Intraday Market Thoughts

Spain Spreads Push Further, ADP Disappoints, Chicago PMI Next

by Patrik Urban
May 31, 2012 14:31

Draghi's urges leaders to clarify there is EZ vision; German retail sales rose m/m but fell sharply y/y; German unemployment rate lower; Eurozone CPI eased; Swiss GDP rose. USD ADP rose to 133K from 113K but was 20K less than expected; Q1 GDP revised down to 1.9% and jobless claims rose by 10K. Chicago PMI is next. Details on last nights Premium Intermarket Insights are found below. These include key chart on monthly stochastics of Spains 10-yr yields chart as part of the 4-in-1 charts.

The ECB president Mario Draghi said today that European leaders must clarify their vision for the Eurozone. They should outline a banking union that would guarantee pan European deposits, create European bank resolution fund and centralize bank supervision, MNI reports. As a consequence sovereign spreads and risk aversion would decline, he added.

German retail sales rose only 0.6% in April after 1.6% in March while annual sales dropped by 3.8% from previous 3.2%. The labor market continues to be resilient as the unemployment rate declined to 6.7% from 6.8% and the number of unemployed Germans remained unchanged.

In other news, Eurozone CPI eased further to 2.4% from 2.6% reaching a 15 month low; Swiss Q1 GDP rose 0.7% from 0.5% q/q but remained steady at 2% on annual basis and UK nationwide HPI declined 0.7% in May from previous -0.9% y/y.

Spanish and Italian 10 year yields are lower today around 6.51% and 5.83% respectively. Spain-German 10 yr spread enters its 4th day above 5%. +5% is the bailout territory for Greece, Ireland and Portugal.

US May ADP disappointed at 133K from a revised 119K ve expectations of 150K, while US Q1 GDP was revised down to 1.9% from 2.2% as expected, with Personal Consumption revised down to 2.7% from 2.9%. US Jobless claims rose to 383K from a revised 373K, vs. an expected decline to 370K.

Chicago PMI is due at 9:45 am and it is seen marginally higher in May at 56.7 after falling considerably in April to 56.2.

Ireland is voting today to ratify the fiscal treaty. While an approval is widely expected, a failure to ratify the treaty would weaken the common currency even further. The polling stations close at 10 pm local time (5pm ET).

Both of Wednesdays EURUSD trades are in progress; only 1 of 2 USDCAD longs is filled and in progress and only 1 of 2 AUDUSD shorts is in filled and in progress; GBPUSD short has been filled, targeting the key target from last weeks premium charts; Gold stopped out at 1570 & were sitting back for now . For direct access, click here ; Non Subscribers can join here:


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