data for the UK with the CPI (expected +0.3% mom; +0.1% previous), RPI (expected +0.3% mom; 0.1% previous) and PPI (expected +0.3% mom; +0.4% previous) numbers due – all of which should be watched closely ahead of the BoE meeting on Thursday.

Tuesday 14 June

  • In the UK, the May inflation numbers largely came in softer than expected. CPI (+0.2% mom vs. +0.3% expected) and PPI (+0.1% mom vs. +0.3% expected) both came in lower than expected, and while RPI was in line with expectations on a monthly basis (+0.3% mom). We also saw the final May CPI numbers for Italy (-0.3% YoY) and Spain (+0.5% mom; -1.1% YoY), both of which were in line with expectations. Eurozone April industrial production data out of the, which clocked in at the very upper end of the forecast range and well above expectations (+1.1% mom vs. +0.8% expected).
  • In the US, the NFIB Small Business Optimism index for May exceeded expectation and hit its highest level since January (93.8 vs. 93.6). US retail sales also beat expectations and posted an increase of +0.5% mom in May (vs. +0.3% expected).

Wednesday 15 June

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  • FOMC meeting concluded that the base interest rates will be kept unchanged at 0.50%.
  • In Europe, French May CPI provided a surprise on the upside at +0.5% mom (vs. +0.3%expected). Prices were up +0.1% YoY (0.0% expected). In the UK the labour market remains resilient despite uncertainty ahead of the upcoming referendum, with the unemployment rate for May declining to 5.0% (vs. 5.1% expected; 5.1% previous) – the lowest levels since 2005. Wages growth also ticked up as weekly earnings increased by +2.3% 3m/YoY (vs. +2.0% expected; +2.2% previous).
  • In US, we saw producer prices for May tick up by +0.4% mom (+0.2% previous) and beat estimates (+0.3% expected), primarily driven by the biggest rebound in energy costs since May 2015.
  • Bank of Japan, Bank of England and Swiss National Banks kept their base interest rate unchanged at -0.10%, 0.50% and -0.75% respectively.
  • The yen has touched its strongest level in two years after the Bank of Japan stopped short of easing policy, while demand for developed world government debt is keeping yields at notable lows after inaction from the Federal Reserve and the Bank of England.
  • UK retail sales grow faster than expectet for May at 0.9% to 0.2%, which lead to a YoY growht of 6% compare to 3.9%.
  • US jobless claims rise to 277,000 this week from 264,000 the week prior.

Friday 17 June

  • Japan’s PPI for May came in line with expectation at 0.2%, and brought YoY PPI to be -4.2%.
  • US building permits in May was slightly below market expectation at 1.13 million, compares to 1.15 million forecast. Canada CPI in May showed a MoM gain of 0.3%, in line with market expectation.
IndexActual priceWeek to dateMonth to dateYear to date
S&P 5002074.4-1.0-1.01.5
Eurostoxx 600325.7-2.2-6.2-11.0
Nikkei15599.7-6.0-9.5-18
MSCI Emerging Markets799.8-2.9-0.90.7
FTSE 1006017.44-1.61-3.42-3.60
Treasury yield 10 years1.60-0.04-0.24-0.67
Bund yield 10 years0.01-0.01-0.13-0.62
Gilt yield 10 years1.13-0.10-0.30-0.83
USD vs Sterling1.4280.18-1.38-3.07
Sterling vs Euro0.790-0.07-2.66-6.66
USD vs Emerging Markets FX66.953-1.310.332.00
Commodity Index191.5-0.72.98.7
Gold1289.01.26.121.5
Brent Oil48.5-4.1-2.530.0

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