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Weekly Economic Commentary


Charts with Much to Tell

May 25, 2012

Dowload PDF Version

Today is an economic data light day, with most folks on this side of the Atlantic having nearly commenced the long Memorial Day weekend.  So, we thought a picture commentary is a good idea. 

Lest you thought the Chinese authorities are wondering how to get the economic engine working on high gear once again, here is one of the tools – the renminbi was last quoted at 6.34 per dollar, which is a depreciation from the 6.28 quote on April 30.  They have rolled out a multi-pronged approach – a slow depreciation of the currency, lower reserve requirements, and Premier Wen Jibao’s statement about the need to stimulate economic activity.

Chart 1
 Dec 052512 Chart 1

While we are speaking about exchange rates, the dollar-euro quote points to a weakening of the euro.  The euro is trading around $1.25 per euro, the lowest since July 2010.  The flight away from the euro is a major factor as risk aversion has set in.

Chart 2
Dec 052512 Chart 2

In the United States, the 10-year Treasury yield as risen a few basis points after the historical low of 1.70% and was trading at 1.75% today. 

Chart 3
Dec 052512 Chart 3

The turmoil in Europe and signs of slowing economic conditions in parts of Asia has led to lower oil prices, with Brent crude oil at $108.63.

Chart 4

Dec 052512 Chart 4

In the meantime, inflation expectations in the United States have also moved down 27 bps from a high of 206 bps on April 30 to 179 bps as of May 24 (see Chart 5).

Chart 5

Dec 052512 Chart 5

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.