Global central banks are increasingly investing in gold, making it the second-largest asset in their reserves, surpassing the Euro for the first time. The US dollar remains the top asset, but its global share has declined to 48% from around 60% in 2017. In the first quarter of 2024, central banks set a new record by purchasing a net total of 290 tonnes of gold. This trend highlights a significant shift in the composition of central banks’ reserves.
Retail sales in the eurozone decreased by 0.5 percent in April on a monthly basis, following a 0.7 percent rise in March, while economists had forecasted a 0.1 percent decline. Compared to April of the previous year, retail sales remained unchanged. Excluding food, sales dropped by 0.1 percent month-on-month in April but increased by 0.4 percent year-on-year. These figures were released by Eurostat on Thursday.
The European Central Bank reduced the interest rate by 25 basis points on Thursday, meeting investors’ expectations. This adjustment brings the refi rate to 4.25 percent, the marginal lending facility to 4.50 percent, and the deposit facility to 3.75 percent. Recent figures for May revealed that inflation in the eurozone increased to 2.6 percent, surpassing the forecasted 2.5 percent. In April, inflation stood at 2.4 percent. Additionally, core inflation, which is relevant for the ECB, rose from 2.7 to 2.9 percent.
The 6M Euribor decreased with 2 basis points to 3.74% compared to previous business day. The 10Y Swap increased with 4 basis points to 2.79% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The Purchasing Managers’ Index (PMI) for the U.S. service sector rose more than expected in May, according to data released by the Institute for Supply Management on Wednesday. The PMI increased from 49.4 in April to 53.8 in May. Economists had anticipated a rise to 50.7 points. The Purchasing Managers’ Index from S&P Global also showed a strong acceleration for the U.S. service sector in May.
The German service sector showed more growth in May than previously recorded, according to final figures from S&P Global on Wednesday. The Purchasing Managers’ Index, which measures the activity of the service sector, came in at 54.2 compared to 53.2 a month earlier. The preliminary measurement indicated an index of 53.9. The Purchasing Managers’ Index for the German industry increased from 42.5 to 45.4. As a result, the composite index rose from 50.6 to 52.4. The preliminary index stood at 52.2.
Producer prices in the eurozone dropped again in April. This was revealed by figures from Eurostat, the European statistics office, on Wednesday. On a monthly basis, producer prices fell by 1.0 percent in April. In March, the decrease was 0.5 percent. On an annual basis, producer prices in April fell by 5.7 percent. A month earlier, this was a decline of 7.8 percent. The decrease was mainly caused by lower energy prices. Excluding prices for energy, producer prices in April rose by 0.2 percent on a monthly basis. On an annual basis, there was a price decline of 1.0 percent in April.
The 6M Euribor is unchanged at 3.76% compared to previous business day. The 10Y Swap decreased with 2 basis points to 2.75% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
U.S. job openings declined significantly in April, reaching the lowest point since February 2021, indicating a softening labor market which could assist the Federal Reserve in controlling inflation. The drop in job openings and the decrease in the ratio of job openings to job-seekers suggest a normalization of labor demand and supply, with Fed officials viewing the cooling as beneficial for price stability while keeping future rate cuts dependent on labor market and inflation trends.
Brazil’s economy is expected to have experienced an acceleration in the first quarter of the year, driven by increased federal spending, strong household expenditure, and private investment. This growth marks an improvement compared to the stagnation in late 2023, with projections suggesting a 0.8% quarter-over-quarter growth and a 2.2% year-over-year increase.
The U.S. dollar experienced a rebound after hitting multi-month lows against the euro, sterling, and Swiss franc, supported by a consolidation of gains in other currencies and market reactions to U.S. economic reports including job openings and manufacturing activity. Meanwhile, the yen surged to a three-week high against the dollar, influenced by the Bank of Japan’s vigilance over currency fluctuations and possible discussions on reducing bond purchases.
The 6M Euribor increased with 1 basis point to 3.76% compared to previous business day. The 10Y Swap decreased with 5 basis points to 2.77% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
After most Russian gas supplies were halted after the invasion of Ukraine, Norway has got a pivotal role in European fuel security. Gas traders are closely monitoring updates on the planned seasonal maintenance of Gassco AS, as any unplanned extensions to works have an out-sized impact on the gas market. The Norwegian state owned gas company was supposed to ease maintenance in June, however, Gassco now says that the duration of these outages are uncertain.
Benchmark futures advanced as much as 6% on Monday. Uk prices rose 5.67%. Dutch front-month futures, the European gas benchmark, rose 5.05% to €35.95 a megawatt-hour.
Sanctions against Russia have weakened the value of the ruble, currently trading at 89.61 per dollar, and pushed up the cost of goods, especially imports. Russia’s central bank has tried to offset inflation by raising interest rates, with short-term rates currently set at 16%. However, Russia’s official inflation rate is still at an uncomfortable 7.8%, and the Russian research firm Romir reports that overall price levels for common consumer goods have nearly doubled since the 2022 invasion.
Turkey’s inflation accelerated more than forecast last month. Data published on Monday showed inflation accelerated to 75.5% in May, compared to just under 70% a month earlier. Monthly price growth, the central bank’s preferred gauge, was 3.4%. Both readings exceeded predictions. This trajectory of prices follows the path mapped out by the central bank as it embraced more conventional economics since President Recep Tayyip Erdogan’s re-election a year ago. The question now is whether inflation will also follow the forecasts on the way down and subsequently allow interest rates to fall after an aggressive cycle of monetary tightening. Policymakers anticipate Turkey’s inflation will end the year at 38%. The central bank performed a cumulative tightening of over 40 percentage points in less than a year, which brought its interest rate to 50% since March.
The 6M Euribor decreased with 1 basis point to 3.75% compared to previous business day. The 10Y Swap decreased with 7 basis points to 2.82% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
In April US inflation was higher than the market had expected. The so-called PCE index for core inflation, a key indicator for the Federal Reserve’s monetary policy, stood at 2.8 percent year-on-year, unchanged from March, while economists had anticipated core inflation at 2.7 percent. Incomes rose by 0.3 percent in April, after a 0.5 percent increase the previous month, matching expectations.
Eurozone inflation reached 2.6 percent in May, up from 2.4 percent in April and above the expected 2.5 percent, with core inflation at 2.9 percent, up from 2.7 percent the previous month and exceeding the anticipated 2.7 percent. The euro was slightly higher at 1.0844 dollars on Friday. The European currency was 0.2 percent higher against the British pound at 0.8525. The British pound fell by 0.2 percent to 1.2715 dollars.
Chinese industry unexpectedly contracted in May, while growth in the service sector slightly declined, according to government data released on Friday. The manufacturing PMI fell from 50.4 to 49.5, indicating contraction after two months of growth. The service sector PMI slightly dropped from 51.2 to 51.1.
The 6M Euribor decreased with 1 basis point to 3.76% compared to previous business day. The 10Y Swap increased with 1 basis point to 2.89% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
Pending home sales in the United States dropped more than expected in April, according to figures from the National Association of Realtors (NAR). The sales index fell by 7.7 percent to 72.3, while economists had predicted a 1.1 percent decline. On an annual basis, pending home sales decreased by 7.4 percent in April. These figures indicate a significantly weaker housing market than anticipated.
Producers in the Dutch industry were less negative in May compared to April, reported Statistics Netherlands. The confidence index rose from -3.6 to -2.8, with manufacturers being more positive about the expected business activity. Despite this increase, producer confidence remained below the 20-year average of -1.3 in May. The highest value of 10.4 was recorded in October 2021, while the lowest value of -31.5 was reached in April 2020.
Crude oil inventories in the United States fell by 4.2 million barrels to 454.7 million barrels last week, reported the American Energy Agency EIA. However, gasoline inventories increased by over 2 million barrels to 228.8 million barrels, and the inventories of heating oil and diesel rose by 2.5 million barrels to 119.3 million barrels. Additionally, the refinery capacity utilization increased from 91.7 to 94.3 percent.
The 6M Euribor increased with 2 basis points to 3.77% compared to previous business day. The 10Y Swap decreased with 5 basis points to 2.88% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
German inflation for May rose slightly less on an annual basis than anticipated. This was evident from preliminary figures from the German statistics office Destatis, on Wednesday. On an annual basis, inflation was 2.4 percent compared to 2.2 percent a month earlier and an expected 2.5 percent. On a monthly basis, German consumer prices rose by 0.1 percent compared to 0.5 percent a month earlier. Expectations were at 0.2 percent. Core inflation remained at 3.0 percent.
Consumer confidence in France remained unchanged in May. This was evident from data from the French national statistics bureau Insee, on Wednesday. The confidence index came in at 90, the same as the reading in April. Economists had expected an index of 91 for May.
Investments in the Netherlands fell sharply again in March. This was reported by Statistics Netherlands on Wednesday. The volume of investments in tangible fixed assets was 8.6 percent lower than a year earlier, reported the CBS. This was mainly due to lower investments in buildings. Investments in infrastructure and machinery were also lower than the previous year. Investments have now been declining for seven consecutive months.
The 6M Euribor decreased with 3 basis points to 3.75% compared to previous business day. The 10Y Swap increased with 9 basis points to 2.93% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
In May UK shop price inflation slowed to its lowest rate in two and a half years, indicating that the pace of price increases in British retail is returning to normal levels, with food inflation also continuing its downward trend for the thirteenth consecutive month. This easing of inflationary pressures, welcomed by the Bank of England, suggests potential for future interest rate cuts as services sector prices remain the focus due to their higher inflation compared to goods.
In April, Japan’s corporate services prices surged at the fastest rate since March 2015, driven by rising labor costs in services industries, marking a significant development for policymakers who are keen on initiating a wage-led demand growth cycle. The Corporate Services Price Index increased by 2.8% year-on-year, with the Bank of Japan considering further rate hikes as part of its shift away from negative interest rates.
The Bank of Israel maintained its benchmark interest rate at 4.50%, citing increasing inflation pressures and ongoing geopolitical uncertainties due to the conflict with Hamas in Gaza. The central bank highlighted that any future rate cuts would be cautious, acknowledging challenges in normalizing interest rates while aiming to stabilize the markets and support economic growth amid heightened risks.
The 6M Euribor is unchanged at 3.78% compared to previous business day. The 10Y Swap increased with 4 basis points to 2.84% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
The European Central Bank (ECB) is set to lower interest rates from a record high of 4% at its upcoming June 6 meeting. The ECB now looks almost certain to be one of the first major central banks to cut rates, after being one of the last to raise them after the biggest inflation surge for a generation. ECB’s chief economist Philip Lane told the FT in an interview: “Barring major surprises, at this point in time there is enough in what we see to remove the top level of restriction.” This move precedes anticipated rate cuts by the FED and the Bank of England later in the summer.
On Monday, European Union governments officially approved a new regulation aimed at guaranteeing that the EU generates 40% of its solar panels, wind turbines, heat pumps, and other sustainable technology equipment. This initiative is crafted to bolster European industries in competing with counterparts in the U.S. and China. The Net Zero Industry Act (NZIA) is set to be enacted next month or in early July.
Spot gold held its ground at $2,349.89 per ounce, as of 0600 GMT, after rising about 1% in the previous session. U.S. gold futures were up 0.7% at $2,350.70.
The 6M Euribor is unchanged at 3.78% compared to previous business day. The 10Y Swap decreased with 4 basis points to 2.80% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
Germany’s economy grew in the first three months of this year in line with an earlier estimate, according to new data from the German statistics office Destatis released on Friday morning. On a quarterly basis, economic growth was 0.2 percent, following a 0.5 percent contraction in the fourth quarter. On an annual basis, Germany’s GDP decreased by 0.2 percent in the first quarter, which also matches the preliminary estimate.
Raphael Bostic, President of the Atlanta Fed, expects that official interest rates will remain stable at the current level for an extended period to achieve the inflation target of 2 percent, which he believes could take several years. Bostic emphasizes that the robust job growth and the savings spent during the coronavirus crisis keep demand high despite higher interest rates. He warns against shifting inflation targets under the current circumstances and confirms that the Fed is committed to the 2 percent goal.
Oil prices rose on Friday after four days of declines, with West Texas Intermediate increasing to 77.72 dollars per barrel and Brent to 82.00 dollars per barrel. However, on a weekly basis, prices fell by about 2 percent due to concerns that the Federal Reserve’s prolonged high interest rates could weaken oil demand. Analysts note a weak demand period despite the expected seasonal increase and highlight the upcoming OPEC meeting, where the response of oil-producing countries to the current price levels will be crucial.
The 6M Euribor is unchanged at 3.78% compared to previous business day. The 10Y Swap is unchanged at 2.84% compared to previous business day.
In the attachment, today’s market data on money and capital market rates as well as other rates are presented.
