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Daily Briefing – Thursday, June 1, 2017


With Brexit negotiations set to start in 10 days, 2 policy papers have emerged from the EU, one listing the 40 agencies, 8 projects and aid funds to which the UK owes money and the other stating that the European Court of Justice is having jurisdiction over all disputes. The FTSE lost 0.1% on closing but is showing a spectacular 4.4% gain for the month of May, as the Labor party continues to advance against Conservatives ahead of upcoming elections. Mortgage approvals yesterday were down 1.5Kbut consumer credit fell but not as low as analysts had expected (1.5bn GBP)Elsewhere in Europe, as today’s PMIs begin to roll in, yesterday’s unemployment figures showed a 1/10th% drop but inflation is at a 5-month low – 1.4% for the region.


Contradicting official numbers, the Caixin/Markit manufacturing PMI for China overnight revealed a contractionary 49.6 for the first time in a year. The data comes in as unemployment rises and the offshore Yuan rate was increased by the central bank by 0.8% in one session – all together causing the AUDUSD to erase overnight gains. Meanwhile, Australia’s retail sales figure for April shows a 1% rebound after March’s slight contraction, this following a worrying rise in household debt and house prices. And Japanese data overnight was excellent, with capital spending up 4.5% and the manufacturing PMI rising to 53.1


US indexes ended the day in the red yesterday after the Redbook Index continued to show declines and the Federal Reserve’s Beige Book showed improving economic activity levels and continuing to make a case for a June interest rate hike. In the biggest drop in 3 years, pending home sales yesterday fell by 1.3%, bringing the YoY result to -5.4%. Yesterday, the Wall Street Journal reported that President Trump – after signaling his intention of backing out of the Paris Accord – was now exploring increasing oil production in Alaska.


Crude oil fell back to the $47 level after JBC Energy – a private research firm – reported that compliance amongst OPEC members with their production freeze agreement had fallen to 92% in May. The commodity then bounced back above $48 following the API’s report of a 8.7mB inventory withdrawal.


Week’s Events

7:15-8:30 AM GMT Portugal, France, Italy, Germany, Greece, & EU:  Markit Manufacturing PMIS
8 AMGMT Italy: GDP
12:30 PM GMT US: Jobless Claims. Then at 1:30, Markit PMIs followed at 2 by ISM PMI & prices, and construction spending.
3 PM GMT EIA Crude Oil inventories

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