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Daily Market Commentary

 UK retail sales declined 3.9% in June, the biggest drop since the mid 80's.  The slowdown is being blamed on a slower economy, rising unemployment and price increases from food and energy.  Somewhat contrarily, we are hearing this evidence more and more.  Rising unemployment, slower economy is usually synonymous with LOWER inflation, not higher.  This is another reason why we are stubbornly sticking with a call that says inflation will not be as big a problem as central banks are currently forecasting.  High food and energy prices are, in the longer term, disinflationary.

Sterling are getting creamed on this news and are by far the weakest currency in the world. 

The RBNZ lowered rates overnight to 8%.  New Zealand's economy is lowing markedly, but is still feeling big inflationary pressure because of its proximity to China.  NZ has one of the most internationally open economies in the world. 

Bonds in Canada are slightly higher, mostly on the back of weak equities.  Credit seems to be hovering here.  Some industries are better while others are worse.  It's interesting to note that Cdn bank spreads have moved out this week, while most other credit is slightly improved.    

Lots of earnings are out this morning, and existing home sales at 10am so we will be watching the tape closely. 

Jobless claims are out, initial are way up, while continuing claims have dropped.  There is not a lot of verbiage behind the numbers, but we've got to assume that the participation rate dropped when first time claimants are outpacing continuing by a wide margin.  We continue to watch employment trends closely, especially after last months huge half point rise in the unemployment rate. UK retail sales declined 3.9% in June, the biggest drop since the mid 80's.  The slowdown is being blamed on a slower economy, rising unemployment and price increases from food and energy.  Somewhat contrarily, we are hearing this evidence more and more.  Rising unemployment, slower economy is usually synonymous with LOWER inflation, not higher.  This is another reason why we are stubbornly sticking with a call that says inflation will not be as big a problem as central banks are currently forecasting.  High food and energy prices are, in the longer term, disinflationary.

Sterling are getting creamed on this news and are by far the weakest currency in the world. 

The RBNZ lowered rates overnight to 8%.  New Zealand's economy is lowing markedly, but is still feeling big inflationary pressure because of its proximity to China.  NZ has one of the most internationally open economies in the world. 

Bonds in Canada are slightly higher, mostly on the back of weak equities.  Credit seems to be hovering here.  Some industries are better while others are worse.  It's interesting to note that Cdn bank spreads have moved out this week, while most other credit is slightly improved.    

Lots of earnings are out this morning, and existing home sales at 10am so we will be watching the tape closely. 

Jobless claims are out, initial are way up, while continuing claims have dropped.  There is not a lot of verbiage behind the numbers, but we've got to assume that the participation rate dropped when first time claimants are outpacing continuing by a wide margin.  We continue to watch employment trends closely, especially after last months huge half point rise in the unemployment rate.



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