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Portugal
Portuguese 10-year yields rose during the entire week, as representatives of the ESM will visit the nation for the eighth and ninth reviews of its bailout program. This week, INE revealed that, in Q2 of 2013, Portuguese GDP increased by 1.1% quarter-onquarter. After 10 consecutive quarters of recession, the economy was able to grow, due to an increase of both national and foreign demand. However, the national trade deficit widened in Jul to 902 million from a previous level of 634 million in Jul 2012. This change resulted from a faster growth of imports (10.5%) than the one of exports (5.5%). The latter derived from an increase in both Intra-EU and ExtraEU trade, mostly due to rising mineral fuel sales.
INDEXES PERFORMANCE
Sep 02
PSI 20 STOXX 50 FTSE 100 DAX CAC 40 NIKKEI 225 HANG SENG
5.904,35 2.774,09 6.506,19 8.243,87 4.006,01 13.572,92 22.175,34
Sep 03
5.887,79 2.753,35 6.468,41 8.180,71 3.974,07 13.978,44 22.394,58
Sep 04
5.900,26 2.758,29 6.474,74 8.195,92 3.980,42 14.053,87 22.326,22
Sep 05
5.950,16 2.774,20 6.532,44 8.234,98 4.006,80 14.064,82 22.597,97
Sep 06
5.978,09 2.803,42 6.547,33 8.275,67 4.049,19 13.860,81 22.621,22
Wkly Chg
2,93% 3,02% 2,10% 2,13% 2,93% 3,52% 4,09%
Europe
Despite concerns over a possible military conflict with Syria, European stock reached this week a three-week high, completing their biggest weekly gain since Apr. The Euro zone business activity in Aug, as well as its manufacturing activity, was at its strongest level since June 2011, offering hope that the region is on its way to a sustainable recovery. Still, its GDP contracted 0.50% in Q2 of 2013 over the same quarter of the previous year. The European PMI came in at 51.4 (an increase from the 50.3 level registered in July) beating market expectations. Euro zone countries bonds pared weekly declines after European Central Bank President Mario Draghi failed to convince investors interest rates will remain low amid global economic growth.
CURRENCIES
Sep 02
EUR/USD EUR/CHF EUR/GBP EUR/JPY EUR/YUAN AUD/JPY
1,319 1,233 0,849 131,34 8,071 89,59
Sep 03
1,317 1,233 0,846 131,13 8,062 90,13
Sep 04
1,320 1,235 0,845 131,64 8,079 91,44
Sep 05
1,312 1,240 0,842 131,35 8,029 91,31
REFERENCE RATES
Sep 02 Euribor Euribor Euribor Euribor Eonia 1M 3M 6M 12M
0,129% 0,225% 0,344% 0,550% 0,079%
Sep 03
0,129% 0,225% 0,342% 0,548% 0,080%
Sep 04
0,129% 0,225% 0,343% 0,549% 0,073%
Sep 05
0,129% 0,225% 0,344% 0,551% 0,069%
Sep 06
0,129% 0,225% 0,344% 0,551% 0,075%
Asia
Chinese PMI surpassed markets expectations, hitting a 16-month high of 51.0, in Aug. This strengthening of Chinas manufacturing can be explained by the improvement of foreign and national demand, indicating a recovery in the Worlds second largest economy. As for Australia, GDP growth in Q2 beat expectations, advancing 0.6% during the last three months, while RBA kept its cash rate at a record low of 2.5%. In India, the economy has been hit by a wave of growth downgrades, with many analysts predicting the slowdown to worsen in the coming months. On a different note, Bank of Japan decided not to change its monetary policy, revising up its assessment of the economy. The monetary base will continue to increase at an annual pace of about 60-70 trillion yen.
BOND YIELDS
Sep 02 Portugal 6M Portugal 5Y Portugal 10Y Spain 10Y France 10Y Italy 10Y Germany 10Y UK 10Y
1,168% 6,315% 6,666% 4,443% 2,508% 4,363% 1,907% 2,873%
Sep 03
1,070% 6,311% 6,757% 4,469% 2,524% 4,346% 1,935% 2,893%
Sep 04
1,039% 6,384% 6,770% 4,508% 2,532% 4,423% 1,941% 2,898%
Sep 05
1,454% 6,575% 6,991% 4,604% 2,626% 4,529% 2,047% 3,029%
Sep 06
1,460% 6,596% 7,091% 4,531% 2,551% 4,503% 1,949% 2,952%
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SPOTLIGHT
PMI Index
United States
Although uncertainty about the Syrian crisis kept investors on hedge, US stock markets ended the week on a positive note, driven by several positive economic reports. According to the Fed, consumer spending improved and economic activity rose in several sectors, such as travel and tourism, housing sales, nonfinancial services and manufacturing. Furthermore, the index of national factory activity largely beat expectations, rising to 55.7 in Aug, the highest reading since Jun 2011. Construction spending climbed 0.6% to an annual rate of $901 billion. Additionally, weekly jobless claims fell another 9,000 to 323,000, as the private sector added 176,000 jobs in Aug. However, US trade deficit increased 13.3% in Jul, widening more than expected. Analysts considered that this positive economic data indicates that it is likely that the Fed will not be deterred from starting to pullback its monthly asset purchasing program. As such, treasuries prices fell for the first time in three weeks, pushing 10year note yields to a two-year high, close to 3%.
INDEXES PERFORMANCE
Sep 02
S&P 500 DJIA NQ 100 S&P Lac 40
CLOSED CLOSED CLOSED 3.464,49
Sep 03
1.639,77 14.801,55 3.091,76 3.469,29
Sep 04
1.653,08 14.832,42 3.124,54 3.484,30
Sep 05
1.655,08 14.929,49 3.129,94 3.547,21
CURRENCIES
Sep 02
USD/JPY USD/YUAN AUD/USD GBP/USD USD/CHF USD/CAD
99,58 9,120 0,900 1,555 0,935 1,055
Sep 03
99,56 6,121 0,905 1,556 0,936 1,054
Sep 04
99,73 6,120 0,917 1,562 0,936 1,498
Sep 05
100,11 6,120 0,912 1,559 0,945 1,050
Sep 06
99,11 6,121 0,919 1,563 0,937 1,041
Wkly Chg
1,00% 0,02% 3,21% 0,81% 0,80% -1,15%
South America
S&P Lac 40, which captures approximately 70% of the Latin America's total market capitalization, presented a strong positive change. However, the Brazilian trade balance rose less than expected and its industrial production dropped, falling short of markets expectations. On the other hand, positive PMI data from China, Brazils top trading partner, kept markets afloat. As for Mexico, a lot of difficulties to lure investors into local-currency bonds were observed, due to speculation that the Fed will pullback its stimulus and spark an exit from emerging markets.
COMMODITIES
2,42% -2,11% 1,62% -3,03%
Crude Oil WTI Natural Gas Crude Oil Brent Corn
Commodities
Oil prices shot up this week, as ongoing expectations for U.S. military action against Syria underlined concerns over a disruption to supplies from the Middle East. Better than expected US economic data also had a positive impact on this fluctuation. As for corn, prices rose as dry weather forecasts generated concerns among experts, over a mismatch between supply and demand. Natural gas prices fell after official U.S. data revealed that natural gas storage in the U.S. rose by 58 billion cubic feet last week, above market expectations for an increase of just 54.
US TREASURY YIELDS
Sep 02 US 3M US 1Y US 10 Y US 30 Y
0,030% 0,124% 2,835% 3,736%
Sep 03
0,025% 0,127% 2,861% 3,790%
Sep 04
0,023% 0,137% 2,897% 3,796%
Sep 05
0,025% 0,144% 2,988% 3,881%
Sep 06
0,020% 0,129% 2,934% 3,867%
Ana Santos
David Novo
Mrcia Azevedo
Tiago Fonseca
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