From Capital Economics on Friday:
At the time of writing (Friday afternoon in the UK), equity and commodity prices and government bond yields are all falling sharply. This appears to be in response to weaker-than-anticipated US data on retail sales and consumer confidence (discussed further below). If so, this is probably an overreaction, as the figures were hardly disastrous. The falls in the prices of riskier assets may also have been exaggerated by week-end position squaring after the Bank of Japan-inspired rally in the previous days.
Nonetheless, most of these moves are consistent with our long-held view that a disappointing global recovery will cause the equity market rally to run out of steam, the prices of industrial commodities to fall further (with Brent crude in particular heading back below $100) and 10-year US Treasury yields to dip to 1.5% or so by year-end. The pick-up in market volatility more generally is something that we had been anticipating too.
Many things are big in Japan, but inflation isn’t one of them. But that may change sooner than you think. At least one metric suggests that Japan is actually pretty close to becoming the Land of the Rising Prices once again.
This, courtesy of Paul Krake at View from the Peak, shows Japanese CPI charted against brent crude priced in yen. Thanks to the yen’s slippery slide, it’s now back up to around the same level it was when Japanese inflation last ran briefly at about 1 per cent. Read more
Live markets commentary from FT.com
Eurogroup to consider Portugal’s repayment schedule today || Japan, U.S. agree on Tokyo joining Trans-Pacific trade talks || Tougher European bank stress tests to be floated at today’s eurogroup meeting || JAB in €7.7bn DE Master Blenders bid || Woodside to reconsider $45bn LNG plant || Myanmar has opened a long-awaited auction for 30 offshore oil and gas exploration blocks || J.C. Penney seeks to raise $1bn || Man Group is preparing a sweeping reorganisation of its core quant fund business || US warns on North Korea nuclear missile || Markets || The SEC vs Scott London Read more
Elsewhere on Tuesday,
– Kauffman economic bloggers forum gets underway
– Let’s play LME copper warehousing
– Election night, in a Peruvian jail
– Worst hashtag ever? Read more
Yen strengthens; Japanese stocks fall || Eurogroup to consider Portugal repayment schedule today || Stricter EU bank stress tests being floated || Woodside reconsiders big Australian LNG plant || Singapore GDP falls 1.4% in Q1 || Martin Wolf on Thatcher and post-Thatcher UK Read more