by Calculated Risk on 6/15/2011 04:13:00 PM

A few articles:
• From the LA Times: Fighting breaks out in Athens as thousands of Greek workers protest

• From the WSJ: Greek Leader to Seek Vote of Confidence

Greek Prime Minister George Papandreou, facing mounting opposition to his plans for further austerity measures being demanded as a price for a new bailout needed to avoid a debt default, said Wednesday he would shuffle his cabinet and demand a vote of confidence in Parliament.

The vote is likely to herald a further bout of intense uncertainty in financial markets already rattled by the disagreements over a new rescue package.

• From the Financial Times: Greek contagion fears spread to other EU banks

• From the WSJ, a list of banks and countries exposed to the debt of Greece, Ireland and Portugal (ht Pat): Greece, Ireland, Portugal: Who Holds the Debt?. This doesn't include the exposure to CDS that Kash outlined last week.

The yield for Greek 2 year bonds is over 28%; the 10 year yield is close to 18%. Portuguese and Irish yields are up too.

Here are the links for bond yields for several countries (source: Bloomberg):

Greece	2 Year	5 Year	10 Year
Portugal	2 Year	5 Year	10 Year
Ireland	2 Year	5 Year	10 Year
Spain	2 Year	5 Year	10 Year
Italy	2 Year	5 Year	10 Year
Belgium	2 Year	5 Year	10 Year
France	2 Year	5 Year	10 Year
Germany	2 Year	5 Year	10 Year

by Calculated Risk on 6/15/2011 12:43:00 PM

Earlier today the BLS reported:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in May on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.6 percent before seasonal adjustment.

The index for all items less food and energy rose 0.3 percent in May after increasing 0.1 percent in March and 0.2 percent in April. The shelter index rose 0.2 percent in May after increasing 0.1 percent in each of the seven previous months. Both rent and owners' equivalent rent rose 0.1 percent; the acceleration in shelter was due to the index for lodging away from home, which rose 2.9 percent in May after being unchanged in April.

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.1% annualized rate) in May. The 16% trimmed-mean Consumer Price Index increased 0.2% (2.8% annualized rate) during the month.

Over the last 12 months, core CPI has increased 1.5%, median CPI has increased 1.5%, and trimmed-mean CPI increased 1.9%.

Note: The Cleveland Fed has a discussion of a number of measures of inflation: Measuring Inflation

Click on graph for larger image in graph gallery.

This graph shows these three measure of inflation on a year-over-year basis.

These measures all show that year-over-year inflation is still low, but increasing.

Note: You can see the median CPI details for May here.

Although the year-over-year increases are below the Fed's inflation target, the annualized rates were above the target in May. However, with the slack in the system, the year-over-year core measures will probably stay near or be below 2% this year.

Earlier:
• NAHB Builder Confidence index declines in June
• Industrial Production edged up in May, Capacity Utilization unchanged
• Empire State Survey indicates contraction
• MBA: Mortgage Purchase Application activity increases

by Calculated Risk on 6/15/2011 10:00:00 AM

The National Association of Home Builders (NAHB) reports the housing market index (HMI) declined to 13 in June from 16 in May. This is the lowest level since last September. Any number under 50 indicates that more builders view sales conditions as poor than good.

This graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the June release for the HMI and the April data for starts (May housing starts will be released tomorrow).

Both confidence and housing starts have been moving sideways at a very depressed level for several years.

Click on graph for larger image in new window.

Press release from the NAHB: Builder Confidence Declines Three Points in June

After holding at a low but steady level for the past six months, builder confidence in the market for newly built, single-family homes declined three points in June to a reading of 13 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The last time the index was this low was in September of 2010.
...
"Builder confidence has waned even further as economic growth has stalled, foreclosures have continued to hit the market and the cost of building a home has risen," agreed NAHB Chief Economist David Crowe. "Meanwhile, potential new-home buyers are being constrained by difficulty selling their existing homes, stringent lending requirements, and general uncertainty about the economy.”
...
Every component of the HMI fell in June. The component gauging current sales conditions and the component gauging traffic of prospective buyers each fell two points, to 13 and 12, respectively. The component gauging sales expectations in the next six months fell four points to tie its record low score of 15 set in February and March of 2009.

Builders are very depressed, and the HMI has been below 25 for forty-eight consecutive months - 4 years!

by Calculated Risk on 6/15/2011 09:15:00 AM

From the Fed: Industrial production and Capacity Utilization

Industrial production edged up 0.1 percent in May, the second consecutive month with little or no gain. Revisions to total industrial production in months before May were small. In May, manufacturing production rose 0.4 percent after having fallen 0.5 percent in April. The output of motor vehicles and parts has been held down in the past two months because of supply chain disruptions following the earthquake in Japan. Excluding motor vehicles and parts, manufacturing output advanced 0.6 percent in May and edged down 0.1 percent in April; the decrease in April in part reflected production lost because of tornadoes in the South at the end of the month. ... At 93.0 percent of its 2007 average, total industrial production in May was 3.4 percent above its year-earlier level. Capacity utilization for total industry was flat at 76.7 percent, a rate 3.7 percentage points below its average from 1972 to 2010.

Click on graph for larger image in graph gallery.

This graph shows Capacity Utilization. This series is up 9.5 percentage points from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 76.7% is still "3.7 percentage points below its average from 1972 to 2010" - and below the pre-recession levels of 81.2% in November 2007.

Note: y-axis doesn't start at zero to better show the change.

The second graph shows industrial production since 1967.

Industrial production edged up slightly in May to 93.0.

Both industrial production and capacity utilization have stalled recently. The was below the consensus of a 0.2% increase in Industrial Production in May, and an increase to 77.0% for Capacity Utilization.

by Calculated Risk on 6/15/2011 08:30:00 AM

• From the NY Fed: Empire State Manufacturing Survey

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers deteriorated in June. The general business conditions index slipped below zero for the first time since November of 2010, falling twenty points to -7.8.

The new orders and shipments indexes also posted steep declines and fell below zero. The index for number of employees dropped fifteen points to 10.2.

This was well below expectations of a reading of 13.0. This is the first regional survey released for June and shows that manufacturing is contracting.

• From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in May on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. ... The index for all items less food and energy increased 0.3 percent in May, its largest increase since July 2008.

Even though the rate of inflation slowed, it was still higher than expected. The pickup in core inflation is bad news - I'll have more on inflation later.

• From the NY Times: Moody's to Review French Banks Over Greece Exposure

French banks were punished Wednesday for their exposure to the Greece after Moody’s Investors Service placed three of the largest on review for a possible downgrade.

Moody’s cited “concerns” about the exposure of BNP Paribas, Société Générale and Crédit Agricole to the Greek economy ...

by Calculated Risk on 6/15/2011 07:18:00 AM

The MBA reports: MMortgage Applications Increase in Latest MBA Weekly Survey

The Refinance Index increased 16.5 percent from the previous week. The seasonally adjusted Purchase Index increased 4.5 percent from one week earlier.
...
"Mortgage rates have declined for 8 of the past 9 weeks. Coming off of the Memorial Day holiday, refinance application volume increased significantly, as borrowers jumped to lock in the lowest mortgage rates since last November," said Michael Fratantoni, MBA's Vice President of Research and Economics. "The volume of refinance applications still remains 28 percent below levels seen at that time, as borrowers with an incentive to refinance remain constrained from doing so by lack of equity in their homes."
...
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.51 percent from 4.54 percent, with points increasing to 1.05 from 0.94 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year average rate since November 19, 2010.

The following graph shows the MBA Purchase Index and four week moving average since 1990.

Click on graph for larger image in graph gallery.

The four week average of purchase activity is still at about 1997 levels. Of course there is a very high percentage of cash buyers right now, but this suggests weak existing home sales through mid-year (not counting cash buyers). Note that mortgage rates have fallen to the lowest level since last November and refinance activity has increased.