- Market Update – equities extended their decline this week, w/the sp500 dropping ~5% (on back of last week’s ~3.6% decline), although late on Thurs and into Fri, it appeared like the worst of the selling pressure had been exhausted.
- The SP500 has been down now for 9 of the last 10 sessions (and 4 of those 9 days have been declines of more than 1%, inc. the 3.1% drubbing experienced on Tues June 29). The big underlying catalyst behind the weakness has been a theme present in the marketplace for a couple weeks now but gaining more adherents every day – a concern that economic growth is quickly slowing and potentially heading for a “double dip”.
- US investors have endured a slew of economic readings coming in below consensus really since the May jobs report back on June 4 (when the private sector adds of just 41K badly missed St expectations of +180K; that 41K has subsequently been revised lower to +33K).
- ECB meeting on Thursday - questions are expected to centre around additional liquidity measures and the ECB's asset purchases. Developments in Euroland bond markets and news out of southern Europe.
- US non-manufacturing ISM - will it hold up better than its manufacturing sibling?
- Monetary policy meeting at the Bank of England is not expected to bring any changes.
- Swedish industrial data and the government s net borrowing needs. Norwegian CPI.
- Global Update
Global PMI's have fallen - fundamentals suggest a slowdown, but the European debt crisis has likely accelerated the decline.
- The Riksbank hiked rates by 25bp, as expected, and the repo path was revised slightly higher in 2010 and 2011, but lower in 2012-13.
- The expiry of the one-year LTRO has brought the duration of Euroland money market liquidity lower, which has put upward pressure on short-term rates.
- The G-20 summit highlighted the change in policy focus from coordinated global growth support to a more diverse agenda. In Europe, focus is on public finances and in Asia attention has turned to inflation fighting.
