Daily update
Daily update
- Markets have responded to escalating violence in the Middle East. Overnight missile attacks by Iran against Israel differed from those in April—there was less warning, and faster missiles were used. Israeli Prime Minister Netanyahu has pledged retaliation. Investors have seen this as a more serious escalation, and oil prices have risen. However, even at higher levels oil prices are still near the lows for the year. This limits the economic consequences for now.
- US financial markets are anticipating Friday’s employment report (despite the report’s frequent revisions, and increasingly strained relationship with labor market reality). The ADP payrolls report is released today, but the significance of this has dwindled. The number of economists forecasting the data has fallen by a third in recent years. Federal Reserve Chair Powell’s suggestion of two quarter point rate cuts this year, as the Fed plays catch up to the economy, blunts the impact of labor data.
- Hong Kong equities had a fun day, returning from holiday to react to China’s stimulus plans. Unfortunately equity market exuberance does not always match the enthusiasm of impartial economists.
- There are at least six ECB speakers scheduled today. Economists try to feign interest in this babble of central bank speak, but it is hard to do.
