A buoyant mood in
Europe has investors flowing back into risk and bond yields floating
upwards.
A look at today’s
data, starting in Canada: real GDP for April clocked-in a little better than
expected with an increase of 0.3%. Statistics Canada says mining and energy led
the increase while retail trade and the public sector were down.
May’s Industrial Product Price Index was
unchanged from April. Price increases for motor vehicles and transportation
equipment, and lumber and wood products, were offset mainly by a decline in
petroleum and coal products. The Raw Materials Price Index fell 1.0%, largely
because of lower crude oil prices.
In the U.S.,
consumer spending was flat in May while incomes grew by 0.2%. It’s the first
time in 6 months spending did not increase. Slow job growth and worries about
Europe are believed to have consumers pulling back. The June reading of U.S.
consumer sentiment would tend to back that up. The University of Michigan Index
dropped more than 6 points to 73.2.
But in Europe the
EU leaders appear to have cleared the very low bar that was set for them. They
have worked out a proposal that will allow the EU recapitalize banks directly,
rather than funneling the money through governments. It’s seen as a loss for
Germany and a big win for Italy and Spain. (Insert your own Euro 2012 analogy
here.) But it’s still just a short-term move. Yields on Spanish and Italian
bonds are down considerably.
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