Wednesday, July 1, 2015

Economic Journal - Wednesday, 7/1/2015


(As of 7:15 am PST)


The third quarter kicks off today and it looks like we’re going to have a busy one. Stocks are rallying throughout Europe and the US after Greek Prime Minister Alexis Tsipras signaled in a letter to Greece’s creditors that he was “prepared to accept” most of the bailout terms of Greece’s lenders. The letter comes a day after Greece missed a $1.7 billion repayment to the International Monetary Fund. Despite Tsipras’ demands for a few modifications to pension cuts and tax increases, the reopening of the conversation has spurred a positive trade in European and US equities. Adding to the momentum for US markets is a mostly positive data calendar. The ADP employment report showed the US private sector added 237,000 jobs in June – the fastest pace in more than 6 months. The ADP report comes just days before the more reliable non-farm payrolls report is issued by the US Labor Department. The ISM manufacturing index rose to 53.3 in June from 52.8 in May, slightly higher than expected and signaling activity continues to expand. Construction spending beat expectations for May but fell off the April pace. Other reports due out later in the day include data on truck and auto sales. While European and US markets are rallying, Asian markets finished the day mixed with the Shanghai index tumbling 5% Wednesday after trading up earlier in the day. The index is down 13.5% over the last 5 days and officially in “bear market” territory. Gold is down slightly today, while oil shed 2% ahead of a report on crude inventories. Interest rates and the US dollar are higher. It’s a jam packed day with lots of activity. Expect it to remain that way for the remainder of this holiday shortened week.

No comments: