From the Desk of Lou Brien
- Stocks were lower across the board in Asia overnight. The Hang Seng, fell 1.3%, Shanghai lost 0.9%, the Nikkei was off by about a half, percent and Australia lost one third of a percent. Europe is weak; the Footsie is currently lower by more than two percent and the Dax is off by 1.7%. US stock futures are lower by a bit more than one percent as I write.
- The Reserve Bank of Australia took a break from their series of rate hikes and kept things steady at 4.50%. They also signaled that policy will be on hold for a little while at least as they judge the affect the previous rate hikes had on their economy.
- The May reading of China's Purchasing Managers Index fell to 53.9 from 55.7 the month before; a steeper decline than was forecast and the lowest result since February.
- The May reading of Germany's Unemployment Rate was down one tenth to 7.7%, a steady result had been forecast. Also, the net change in the number of unemployed fell 45k, a much greater decline than the -17k estimate.
- Q1 GDP for Switzerland was +0.4% on a quarter on quarter basis, but this missed the forecast for growth of +0.7% and is down from +0.9%.
- The ECB thinks that Europe's banks will have to write off about $237 billion of bad debts by 2011. The estimate was in the biannual Financial Stability Report, which also said about the situation, "The risk that this implies for bank funding costs also raises the possibility of a setback to the recovery in banking sector profitability." In part because of the ECB comments the dollar/euro is again testing its historical mid-point at 1.2134; the low in the last twenty-four hours is 1.2111 and the current level is down about 150 pips from yesterday at 1.2155.
Disclosure: no positions