The polls proved wide of the mark. While we had detected a break toward the Tories over the past week, the results were stunning. The Tories appear to have won half the 650 seats. Most of the contested seats swung to the Conservatives. They picked up seats from the Lib-Dems and Labour.
The dramatic sell-off in European bonds continues apace today. In part, sparked by the easing of deflation pressure, there is a taper tantrum of sorts playing out. The 10-year German bund yield is up 18 bp to 76 bp. Recall that about a month ago, it was at 5 bp, and everyone knew it was going to go negative.
The state of living standards in the UK has been a hotly contested issue in the build-up to the country’s general election. The coalition government has argued that living standards have increased since it came to power in 2010. The Labour Party and other opposition parties claim that living standards have fallen.
Since the US economic recovery began, following the “Great Recession” of 2008, things have been slow but steady. That is, they were until the first quarter of 2015. A number of growth indicators have been off for some time, but at the start of this year, the economy barely grew, and all indicators point to similarly sluggish growth right now.
After losing 50% of its value in 2014, oil prices have surged in 2015, rising from $40 to over $60 a barrel in just three months.
The price of oil rose to over $60 a barrel in the United States on Tuesday, and has risen even further in early Wednesday trading. Analysts disagree on the exact causes, but as one analyst wrote in a note on Wednesday, “bulls are in control of the market.”
On April 1, in an announcement that just a year or two ago might have been seen as an April Fools’ prank, McDonald’s said that by July 1 it would raise wages to at least one dollar above the local minimum wage in each of its 1,500 US stores.
While this only applies to about 90,000 workers at company-owned restaurants, it puts pressure on the more than 3,100 McDonald’s US franchisees, each running an average of about four stores each. These outlets have about 750,000 workers, who no doubt will clamor for their own pay hike.
Arguably, the most famous astrophysicist in the world, Neil DeGrasse Tyson, has posited that the first private trillionaires in the world will make their money by exploiting the endless resources of space. These comments came during an interview with CNBC regarding his TV show called “Star Talk.”
The beginning of a new month starts the usual cycle of economic data. Among these, only the US employment report is significant. A weak report would not only rule out a June hike by the Fed, but would call a September move into question as well. A strong report could mark the return of the dollar bulls after taking a six-week spring vacation.
A number of economic indicators suggest a surprise slowdown throughout Europe, while American spending doubles but remains pressured by moribund wage growth.
This week the UK announced that its economy had risen by only 0.3%, a decline from the previous quarter despite expectations that quantitative easing in the European Union, combined with Britain’s own economic growth trend and growth policies by the Conservative party. The growth rate was about half of analysts’ estimates.
The broad-based dollar sell-off this week has considerably narrowed. The dollar’s losses have become move concentrated in the post-FOMC sessions with just the euro sustaining the momentum and extending this week’s gains.
