European shares remain lower, close to intraday lows, with the banks and autos sectors underperforming and food & beverage, retail outperforming. Tsipras hardens Greek stance after collapse of bailout talks. The Italian and Swedish markets are the worst-performing larger bourses, the U.K. the best. The euro is weaker against the dollar. Greek 10yr bond yields rise; Spanish yields increase. Commodities decline, with copper, nickel underperforming and natural gas outperforming. U.S. Empire manufacturing, net TIC flows, NAHB housing market index, industrial production, capacity utilization due later.
Mark Carney: "Real markets are essential to guarantee prosperity. Not markets that collapse when there is a shock from abroad. Not markets where transactions occur in chat rooms. Not markets where no one appears accountable for anything." So... not markets which are artificially rigged by $22 trillion in central bank liquidity and which collapse every time the "threat" that any of this preciously liquidity may be taken away?
After a Chinese session which following the MSCI failure to include Chinese stocks in its EM index, if only for the time being, was largely a dud with Shanghai stocks actually dropping by 0.1% after a late day selloff, eyes turned to Europe, which once again did not disappoint and where the bond rout continued apace, with the 10Y Bund yield spiking just after the European open, and rising above 1.05%, the widest level since September 19, before recouping some losses and trading just around 1.00% at last check.
After yesterday's unprecedented volatility fireworks across all markets and continents, today so far has been a modest disappointment, with no crashes and subsequent surges in China, where the Politburo's only achievement was keeping the bubble dream alive by pushing the Shanghai Composite over 5,000 for the first time since January 2008, closing the index 1.5% higher on the day - a very modest gain by China's recent blow-off top standards. Europe, too, has been relatively tame with the 10 Year Bund starting off on the wrong foot, the yield rising back above 0.91% before once again dipping to the upper 0.8% range, tracking the move in the EURUSD tick for tick, which also is a tractor beam for the US 10 Year. On the equity, front, things are just as muted, with futures at the Low of Day as of this moment, despite yesterday's last minute manic buying spree, the S&P set to open below 2100 as a result.
For once Mario Draghi was right. A day after the European central bank head warned of a spike in volatility, volatility did just that, with markets everywhere from China to Europe seeing volatility explode.
Will global QE carry on forever...the next month may give out some clues..will it be Junemaggedon after we had May-hem??
June is off with a bang, and a very busy week in the macro economic calendar, both globally and in the US, which culminates with the latest "most important ever" payrolls report, one which will surely be closely watched by a Fed which may hike as soon as a few weeks from now (but probably won't).
Remember China's 6% crash last week? It is now a distant memory made even more remote thanks to the latest batch of ugly data out of China, coupled with hints of even more liquidity injections, which led to the latest surge in the Shcomp, an index that has put most pennystocks to shame. In Europe, the big story remains Greece, and as everyone expected, the doomed country and its creditors failed to make a deal on Sunday. This is after Greek Officials were said to have prepared a draft agreement, which was expected to be announced on Sunday. Not helping things, Greek PM Tsipras came out in fully defiant mode and accused bailout monitors of making “absurd” demands and seeking to impose “harsh punishment” on Athens. A bunch of final PMI number showed a modest improvement in the periphery at the expense of Germany whose deterioration is starting to be a concern.
Combination of important events/data and large move in last two weeks, the dollar may pullback/consolidate in the days ahead.
Earlier today the Austrian Central Bank confirmed the Kronen-Zeitung report, and said that by the year 2020, it would hold 50%, or 140 tons, of its gold domestically, up from 17% currently. This means that Austria will withdraw some 140 tons of gold from the BOE which holds 80% of Austria's gold currently and send 92.4 tons back home to Vienna with another 47.6 tons being sent to Switzerland. Which is also the biggest news: Austria is explicitly demonstrating a lack of confidence in the "pro-western" system of which the Bank of England is a critical cog, and instead opting for "neutral" Switzerland, which will hold nearly 50 tons of the gold formerly located at the Bank of England.
The Man in the Moon studies the pathology of Earth’s global economy and markets from a distance where there’s no gravitational pull towards empiricism or consensus. His findings: 1) the global economy is over-leveraged, fragile, stagnating, and increasingly centrally managed; 2) capital markets and asset performance have been captured by the perception of the ongoing value of money, and so; 3) unconventional investment analysis is prudent.
The first rule of “Project Bookend” is that you don’t talk about “Project Bookend.” In retrospect, maybe the first rule should have been “you don’t accidentally e-mail ‘Project Bookend’ to a news agency.”
Six months ago we warned that Austria was considering it, and now, as Kronen-Zeitung reports, with no rigged Swiss-like referendum required, Austrian Central Bank Governor Edwald Nowotny has committed to repatriating 110 tonnes of gold. This is part of Nowotny's new "gold strategy" and with his position (on paper) as one of Draghi's foremost lieutenants, appears to be a huge stab in the back for super-Mario. While gold withdrawals from the NY Fed are incessant, this time it appears the Bank of England faces the trust-fall as 80% of Vienna's gold is held there.
As the live webcast from US AG Loretta Lynch indicates, moments ago the DOJ announced five global banks including Citi, J.P. Morgan, Barclays, RBS would plead guilty to criminal charges to conspiring to manipulate FX Prices, and would pay some $5.6 billion in combined penalties to resolve a long running U.S. investigation into whether traders at the banks colluded to move foreign currency rates in directions to benefit their own positions.