Weekly Economic Update for June 11, 2012

June 11, 2012  |   News

Last week, global markets rallied on European Central Bank President Mario Draghi’s assertion that risks to the EU economy had increased, interpreting it as a signal that the ECB and other central banks might take swift action to rescue weaker eurozone nations. (Stateside, Federal Reserve Chairman Ben Bernanke offered no signal of more easing, but San Francisco Fed President Janet Yellen hinted that it might be possible.) Friday, President Obama urged EU leaders to address the sovereign debt crisis decisively, a request that gave stocks a boost Friday, even as Reuters reported that Spain was going to ask for an EU/IMF bailout. Will the EU and IMF decide to create something like TARP, or enlarge their bailout fund? The world is watching, and Greece’s special elections are coming up.1,2,3

Many analysts had predicted a May decline in the Institute for Supply Management’s closely watched non-manufacturing index. That didn’t happen: the primary index rose 0.2 points in May to 53.7, and the new orders index rose 2.0 points to 55.5.4


The Fed’s latest periodic roundup of economic conditions in its 12 districts had 10 of them reporting either “moderate” or “modest” growth. Some economists had feared it might chronicle lost momentum; instead, it noted improving conditions in manufacturing, consumer spending and the housing market.5
New hope of central bank action spurred the following weekly advances: S&P 500, +3.73% to 1,325.66; DJIA, +3.59% to 12,554.20; NASDAQ, +4.04% to 2,858.42. Gold lost 1.89% last week with futures settling Friday at $1,591.40. Oil rebounded with a 1.05% gain for the week, settling Friday at $84.10 on the NYMEX.3

THIS WEEK: Monday, markets may react to the anticipated weekend request by Spain for bank recapitalization; also, Apple’s Worldwide Developer Conference begins with the promise of new product introductions. Nothing major is scheduled for Tuesday. Wednesday, the Commerce Department releases the May Producer Price Index and May retail sales data; JPMorgan’s Jamie Dimon testifies before the Senate. Thursday offers the May Consumer Price Index and earnings from Smithfield Foods, Kroger and Pier 1. Friday is a quadruple witching day that also marks the release of the University of Michigan’s preliminary June consumer sentiment survey along with data on May industrial production.

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1 – www.reuters.com/article/2012/06/06/markets-global-idINL1E8H6FCI20120606 [6/7/12]
2 – www.cnbc.com/id/47720735/ [6/7/12]
3 – money.msn.com/market-news/post.aspx?post=c3e3a1ff-6754-4802-a4c2-41f8bba675f0 [6/8/12]
4 – www.ism.ws/ISMReport/NonMfgROB.cfm [6/5/12]
5 – articles.marketwatch.com/2012-06-06/economy/32069969_1_economic-reports-beige-book-moderate-growth [6/6/12]
6 – montoyaregistry.com/Financial-Market.aspx?financial-market=common-financial-mistakes-and-how-to-avoid-them&category=29 [6/8/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F8%2F11&x=0&y=0 [6/8/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F8%2F11&x=0&y=0 [6/8/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F8%2F11&x=0&y=0 [6/8/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F8%2F07&x=0&y=0 [6/8/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F8%2F07&x=0&y=0 [6/8/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F8%2F07&x=0&y=0 [6/8/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=6%2F7%2F02&x=0&y=0 [6/8/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=6%2F7%2F02&x=0&y=0 [6/8/12]
7 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=6%2F7%2F02&x=0&y=0 [6/8/12]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [6/8/12]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [6/8/12]
9 – treasurydirect.gov/instit/annceresult/press/preanre/2002/ofm10902.pdf [1/9/02]



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