Daily Market Color 05/22/2013

Daily Market Color

05/22/2013

Economic Reports & Headlines

The Bank of England released minutes for its most recent meeting. The Monetary Policy Committee had a split vote once again on a move to increase their asset purchase program by 25bn pounds.

April’s retail sales report in the UK contracted unexpectedly on a month over month basis. The reading was lower than consensus, -130bps Vs 0bps

CBI released its Industrial Trends survey for May. The report came in below consensus, -20 Vs -17.

On the domestic front, the National Association of Realtors released their existing home sales report for April which came in slightly below economists’ forecast, 4.97m Vs 5.00m. Existing homes sales are at a three year high.    

Ben Bernanke’s testimony to congress was dovish. It appears that the Federal Reserve Chairman believe tighten monetary policy within the near future would be premature.

Future Reports

Tonight we will get a flash manufacturing PMI reading from China.

Tomorrow we will get flash PMI composite readings from France, Germany and the Eurozone.

The UK will release GDP data and Italy will give a read on retail sales.

On the domestic front, market participants will last week’s jobless claims report. Economists’ are calling for claims to come in at 345k.

US’s Flash PMI manufacturing report is expected to come in at 50.8. Any reading above 50 indicates an expansion.

We will get a read on new homes sales in the US for April. Consensus is calling for 425k new home sales.

  

Trade

The housing market and accommodative Fed policy is propelling US equities to new heights. In two weeks we will get an updated read on employment in the US. The Banks of Japan plan to meet with JGB market participants on May 29^th to discuss the turbulence in Japanese Government bond yields. This meeting is expected to assist the Bank of Japan to schedule their bond purchases for June. I suppose they expect that this will cause decrease rapid swings and create a gradual move JGB yields. But I doubt that the scenario will come to fruition. I will continue to short the Yen.