Thu 15 Jun 2017


 NBR  Nightly Business Report.
 BTV  Bloomberg Technology: Market Report (Emily Chang).
  EG   Eurogroup/ESM/IMF/ECB: Post-Meeting Press Conference (Dijsselbloem, Regling, Lagarde)

In Portfolioticker today

Today at the stock market

bull/bearU.S. stocks fell for the 4th time in 5 days as selling in technology shares resumed. The USD advanced with Treasury yields, while gold slid more than 1.5% as traders digested the more hawkish tone struck by the Federal Reserve. Equity benchmarks slipped from near record levels, technology shares pacing declines.

Investors resumed selling the major technology shares that have contributed most to equity records this year, as the threat of higher interest rates prompted a shift from growth into value shares. European stocks dropped to levels last seen in April:

  • The S&P 500 Index fell 0.2% to 2,432.49 at 4 p.m. in New York, paring losses that reached 0.8%. Tech shares in the measure lost 0.5 percent, while bond proxies from real estate to utilities led gains.
  • The Dow Jones Industrial Average slipped 0.1% from a fresh record.
  • The tech-heavy Nasdaq indexes retreated at least 0.4%.
  • The Stoxx Europe 600 Index retreated 0.4 percent.
  • Emerging-market equities tumbled 1.2%.

Softening commodity prices did little bolster arguments that inflation will pick up the pace, even as the U.S. labor market remains on strong footing – raising the specter that Federal Reserve officials made a policy error. Crude fell to a 7-month low. Gold futures sank 1.7% to close at $1,254.60/ounce, notching the biggest drop since 15 Dec 2016. The USD strengthened and 10-year Treasury yields climbed as the Fed suggested the strength of the labor market will ultimately prevail over weakness in inflation.

Meanwhile, Washington remained in focus as the special counsel investigating Russia’s interference in the 2016 election was said to be planning to interview two top U.S. intelligence officials about whether President Donald Trump sought their help to get the FBI to back off a related probe of former National Security Adviser Michael Flynn.Bloomberg

Market indices

Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2,432.46 -0.23% 2,238.83 +8.64%
DJIA INDU 21,359.90 -0.07% 19,762.60 +8.08%
NASDAQ IXIC 6,165.50 -0.48% 5,383.12 +14.53%

The portfolio today

USD and AUD denominated indices over the past 52 weeks (Chart: Bunting)
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting

Index values

Index Currency Today Change 31 Dec 16 YTD
USD-denominated Index USD 2.613 -0.68% 2.105 +24.15%
Valuation Rate USD/AUD 0.76304 -0.16% 0.72663 +5.01%
AUD-denominated Index AUD 3.426 -0.52% 2.895 +18.32%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $960.18 -0.80% $792.45 +21.16%
Alphabet C GOOG $942.31 -0.89% $771.82 +22.08%
Apple AAPL $144.29 -0.60% $115.82 +24.58%
Amazon AMZN $964.17 -1.26% $749.87 +28.57%
Ebay EBAY $34.09 -1.19% $29.69 +14.81%
Facebook FB $149.80 -0.30% $115.05 +30.20%
PayPal PYPL $52.29 +0.75% $39.47 +32.48%
Twitter TWTR $16.83 +0.42% $16.30 +3.25%
Visa V $94.17 -1.21% $78.02 +20.69%
VMware VMW $87.73 -0.25% $78.73 +11.43%

FX: USD/AUD

USD

DXY movements
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg

The Bloomberg Dollar Spot Index (DXY) rose 0.6% following 3 days of losses.
Japan’s JPY was 0.7% weaker at 110.34 per USD after climbing 0.5% Wednesday.
Britain’s GBP weakened 0.1% to EUR 1.2741 and the EUR retreated 0.6% to USD 1.1151.
Bloomberg

AUD

AUD movements
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com

Oil and Gas Futures

Futures prices

West Texas crude futures fell 0.6% to settle at $44.46/barrel, the lowest in 7 months. It tumbled 3.7% in the previous session after data showed U.S. gasoline supplies unexpectedly rose for a second week.Bloomberg

Prices are as at 15:49 ET

  • NYMEX West Texas Intermediate (WTI): $44.39/barrel -0.76% Chart
  • ICE (London) Brent North Sea Crude: $46.88/barrel -0.26% Chart
  • NYMEX Natural gas futures: $3.05/MMBTU +3.95% Chart

flag_australia AU: Labour Force. May 2017

"Collins St, 5p.m.", John Brack (1955) National Gallery of Victoria

“Collins St, 5p.m.”, John Brack (1955) National Gallery of Victoria

Press Release Extract [ser_23]

MAY KEY POINTS

Trend Estimates (Monthly Change)

  • Employment increased 25,200 to 12,122,100.
  • Unemployment decreased 4,800 to 729,200.
  • Unemployment rate remained steady at 5.7%.
  • Participation rate remained steady at 64.8%.
  • Monthly hours worked in all jobs increased 2.9 million hours (0.18%) to 1,677.7 million hours.

Seasonally Adjusted Estimates (Monthly Change)

  • Employment increased 42,000 to 12,152,600. Full-time employment increased 52,100 to 8,287,400 and part-time employment decreased 10,100 to 3,865,200.
  • Unemployment decreased 18,600 to 711,900. The number of unemployed persons looking for full-time work decreased 23,000 to 489,300 and the number of unemployed persons only looking for part-time work increased 4,400 to 222,700.
  • Unemployment rate decreased by 0.2 pts to 5.5%.
  • Participation rate increased by less than 0.1 pts to 64.9%.
  • Monthly hours worked in all jobs increased 31.1 million hours (1.87%) to 1,695.3 million hours.

Labour Underutliisation (Quarterly Change)

  • Trend estimates: the labour force underemployment rate increased 0.1 pts to 8.8%. The underutilisation rate remained steady at 14.5%.
  • Seasonally adjusted estimates: the labour force underemployment rate decreased 0.1 pts to 8.8%. The underutilisation rate decreased 0.4 pts to 14.4%.
May Key Figures Apr 2017 May 2017 Month Year
Trend
Employed persons (’000) 12,097.0 12,122.1 25.2 1.6%
Unemployed persons (’000) 734.0 729.2 -4.8 0.8%
Unemployment rate 5.7% 5.7% 0.0 pts 0.0pts
Participation rate 64.8% 64.8% 0.0 pts 0.0pts
Seasonally Adjusted
Employed persons (’000) 12,110.7 12,152.6 42.0 2.06%
Unemployed persons (’000) 730.5 711.9 -18.6 -1.5%
Unemployment rate 5.7% 5.5% -0.2 pts -0.2pts
Participation rate 64.8% 64.8% 0.0 pts 0.1pts

COMMENTARY

Trend Estimates

Australia’s trend estimate of employment increased by 25,200 persons in May 2017, with:

  • the number of unemployed persons decreasing by 4,800 persons;
  • the unemployment rate remaining steady at 5.7 per cent;
  • the participation rate remaining steady at 64.8 per cent; and
  • the employment to population ratio increasing by 0.1 percentage points to 61.2 per cent.

Over the past year, trend employment increased by 194,200 persons (or 1.6 per cent), which is still below the average year-on-year growth over the past 20 years (1.8 per cent). Over the same 12 month period the trend employment to population ratio, which is a measure of how employed the population (aged 15 years and over) is, increased by less than 0.1 percentage points to 61.2 per cent.

In monthly terms, the trend employment increased by 25,200 persons between April 2017 and May 2017. This represents an increase of 0.21 per cent, which is above the monthly average growth rate over the past 20 years of 0.16 per cent.

Trend full-time employment increased by 19,300 persons in May, while part-time employment increased by 5,900 persons. Compared to a year ago, there are 98,800 more persons employed full-time and 95,300 more persons employed part time. The part-time share of employment has been relatively stable since August 2016, at 31.9 per cent.

The trend estimate of monthly hours worked in all jobs increased slightly (by 2.9 million hours, or 0.18 per cent) in May 2017, to 1,677.7 million hours. Monthly hours worked increased by 1.49 per cent over the past year.

The trend unemployment rate remained steady at 5.7 per cent in May 2017 while the number of unemployed persons decreased by 4,800. The unemployment rate has been relatively stable, at around 5.7 to 5.8 per cent, for 18 months. The most recent period with similar stability was May 2007 to October 2008, when it remained at around 4.2 to 4.3 per cent.

The quarterly underemployment rate increased by 0.1 percentage points to 8.8 per cent in May 2017. Over the past year this rate increased by 0.4 percentage points, with the number of underemployed increasing by 64,100 persons. The quarterly underutilisation rate, which is combined measure of unemployment and underemployment in the labour force, was 14.5 per cent in May 2017.

The trend participation rate increased by less than 0.1 percentage points to remain at 64.8 per cent in May 2017.

The labour force includes the total number of employed and unemployed persons. Over the past year, the labour force increased by 199,700 persons (1.6 per cent). This rate of increase is the same as for the total Civilian Population aged 15 years and over (318,600 persons, or 1.6 per cent).

The trend participation rate for 15-64 year olds, which controls (in part) for the effects of an ageing population, increased by less than 0.1 percentage points to 77.2 per cent in May 2017.

The trend participation rate for 15-24 year olds remained steady at 66.6 per cent in May 2017. Over the past year it decreased 0.7 percentage points. The unemployment rate for this group decreased by 0.1 percentage points to 12.8 per cent in May 2017 and increased by 0.2 percentage points over the year.

The trend series smooths the more volatile seasonally adjusted estimates and provide the best measure of the underlying behaviour of the labour market.

Seasonally Adjusted Estimates

Seasonally adjusted employment increased by 42,000 persons from April to May 2017. The underlying composition of the net increase was an additional 52,100 persons in full-time employment and a 10,100 decrease in part-time employment. Since May 2016, full-time employment increased by 148,000 persons, while part-time employment increased by 84,800 persons.

Seasonally adjusted monthly hours worked in all jobs increased by 31.1 million hours in May 2017 to 1,695.3 million hours. The increase over the past three months was an additional 33.0 million hours worked.

The seasonally adjusted employment to population ratio increased by 0.1 percentage points to 61.3 per cent in May 2017, representing an increase of 0.2 percentage points from the same time last year.

The seasonally adjusted unemployment rate decreased by 0.2 percentage points in May 2017 to 5.5 per cent. The labour force participation rate increased by less than 0.1 percentage points to 64.9 per cent.

The quarterly seasonally adjusted underemployment rate decreased by 0.1 percentage points to 8.8 per cent. The quarterly underutilisation rate decreased 0.4 percentage points to 14.4 per cent.

Unemployment Rates by State

State Apr (trend) May (trend) Apr (sa) May (sa)
New South Wales 4.9% 4.8% Change 4.7% 4.8% Change
Victoria 6.1% 6.1% 6.1% 6.0% Change
Queensland 6.3% 6.3% 6.3% 6.1% Change
South Australia 7.0% 7.1% Change 7.3% 6.1% Change
Western Australia 5.9% 5.8% Change 5.9% 5.5% Change
Tasmania 5.9% 5.9% 5.9% 6.1% Change
Northern Territory 3.3% 3.2% Change - -
Australian Capital Territory 3.6% 3.5% Change - -
Australia 5.7% 5.7% 5.7% 5.5% Change

Australian Bureau of Statistics, “6202.0 – Labour Force. May 2017“, 15 Jun 2017 More

flag_europe EU: Eurogroup Agrees EUR 8.5 Billion Loan To Greece

The Eurogroup welcomes that agreement has been reached between Greece and the institutions on a policy package of structural measures, which aims at shoring up growth and addressing the underlying structural imbalances in public finances and paves the way for a successful completion of the second review of the ESM programme.

The Eurogroup also welcomes the adoption by the Greek parliament of the agreed prior actions for the second review, notably the ambitious post-programme fiscal package, which is composed of an income tax reform broadening the tax base and a pension reform. Together they deliver net savings of 2% of GDP which will underpin the fiscal targets post-2018. It also contains a contingent expansionary package to enhance the growth potential of the Greek economy and to improve the Greek social safety net that will be implemented provided that the agreed medium-term targets are met. We also welcome the adoption of a package of decisive measures to effectively address non-performing loans (NPL), such as establishing an active secondary market, an Out-of-Court Debt Workout framework, as well as all actions to make the Hellenic Corporation of Assets and Participations (HCAP) fully operational.

Moreover, the policy package includes a large number of structural measures aimed at enhancing the growth potential of the Greek economy. With regard to labour market reforms, the Eurogroup welcomes the adopted legislation safeguarding previous reforms on collective bargaining and bringing collective dismissals in line with best EU practices. The Eurogroup also commends the Greek authorities for adopting legislation to implement OECD recommendations to strengthen competition, to facilitate investment licensing and to further open-up regulated professions. We welcome the commitment by Greece to continue on its reform path.

The Eurogroup also commends Greece and the European Commission for the exceptional mobilisation of EU Funds to boost investment in support of jobs and growth since July 2015, for a total amount of nearly EUR 11 bn. The Eurogroup calls upon the Greek authorities to work closely with the European Commission to ensure that additional EUR 970 million made available following the review of the national cohesion policy funding envelopes for the period from 2017 – 2020 are fully absorbed. Furthermore, we commit to continue to provide high-level experts to support the design and implementation of reforms through technical assistance projects.

In parallel the Eurogroup invites Greece together with the institutions as well as relevant third parties by the end of this year to develop and support a holistic growth enhancing strategy including improvements of the investment climate. Further options for mobilizing additional funds from national development banks and other international financial institutions (such as the EIB and EBRD) should be explored.

The Eurogroup supports the efforts of the Greek authorities to work with the European institutions on the creation of a National Development Bank that would coordinate the implementation of development and promotional activities. The Eurogroup calls upon Greece, the European Commission and IFIs to work together to strengthen the pipelines of viable investment projects. Efforts should be made to step up the technical assistance from the European Investment Advisory Hub with a view to facilitating the preparation of investable projects and the establishment of investment platforms.

Today the Eurogroup discussed again the sustainability of Greek public debt with the objective that Greece regains market access at sustainable rates. The Eurogroup reconfirmed the commitments and principles contained in the statements of May 2016. We noted that the implementation of the agreed short term debt measures already contributes to a substantial lowering of the gross financing needs (GFN) of Greece over the medium and long term and significantly improves the profile of Greek public debt.

The Eurogroup welcomes the commitment of Greece to maintain a primary surplus of 3.5% of GDP until 2022 and thereafter a fiscal trajectory that is consistent with its commitments under the European fiscal framework, which would be achieved according to the analysis of the European Commission with a primary surplus of equal to or above but close to 2% of GDP in the period from 2023 to 2060.

The Eurogroup concluded that debt sustainability should be attained within the framework of the debt measures envisaged by the Eurogroup in May 2016. In this regard, the Eurogroup recalled the assessment of debt sustainability with reference to the agreed benchmarks for gross financing needs: GFN should remain below 15% of GDP in the medium term and below 20% of GDP thereafter so as to ensure that debt remains on a sustained downward path.

The Eurogroup recalls that it stands ready to implement a second set of debt measures to the extent needed to meet the aforementioned GFN objectives, in line with the Eurogroup statement of 25 May 2016. This includes abolishing the step-up interest rate margin related to the debt buy-back tranche of the 2nd Greek programme, the use of 2014 SMP profits from the ESM segregated account, the restoration of the transfer of the equivalent of ANFA and SMP profits to Greece (as of budget year 2017), liability management operations within the current ESM programme envelope taking due account of the exceptionally high burden of some Member States, and EFSF reprofiling within the maximum Programme Authorised Amount.

The Eurogroup stands ready to implement, without prejudice to the final DSA, extensions of the weighted average maturities (WAM) and a further deferral of EFSF interest and amortization by between 0 and 15 years. As agreed in May 2016, these measures shall not lead to additional costs for other beneficiary Member States.

In order to take into account possible differences between growth assumptions in the DSA and actual growth developments over the post-programme period, the EFSF reprofiling would be recalibrated according to an operational growth-adjustment mechanism to be agreed. This mechanism will be fully specified as part of the medium-term debt relief measures, following the successful implementation of the ESM programme to make sure the GFN benchmarks defined above are respected and to ensure that the ceiling established by the EFSF Programme Authorised Amount is respected. The Eurogroup mandates the EWG to work further on this as of 2018.

At the end of the programme, conditional upon its successful implementation and to the extent necessary, this second set of measures will be implemented. The exact calibration of these measures will be confirmed at the end of the programme by the Eurogroup on the basis of an updated DSA in cooperation with the European institutions, so as to ensure debt sustainability and compliance with the European fiscal policy framework. This DSA, while based on cautious assumptions, will also take into account the impact of growth enhancing reforms and investment initiatives.

For the long term, the Eurogroup recalls the May 2016 agreement that in the case of an unexpectedly more adverse scenario a contingency mechanism on debt could be activated. The activation of this mechanism would be considered subject to a decision by the Eurogroup and could entail measures such as a further EFSF re-profiling and capping and deferral of interest payments.

Acknowledging the staff level agreement reached with Greece on policies, IMF management will shortly recommend to the IMF’s Executive Board the approval in principle of Greece’s request for a 14-month Standby Arrangement. The IMF welcomes the further specification of the debt measures given today by Member States, and agrees that it represents a major step towards Greek debt sustainability. The IMF arrangement will become effective with resources made available in accordance with its terms, provided that the programme stays on track, when IMF staff can assure to the IMF’s Executive Board that there is an agreement on debt relief measures, that, appropriately calibrated at the end of the programme, would secure debt sustainability.

In view of the full implementation of all prior actions and subject to the completion of national procedures, the ESM governing bodies are expected to approve the supplemental MoU and the disbursement of the third tranche of the ESM programme amounting to EUR 8.5 bn to cover current financing needs, arrears clearing, and possibly room to start building up a cash buffer.

In view of the ending of the current programme in August 2018, the Eurogroup commits to provide support for Greece’s return to the market: the Eurogroup agrees that future disbursements should cater not only for the need to clear arrears but also to further build up cash buffers to support investor’s confidence and facilitate market access.

Eurogroup, “Eurogroup statement on Greece” 15 Jun 2017 Eurogroup

Post Meeting Remarks by Jeroen Dijsselbloem (EuroGroup)

Today we welcomed two new ministers, Toomas Toniste, who is the new finance minister for Estonia, and Paschal Donohoe, who is the newly appointed Irish minister of finance. We very much look forward to working together with them. We also congratulated Edward Scicluna who, after winning the elections, was appointed for another term as minister for finance, so he will stay with us.

For today’s meeting, we also welcomed Christine Lagarde, Managing Director of the IMF, and thank you for joining us here also at the press conference. She joined us both for the Article IV discussions on the Eurozone as well as, of course, on the Greek programme. We welcomed Elke König, who is the Chair of the Single Resolution Board, and Sabine Lautenschläger, the Vice-Chair of the ECB Supervisory Board to present the first case of implementation of the European resolution framework in the Eurogroup.

Our meeting revolved mainly around Greece, and was a crucial one for the programme. I am glad to announce that we have achieved an agreement on all elements: conditionality, debt strategy moving forward and IMF participation. Christine Lagarde will speak about that.

We have issued a statement. I will therefore only present the key elements.

First, we welcomed the ambitious policy package that was fully agreed between Greece and the institutions and the adoption of the agreed prior actions for the second review.

The fiscal measures for the post-programme period that have been adopted address the underlying structural imbalances in Greek public finances. Decisive steps have also been taken to reduce NPLs and to operationalise the privatisation and investment fund.

The policy package also contains a large number of reforms to increase potential growth of the Greek economy, whilst at the same time reinforcing the social safety net. The labour and product market reforms, along with the enhanced use of EU structural funds, technical assistance and growth initiatives, will enable Greece to return to a sustainable growth path. For this purpose, the Greek authorities helped while the European institutions will work on the creation of a National Development Bank, as well as measures to spur investment.

Second, the Eurogroup discussed the debt strategy for Greece on the basis of the agreement of May 2016, last year’s agreement.

It is, first of all, essential that public finances in Greece remain on a solid track. The Greek authorities committed to maintain a primary surplus of 3.5% of GDP until 2022 and a fiscal trajectory after that, that is consistent with its commitments under the European fiscal framework thereafter.

The Eurogroup also specified further the medium term debt measures that were already in the May 2016 statement, which it stands ready to implement at the end of the programme. We confirmed that we are ready to consider a further extension of the weighted average maturities and a further deferral of EFSF interest and amortization, both up to 15 years.

In addition, we also stand ready to implement an operational growth adjustment mechanism to adjust the EFSF loan re-profiling should growth developments in the post-programme period differ from what will be expected at the end of the programme in 2018. In other words, if there is more growth, then more or faster repayment of loans can take place; if growth is less; then further lengthening or further deferral of interest could take place. We have mandated the EWG to work further on this mechanism and it will be part of the decision-making at the end of the programme, part of the medium-term debt package.

As agreed in May last year, these medium-term measures, as well as the growth adjustment mechanism, will be implemented as far as needed at the end of the programme, conditional upon its successful implementation. That is the standard language and that is still valid. The exact calibration of these measures will also be confirmed at the end of the programme on the basis of an updated DSA delivered by the IMF, in cooperation with the European institutions.

For the long term, the Eurogroup recalled the agreement that in the case of an unexpectedly more adverse scenario, an additional contingency mechanism on debt could be activated. In other words, the Eurogroup reiterated its commitment to continue to support Greece in case of a more adverse scenario than now is foreseen.

Finally, against this background, the IMF management will shortly recommend to the board… I’ll stop here, this is the kind of text that Christine, I think, would like to use.

As regards the next steps, following national procedures, the ESM governing bodies are expected to approve the disbursement of the third tranche of the ESM programme amounting to a total of €8.5 bn. Klaus Regling will say more about that figure and how it is built up.

Overall, I think this is a major step forward. The Eurogroup commends the institutions, the Greek authorities and, foremost of course, the Greek people for their intense efforts and resolve. We are now going into the last year of the financial support programme for Greece. We will prepare an exit strategy going forward to enable Greece to stand on its own feet again over the course of next year.

Other than Greece, the key issues we addressed concern recent developments in the context of the European resolution framework for banks, spending reviews and the IMF Article IV review.

We were informed by the institutions, the SSM and the resolution board, of the successful resolution of Banco Popular last week in line with the newly established resolution framework. The authorities involved in the resolution acted in a very swift manner, ensuring a continuation of core functions and with no resulting costs for the taxpayers, and this is very good news.

Last September, we adopted a set of common principles guiding the design and implementation of spending reviews. A topic that is, of course, important to finance ministers. Today, we came back to the issue to take stock of the progress achieved, on the basis of a very good paper provided by the Commission. We have identified remaining challenges and will come back to that next year, working on an exchange of best practices on this topic.

Finally, we discussed the economic and policy challenges for the euro area with the IMF managing director, following the Fund’s regular article IV review. Here good news as well: the Fund confirms the euro area economy is strengthening, with the recovery becoming more and more broad-based. I’ll leave it for Christine to say more about this.

Remarks by Jeroen Dijsselbloem following the Eurogroup meeting of 15 June 2017 Eurogroup

Post Meeting Remarks by Christine Lagarde (IMF)

  • Approval in Principle (AIP) would allow the IMF to be supportive of the progress made on policies, while release of resources under the IMF arrangement would be conditional upon Greece’s European creditors providing commitments for debt relief sufficient to secure debt sustainability.
  • AIP supports the IMF’s long-held principle that any new program with Greece should be predicated on the “two legs” of policy reforms combined with debt relief.
  • The IMF’s Executive Board will need to determine the specific modalities of AIP.

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement on Greece in Luxembourg today:

“I would like to announce my intention to propose to the IMF’s Executive Board the approval in principle (AIP) of a new IMF Stand-By Arrangement for Greece.

“We have recently seen significant progress by the Greek government on policy reforms, with a staff-level agreement followed by supportive legislation from the Greek Parliament. We have also seen progress on debt relief, although further discussions are needed on the scope and type of measures to be provided by Greece’s European creditors.

“AIP is a procedure which the IMF has relied upon in the past where there has been agreement on the policies that would underlie an IMF-supported program, but where full agreement between the member and its creditors has not yet been reached on new financing or debt relief. In the case of Greece, AIP would allow the IMF to be supportive of the progress made on policies, while release of resources under the IMF arrangement would be conditional upon Greece’s European creditors providing commitments for debt relief sufficient to secure debt sustainability.

“It is also important to note that AIP supports the IMF’s long-held principle that any new program with Greece should be predicated on the “two legs” of policy reforms combined with debt relief. With AIP, the release of IMF funds would be contingent on policy implementation and receipt of debt relief assurances so that debt can be deemed sustainable. Furthermore, assessment of debt sustainability would be guided solely by the IMF’s own debt sustainability analysis. It is expected that AIP would involve a precautionary Stand-By Arrangement for a loan amount well below the IMF’s exceptional access threshold. The IMF’s Executive Board will need to determine the specific modalities of AIP.

“I strongly believe that use of the AIP procedure will enable the IMF to leverage both reform and debt relief. It will give confidence to creditors to disburse to Greece under the ESM program in July—thus reducing a potentially serious stress on the Greek economy—and it will give confidence to investors on the prospects for the Greek economy to grow and its people to prosper. I hope that the discussion over specific debt relief measures can soon be brought to conclusion.”

IMF Managing Director Christine Lagarde to Propose Approval in Principle of New Stand-By Arrangement for Greece, 15 Jun 2017 IMF

flag_europe EU: International Trade in Goods. Apr 2017

Press Release Extract [ser_42]

Euro area

The first estimate for euro area (EA19) exports of goods to the rest of the world in April 2017 was €167.7 billion, a decrease of 3% compared with April 2016 (€172.5 bn). Imports from the rest of the world stood at €149.8 bn, a rise of 3% compared with April 2016 (€145.9 bn). As a result, the euro area recorded a €17.9 bn surplus in trade in goods with the rest of the world in April 2017, compared with +€26.6 bn in April 2016. Intra-euro area trade stood at €144.7 bn in April 2017, nearly stable compared with April 2016.

eu_ea_trade_20170615

In January to April 2017, euro area exports of goods to the rest of the world stood at €707.2 bn (an increase of 7% compared with January-April 2016) and imports at €643.9 bn (an increase of 11% compared with January-April 2016). As a result, the euro area recorded a surplus of €63.2 bn, compared with +€78.1 bn in January-April 2016. Intra-euro area trade rose to €609.3 bn in January-April 2017, up by 7% compared with January-April 2016.

European Union

The first estimate for extra-EU28 exports of goods in April 2017 was €144.6 billion, down by 2% compared with April 2016 (€146.9 bn). Imports from the rest of the world stood at €144.6 bn, up by 2% compared with April 2016 (€142.3 bn). As a result, the EU28 recorded a €0.1 bn deficit in trade in goods with the rest of the world in April 2017, compared with a surplus of €4.5 bn in April 2016. Intra-EU28 trade fell to €259.2 bn in April 2017, -1% compared with April 2016.

eu_eu28_trade_20170615

In January to April 2017, extra-EU28 exports of goods stood at €607.4 bn (an increase of 9% compared with January-April 2016) and imports at €613.7 bn (an increase of 10% compared with January-April 2016). As a result, the EU28 recorded a deficit of €6.3 bn, compared with a surplus of €0.8 bn in January-April 2016. Intra-EU28 trade rose to €1 097.6 bn in January-April 2017, +6% compared with January-April 2016.

Eurostat, “International Trade in Goods. Apr 2017“, 15 Jun 2017 More

flag_usa USA: Unemployment Insurance Weekly Claims Report

Press Release Extract [ser_4]

insurance

In the week ending June 10, the advance figure for seasonally adjusted initial claims was 237,000, a decrease of 8,000 from the previous week’s unrevised level of 245,000. The 4-week moving average was 243,000, an increase of 1,000 from the previous week’s unrevised average of 242,000.

unemployment

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending June 3, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending June 3 was 1,935,000, an increase of 6,000 from the previous week’s revised level. The previous week’s level was revised up 12,000 from 1,917,000 to 1,929,000. The 4-week moving average was 1,926,750, an increase of 9,000 from the previous week’s revised average. The previous week’s average was revised up by 3,000 from 1,914,750 to 1,917,750.

Employment and Training Administration, “Unemployment Insurance Weekly Claims Report“, 15 Jun 2017 (08:30) More

flag_japan Japan update

Currency: USD/JPY

JPY movements
^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

Stockmarket: Nikkei 225

N225 movements
^ Nikkei N225 movements over the past week Chart: Google Finance

flag_china China update

Currency: USD/CNY

CNY movements
^ CNY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

Stockmarket: CSI300

CSI300 movements
^ Shanghai CSI300 movements over the past week Chart: Google Finance