Tuesday June 14th


Futures hold lower amid data

U.S. stock-index futures indicated a lower open Tuesday, amid a wider "risk-off" move in global markets that saw the yield on benchmark German government paper fall into negative territory for the first time. In U.S. economic news, retail sales rose a more-than-expected 0.5 percent in May. Ex-autos, gasoline, building materials and food services, retail sales rose 0.4 percent. Import prices rose 1.4 percent, their largest gain in more than four years, while export prices jumped 1.1 percent in May. Business inventories data are due at 10 a.m. ET. The U.S. dollar index extended gains slightly to trade about half a percent higher. Treasury yields edged off session lows. Safe haven assets were in vogue with global equities selling off and the oil price falling Tuesday as the U.S. dollar rose higher. Investors have spoken of concerns over amid global growth concerns and jitters over the U.K.'s upcoming referendum on its European Union membership. At around 8.30 a.m. London time, the 10-year German bund yield hit zero and briefly fell into negative territory. Bond prices and yields move in opposite directions and a negative yield implies that investors are effectively paying the German government for the privilege of parking their cash. A spokesperson for the German Federal Debt Agency spoke immediately after the milestone was reached, stating that the tradability of federal securities is "still very high." "The federal debt-management strategy is long-term, therefore, the current absolute yield level plays only a subordinate role. Our target remains a sustainable balance between cost and planning security for the debt portfolio," the agency said in an email to CNBC. In the U.K., Britain's leave campaign continued to strengthen with favorable results in opinion polls, while the nation's biggest-selling newspaper — The Sun — urged readers to vote to quit the EU. Meanwhile, investors were also looking ahead to crucial central bank decisions from the U.S. and Japan this week. The Federal Reserve is not expected to take action at its rate decision Wednesday, but the actions of other central banks will likely continue to be felt as their easing programs wash over global bond markets. In Asia, the Bank of Japan (BOJ) is also scheduled to hold a policy meeting on June 15 with analysts saying that that bank could surprise markets with additional easing this week. European stocks traded sharply lower on Tuesday and in Asia, Japan's Nikkei 225 tumbled 1 percent. In Japan, the Nikkei 225 closed down 160.18 points, or 1 percent, at 15,859.00, after tumbling 3.51 percent Monday on the back of a relatively stronger yen. Chinese mainland markets eked out gains before market close, with the Shanghai composite adding 9.84 points, or 0.35 percent, at 2,842.91, and the Shenzhen composite added 5.27 points, or 0.28 percent, at 1,832.62. U.S. stocks fell on Monday with the Dow posting triple-digit losses by the close. On the data front Tuesday, the NFIB (National Federation of Independent Business) survey said its small business optimism index rose 0.2 points to a reading of 93.8 last month, remaining below the 42-year average of 98. Oil fell on Tuesday, as investor nervousness over next week's vote on Britain's possible European Union exit swept financial markets, eclipsing signs of a return to health for crude prices. Perceived safe-haven assets such as the Swiss franc and German Bunds rallied, while industrial commodities and equity markets, seen as more vulnerable to economic risk, fell after polls showed Britain's "Leave" campaign leading before a referendum on EU membership. This overshadowed a more upbeat forecast for oil demand growth from the International Energy Agency, which said the oil market is essentially balanced after two years of surpluses. Brent crude oil futures were down 79 cents, or 1.6 percent, to $49.56 a barrel by 8 a.m. ET (1200 GMT), dropping for a fourth day in a row, while U.S. crude futures fell 74 cents, or 1.5 percent, to $48.14 a barrel. Gold inched down on Tuesday as investors waited for cues from a two-day U.S. Federal Reserve meeting beginning later in the day and a June 23 referendum that will decide whether Britain will exit the European Union. Spot gold was down 0.05 percent at $1,282.95 an ounce, but has gained more than 5 percent this month, hitting a peak of $1,287 on Monday, its highest since May 16. U.S. gold fell 20 cents to $1,286.70.