Here is what you need to know.
The global bond rout continues. Early selling dropped bonds around the world to their lowest levels in eight months. The selling was paced by weakness in Germany, which caused the 10-year yield to hit a high of 0.995% before easing (bond yields go up when bond prices go down). Currently, the German 10-year yield is up 4.8 basis points at 0.93%. Selling in other parts of the world has run yields up a handful of basis points with the US and UK 10-year yields at 2.39% and 2.12%, respectively.
The Bank of England kept policy on hold. The central bank held its benchmark interest rate at a record low 0.50% while keeping its asset purchase program at 375 billion pounds. Both were expected. The British pound is higher by 0.6% at 1.5428.
Greece’s debt negotiations are at a stalemate. The first of four debt payments due in a two-week period is scheduled to be made on Friday. That is when the government is supposed to pay 1.6 billion euros ($US1.8 billion) to the International Monetary Fund. However, the IMF has previously stated all four of the debt payments could be made on June 19, buying the troubled country some precious time. Greece’s 2-year yield is up 17 basis points at 22.14%.
Australia’s trade deficit ballooned. April trade data showed a deficit of 3.89 billion Australian dollars ($US3.02 billion), the highest since February 2008. The disappointing reading comes as exports slumped 6% and imports climbed 4%. According to the Australian Bureau of Statistics the weak data was “driven by coal, coke and briquettes, down $US859m (22%) as a result of the temporary closure of ports due to severe weather conditions.” The Australian dollar is lower by 0.5% at .7751.
The ex-head of research for OPEC says oil prices will fall into year end. Hasan Qabazard, who was research head from 2006 to 2013, thinks brent crude oil prices will fall to between $US40 and $US50 per barrel by year end. Such a move would make for a drop of as much as 37% from Wednesday’s closing price of $US63.80 per barrel. A Bloomberg survey in May showed analysts are expecting “OPEC will keep its production target unchanged when the ministers gather” at Friday’s meeting.
Dish Network and T-Mobile US are talking merger. Discussions of a marriage between the two companies are still in the early stages. The Wall Street Journal reports, “The two sides are in close agreement about what the combined company would look like, with Dish Chief Executive Charlie Ergen becoming the company’s chairman and his T-Mobile counterpart, John Legere, serving as the combined company’s CEO.” However, the price and make up of a deal remains unresolved.
Prudential is considering fighting its SIFI tag. The insurance giant is closely monitoring Met Life’s lawsuit against the US that would prevent it from being named a “systemically important” financial institution. Prudential considered a lawsuit back in 2013 when it was slapped with the SIFI tag, but ultimately the board of directors decided against it, according to a person familiar with the situation. “The systemically important designation originated with the 2010 Dodd-Frank financial-overhaul legislation that put new clamps on big firms in the wake of the 2008 crisis.”
Joy Global beat on the top and bottom lines. The mining equipment manufacturer announced adjusted earnings of $US0.59 per share, topping the $US0.55 that was expected. Revenue slumped 12.8% to $US810.5 million, but that outpaced the $US803.05 million that analysts were anticipating. The company guided full-year EPS of $US2.50 to $US3.00 and revenue of $US3.3 billion to $US3.6 billion.
An activist investor wants Samsung to raise its offer for Samsung C&T. Elliott Associates LP announced a 7.12% stake in Samsung C&T, and says the offer by Cheil Industries, Samsung Group’s owning family, “significantly undervalues” the company. The Wall Street Journal reports, “Shareholders of both companies are slated to vote on the deal July 17, and a two-thirds majority is required for passage, with at least one-third of shareholders showing up to vote.”
Stock markets around the world are mostly lower.France’s CAC (-1.9%) leads the way lower in Europe after Australia’s ASX (-1.4%) lagged in overnight trade. China’s Shanghai Composite (+0.8%) was a notable outperformer. S&P 500 futures are down 13.50 points at 2102.50.
US economic data is heavy. Data begins to flow with the 7:30 a.m. ET with the release of Challenger Job Cuts, and continues with initial and continuing claims, productivity and unit labour costs at 8:30 a.m. ET. Natural gas inventories are scheduled for 10:30 a.m. ET.