The favourable Greek election result lifted sentiment only briefly. The makeup of the coalition government remains unknown and there is scepticism Greece can meet even its revised fiscal targets. Moreover, the completed elections have served to shift focus onto Spain, its 10yr bond yield surging 45bp to a fresh record high of 7.29%. The G20 meeting offered little support, its draft communiqué offering nothing fresh on a grand European union plan. German Chancellor Merkel appeared to play to her electorate, saying Greece must stick to its reform plan. European stocks closed 1.2% lower (Spain down 3.0%), although the S&P500 is currently up 0.2%. The US homebuilders index is up 3.0% after a strong homebuilders’ confidence report. The CRB commodities index is 0.5% higher. US 10yr treasury yields ranged between 11.56% and 1.60%, currently unchanged at 1.58%.
The US dollar index (DXY) rose by around 1.0% overnight, forming a technically bullish reversal signal. EUR optimism following the Greek election was shortlived, the London session seeing it fall from 1.2725 to 1.2558. USD/JPY fell from 79.30 to 78.86 but recovered in NY to 79.10. AUD fell in London from 1.0125 to 1.0057 but recovered with US equities to make a fresh month high of 1.0142. NZD fell from 0.7944 to 0.7888 and recovered to 0.7933. AUD/NZD made a fresh two-month low at 1.2735 early London before firming to 1.2790
Economic wrap
US NAHB housing market index up 1 pt to 29 in June, after May revised down from 29 to 28. The index is at a 5 year high but still 60% lower than its 2005 peak.
UK house prices up 1.0% in June, for a 2.4% yr annual pace, according to the Nationwide.
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