Anchor resume from 30 of June to 7 of July 2017
Friday, 07 of July 2017
At a time when geopolitical tensions are increasing (North Korea conducting tests with intercontinental missiles and Qatar refusing the agreements with its neighboring countries), the G-20 meeting of the weekend will be the following reference, in a week in which we still have to digest the minutes published by the Fed and the ECB.
Although the ECB Minutes did not announce concrete plans of action for the rates normalization and the reduction in the ECB's balance sheet, it was recorded that a debate had begun about it, whach triggered strong outflows in the equity markets. At the same time, the Euro continued to strengthen, as the bond IRRs rebounded in anticipation of more restrictive macroeconomic policies.
We have been witnessing the statements of some of the ECB members as well, such as those led by the German Peter Praet, who was optimistic about the effectiveness of the measures implemented and the economic recovery as shown by the macroeconomic data that have been updated during the recent days. Manufacturing PMI rates surged to be at maximum levels of 57,4 from 57,3 expected, benefiting from an increase in new orders. Among them, it is possible to emphasize that Greece returned to situate in expansive terrain from August of the 2016th.
On the negative side, prices maintained the negative trend. The latest data about production prices suffered further falls of -0.4% compared to the expected -0.2% (+3.3% year-on-year with respect to the expected +3.5% and the previous +4.3%).
In contrast to the minutes published in the European Union, the Americans did present a plan for monetary normalization by gradually reducing the balance. However, at the moment it will not be applicable even though equity markets corrected immediately leading the selective S&P500 to the 2.400, where there is an important level of support.
With this, the market gives a +33% of probability to an increase of interest rates of 25 basis points during the September FED meeting and a +61% in December.
We also witnessed the publication of important employment data, among which we highlight the non-agricultural payrolls from June, which have been better than expected, with 222.000 new non-agricultural jobs (compared to the 179.000 expected). The unemployment rate remained at minimum levels (+4.4%) and there has been an improvement in average income of +0.2%.
Looking ahead to the next few days, we will closely follow the G-20 meeting that began today, which will be extended over the weekend, as well as Janet Yellen's appearances scheduled for Wednesday and Thursday.
From the Asian continent, we began the week with the defeat of the current governor of Japan (Abe) in the elections of Tokyo against the governor of the Japanese capital (Yuriko Koike), opening the falls in the Yen. These declines were intensified as a result of Kuroda's intermediation in the markets through new injections of liquidity that were intended to curb the rebounds of the TIRs of the bonds. As for relations with the Eurozone, we anticipate a greater trade between both regions on the basis of the preliminary agreement reached to eliminate 99% of the tariffs imposed by both parties.
For the Asian giant, the PMI Caixin rates were updated, which recovered from previous declines and exceeded forecasts (now in the 50.4 expansion range compared to forecasts of 49.5).
As for the commodities, crude oil fell sharply facing of the refusal of countries like Russia to increase cuts in agreed production rates. We expect that the volatility in the price of the barrel of Brent will continue being high for the next days before the sensitivity of the asset to the declarations made by the different ministers of energy.