ETX Capital Daily Market Bite, 14th June, 2013: Markets Rebound But Euro Zone Data Weighs
June 14, 2013 10:44 am
June 14th 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Losing a bit of momentum as we head into lunch here in Europe with jobs data from the euro zone reaffirming the dire situation in the 17-nation bloc. EZ unemployment jobless rate is at 7-year lows with the data showing a sharp decline in the number of people employed. Greece was the worse where people in work dropped by 2.3% on the quarter, followed by Portugal and the rest of the usual suspects in the southern periphery.
Harmonised Inflation data from the region was in line with expectations so the ECB have little excuse to refrain from stimulating the economy however this month’s policy meeting was difficult to swallow with a more hawkish Draghi who held back from hinting on using tools to kick-start growth in the months ahead. Traders are worried that the ECB is falling increasingly behind the curve with monetary policies and must act in order to generate growth in the region by the end of the year. The inactive OMT programme may have helped stabilize prices in money markets from late last year up until recently but it has not been used as the threat of bailouts have receded across the region and may not even need to be tapped into anytime soon. The market wants an active plan from the ECB at a time when the Fed could potentially remove liquidity.
Furthermore, questions about the OMT’s legality by German lawmakers has the market jittery over how effective the programme could be if the ECB is unable to use it in the way that’s intended. US stock futures are indicating a lower open on Wall Street with the DJIA front month futures contract off around 24 points and the S&P500 contract down 2.5 points. It seems that caution is creeping back in the market ahead of some crucial data in the form of industrial output and the Michigan confidence report with markets again likely to use the data as a gauge to second guess the Fed’s move ahead of next Wednesday’s policy meeting.
June 14th 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Losing a bit of momentum as we head into lunch here in Europe with jobs data from the euro zone reaffirming the dire situation in the 17-nation bloc. EZ unemployment jobless rate is at 7-year lows with the data showing a sharp decline in the number of people employed. Greece was the worse where people in work dropped by 2.3% on the quarter, followed by Portugal and the rest of the usual suspects in the southern periphery.
Harmonised Inflation data from the region was in line with expectations so the ECB have little excuse to refrain from stimulating the economy however this month’s policy meeting was difficult to swallow with a more hawkish Draghi who held back from hinting on using tools to kick-start growth in the months ahead. Traders are worried that the ECB is falling increasingly behind the curve with monetary policies and must act in order to generate growth in the region by the end of the year. The inactive OMT programme may have helped stabilize prices in money markets from late last year up until recently but it has not been used as the threat of bailouts have receded across the region and may not even need to be tapped into anytime soon. The market wants an active plan from the ECB at a time when the Fed could potentially remove liquidity.
Furthermore, questions about the OMT’s legality by German lawmakers has the market jittery over how effective the programme could be if the ECB is unable to use it in the way that’s intended. US stock futures are indicating a lower open on Wall Street with the DJIA front month futures contract off around 24 points and the S&P500 contract down 2.5 points. It seems that caution is creeping back in the market ahead of some crucial data in the form of industrial output and the Michigan confidence report with markets again likely to use the data as a gauge to second guess the Fed’s move ahead of next Wednesday’s policy meeting.
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