Ukraine refers to separatist fighting as “de facto” incursionAugust 28, 2014 Posted by: Pete Karabatos
Geopolitical tensions are negatively impacting the markets this morning. Global equities dropped, gold is higher, the USD is stronger, and the RUB sold off to a six month low on evidence that Russia has sent over 1,000 troops to fight in the Ukraine with the separatists. Russia’s Micex index lost over 2% today. Five months of tensions in the region have led to sanctions on Russia and some of its former cold war foes. The Ukraine has referred to the intensified separatist fighting as a “de facto” incursion.
Yields on 10 year German bunds fell to .86%, the lowest on record, as the threat of deflation increases. Separately, the CHF is trading at near 21 month highs against the Euro. This raises speculation that the Swiss National Bank will intervene to defend its cap of 1.20 against the Euro.
• Eurozone executive and consumer sentiment fell to 100.6 in July, slightly worse than expected. German unemployment also rose unexpectedly and Spanish consumer prices fell by the most in 5 years. All this data supports Draghi’s calls that additional stimulus is needed.
• U.S. GDP was stronger than expected at 4.2%. Business investment rose sharply which should bode well for future economic growth. Additionally, personal consumption increased at a modestly higher pace of 2.5%.
• U.S. pending home sales rose by 3.3%, stronger than expected. This contrasts with the previously released new home sales numbers which were disappointing.
• U.S. jobless claims for the week ended August 23rd held to near 7 year lows, with employers retaining staff in an improving economy.
• Domestic demand in Spain picked up, with GDP registering an advance of .6%, as consumer prices declined by .5% from the prior year.
08/29 EUR: CPI (Aug.); Unemployment Rate (July)
08/29 CAD: GDP (Q2)
09/01 JPY: Capital Spending (Q2 Y/Y)
09/01 GBP: Money Supply (July)
09/02 EUR: Producer Price Index (July)
09/02 USD: Construction Spending (July)
09/04 EUR: Eurozone PMI (August)Read More