The World Bank just published the Commodity Market Outlook report for the second quarter of 2014.
Geopolitical concerns in Iraq and Ukraine/Russia earlier in the year put upward pressure on oil prices during the second quarter. Yet, as tensions moderate, oil prices are expected to ease to $104/barrel in 2015 from $106/barrel in 2014.
High Income Economies
With energy prices showing a significant rebound, U.S. producer prices increased by more than expected in June. The producer price index for final demand rose by 0.4% (m/m) following a 0.2% drop in May. Economists had expected prices to increase by about 0.2%. Excluding food and energy prices, core producer prices edged up by 0.2% in June after dipping by 0.1% in May.
Canada lost 9400 jobs in June and the jobless rate rose by 0.1 percentage points to 7.1% percent, as more people were searching for work. Employment increased by 72,000 annually or 0.4% (y/y), the lowest since February 2010. Employment fell in business, building and other support services as well as agriculture. At the same time, there were more people working in construction and other services.
U.S. Treasuries and German bunds advanced on Thursday, pushing their yields lower, as renewed concerns over European financial markets amid Portuguese banking woes boosted demand for safe-haven government securities. The benchmark 10-year yield declined as much as 6 basis points (bps) to a one-month low of 2.49%, while German 10-year yield slid 6 bps to a 14-month low of 1.17%. In contrast, Italian, Portuguese, and Spanish government bond extended their losses.
U.S. Treasury prices gained on Monday as investors took advantage of bargain-priced bonds after three sessions of selling. Further, the fact that U.S. Treasuries are relatively cheaper than other safe-haven government bonds also boosted oversea demand. The additional yield investors demand to hold U.S. notes over German 10-year bunds is currently at 137 basis points, the widest since 1999.