28 Jun 2013
Flash: Global risk sentiment continues to recover - OCBC Bank
Fxstreet.com (Barcelona) - OCBC Bank Treasury Analysts note that global risk sentiment continued to recover.
They see that this progress come amid more encouraging economic data from the US and Japan, more soothing words from Fed officials to calm market’s recently ruffled feather over QE tapering, and further normalization China’s money market.
They start by noting that US’ initial jobless claims fell 9k to 346k, while May pending home sales surged 6.7% mom (+12.5% yoy), the highest since Dec 2006 reinforcing the optimism in the housing market. Further, they see that personal income rose 0.5% in May, following a 0.1% gain in April, and personal spending rebounded by 0.3% after a revised 0.3% contraction previously, suggesting that Americans were regaining confidence to spend. In particular, they highlight real disposable income
increased by 0.4%, extending the 0.3% gain in April, and the savings rate rose to 3.2% (highest this year).
Over in Japan, they see that industrial production spiked more than expected by 2.0% mom (-1.0% yoy) in May, versus 0.9% mom (-3.4% yoy) in April, commenting that “albeit the unemployment rate held at 4.1% (forecast: 4.0%)”. Jumping back to the US, they write, “Fed’s Dudley also added to the bandwagon of downplaying QE tapering speculation by saying that any rate hike is “very likely to be a long way off” and “asset purchases would continue at a higher pace for longer” if “labour market conditions and the economy’s growth momentum were to be less favorable than in the FOMC’s outlook””. However, they finish by noting that gold continued to be knocked lower to below the US$1200 handle and is headed to a record quarterly decline.”
They see that this progress come amid more encouraging economic data from the US and Japan, more soothing words from Fed officials to calm market’s recently ruffled feather over QE tapering, and further normalization China’s money market.
They start by noting that US’ initial jobless claims fell 9k to 346k, while May pending home sales surged 6.7% mom (+12.5% yoy), the highest since Dec 2006 reinforcing the optimism in the housing market. Further, they see that personal income rose 0.5% in May, following a 0.1% gain in April, and personal spending rebounded by 0.3% after a revised 0.3% contraction previously, suggesting that Americans were regaining confidence to spend. In particular, they highlight real disposable income
increased by 0.4%, extending the 0.3% gain in April, and the savings rate rose to 3.2% (highest this year).
Over in Japan, they see that industrial production spiked more than expected by 2.0% mom (-1.0% yoy) in May, versus 0.9% mom (-3.4% yoy) in April, commenting that “albeit the unemployment rate held at 4.1% (forecast: 4.0%)”. Jumping back to the US, they write, “Fed’s Dudley also added to the bandwagon of downplaying QE tapering speculation by saying that any rate hike is “very likely to be a long way off” and “asset purchases would continue at a higher pace for longer” if “labour market conditions and the economy’s growth momentum were to be less favorable than in the FOMC’s outlook””. However, they finish by noting that gold continued to be knocked lower to below the US$1200 handle and is headed to a record quarterly decline.”