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European Market Update

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Markets in a Lull Ahead of this Week's European Rate Decisions and US Payrolls Data

Wed, Jun 4 2008, 16:02 GMT
by John J. Phillips IV

TradeTheNews.com

ECONOMIC DATA

• ·UK May Nationwide Consumer Confidence: 69 v 67e
• ·UK May NTC/REC Permanent Placements Index: 48. 6 v 48.9e
• ·SP May Services PMI: 43.3 v 42.5 prior
• ·IT May Services PMI: 48.1 v 49.5e
• ·FR May Services PMI: 50.5 v 50. 7e
• ·GE May Services PMI: 53.8 v 53.7e
• ·EU May Services PMI: 50.6 v 50.6e
• ·EU May Composite PMI: 51.1 v 51.1e
• ·UK May Services PMI: 49.8 v 50.5e
• ·EU Apr Retail Sales: M/M -0.6% v 0.2%e || Prior revised from -0.4% to -0.9% |||| Y/Y -2.9% v -0.8%e || Prior revised from -1.6% to -2.3%

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

·In the newspapers overnight the Financial Times noted in an article overnight that new US accounting rules could lead to more losses at banks. Increased regulations for off-balance sheet entities could result in up to $5T of assets having to be returned to the books of banks. According to the Chicago Tribune UAL Corp. (UAUA) is expected to ground dozens of aircraft. The company is expected to ground its planes which are the least fuel efficient. In total, the company is expected to cut its 460-aircraft mainline fleet by 70 jetliners by the end of 2009.

·In energy news overnight US Senator Cantwell (Democrat) is looking to have regulators issue an emergency rule that will give the FTC powers to probe possible oil market manipulation.

·In central bank speak overnight the ECB's Noyer said that Euro-zone inflation will peak and then decline rapidly if wages are contained, adding that it is clear that inflation remains a risk and the ECB must be prepared to adjust its monetary policy accordingly.

·In central bank speak overnight the ECB's Noyer said that Euro-zone inflation will peak and then decline rapidly if wages are contained, adding that it is clear that inflation remains a risk and the ECB must be prepared to adjust its monetary policy accordingly.

·In currencies dealers continued to take note of a potential change in USD sentiment following Bernanke's comments on Tuesday. It was the first phase of verbal intervention by Bernanke since the change in the FX language at the April G7 meeting. The USD also benefiting from continued concerns over the European banking sector as various rating agencies and financial sector analysts revised their views and estimates. Thus risk aversion theme is impacting the global capital markets as equities are lower, bond future prices firmer and carry-related pairs are unwinding. The

·Looking ahead, focus today will fall upon the ADP employment report due out at 8:15 ET, as well as the Q1 Final nonfarm productivity and unit labor cost due at 8:30 ET, and the May ISM non- manufacturing composite due at 10:00 ET. In Fed speak the Fed's Bernanke is scheduled to speak on the economy at Harvard at 14:45 ET. On the earnings front Williams Sonoma is due to report earnings in the premarket.

Published on  Wed, Jun 4 2008, 16:03 GMT