Greece Approves Additional Austerity Measures

Daily Analysis - 24/05/2016

Greek Lawmakers Unlock Aid to Meet Debt Obligations

Lawmakers in Greece approved additional austerity measures including taxes on clothing and the sale of bad loans and distressed debt funds with a support of 153 votes. However, the vote was met with strong opposition. Euro group ministers will be meeting today to decide on whether to unlock aid to the debt-ridden nation.

Eurozone Flash Composite PMI Falls to 16-Month Low

The flash composite output index fell to 52.9 in May, posting a 16-month low. PMI fell from April's 53.0 reading, indicating a slowdown in the private sector growth, data from Markit showed on Monday. Services were steady at 53.1, missing expectations slightly while flash manufacturing was also weaker, falling to 51.5, down from April's 51.7. Although the flash PMI's are preliminary reports, there is evidence that the Eurozone growth might be tapering to 0.30% after rising 0.50% in the first quarter.

ECB's Praet: De-Anchoring of Inflation Expectations Increase

The European Central Bank’s executive board member Peter Praet, in an interview to a Portuguese newspaper on Monday said that a reduction of expectations for inflation to fall below 1 percent or close to zero are real, defending the ECB's monetary policy actions. Mr. Praet said that the ECB wasn't late in delivering the monetary policy actions and said that with its policies the central bank has demonstrated its commitment to avoiding deflation in the euro area. He said that if the ECB faced another economic shock, the central bank had all the monetary policy means to avoid another crisis creatively.

US Flash Manufacturing PMI Falls

The slowdown in April manufacturing PMI to 50.5 marks a decline in the sector for the first time since September 2009. Dragging the sector lower was a renewed weakness in production which weighed on the headline print. Soft new order growth and cuts to stocks were other pressures dragging the flash PMI lower. According to the data, US manufacturers signaled a decline despite it being only a marginal one but firms in the survey reported the uncertainty on the general economic outlook which caused clients to delay spending decisions.

US New Home Sales Expected to Reverse After Declining In March

New home sales report in the US for April are expected to rise 1.80% to a seasonally adjusted 521,000. The forecast for April is expected to reverse the declines from March, where new home sales fell -1.50% to a seasonally adjusted 511,000. Despite the hawkish expectations, economists and homebuilders note that the continued declines in new home sales in March was a warning that further headwinds could keep growth subdued. On Friday, existing home sales in April climbed for the second straight month, rising 1.70% and bringing some optimism back into the housing markets