Overnight, the Japanese economic minister stated that any further decline in the yen would be detrimental to the Japanese economy, which sparked the first rally seriously rally in the yen since the end of April. In prior months, Japanese officials pointed toward a price of 90 to 100 versus the US dollar as an ideal level, but lately the yen has pushed through the 100 level and risks harming Japanese import prices.
Yahoo (YHOO) finalized its acquisition of Tumblr this morning for $1.1 billion, mostly in cash. Upper management at Tumblr will remain the same and the company will continue to operate as a separate company. Yahoo expects a 20% boost to its organic traffic as a result of the deal. Yahoo shares were erratic in early trading, but remained in positive territory throughout the day, closing up 0.55%.
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Two regional Federal Reserve presidents were in the news today, both making comments on the current asset purchase program. In the morning, Dallas Fed President Richard Fisher said that it was unlikely the Fed would cut back on purchases too severely as it would shock the market. This was very telling, given that Fisher is the most hawkish member of the Federal Reserve. The other president speaking today was Chicago President Chuckie Evans. Evans stated that the Fed would need to see further job market gains before going through with the tapering of asset purchases. Overall, Evans reiterated his dovish views.
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US equities hugged the flat line throughout the day and ended barely in negative territory. The comments from Evans were construed as negative and less dovish than he has been in the past, sparking a multi-point sell-off. The defensive consumer staples, utilities, and health-care sectors were the clear underperformers, all falling more than 0.66%. Conversely, energy stocks led, up 1.15%.
Tomorrow's Financial Outlook
There will be no major economic data tomorrow in the US. The more market-moving events will be from Federal Reserve Presidents Bullard and Dudley. New York Fed President William Dudley, a trusted FOMC member of current Chairman Ben Bernanke, will give the best indication of what's inside the minutes from the May FOMC meeting and the direction of monetary policy. These minutes will be released at 2:00 p.m. EDT on Wednesday.
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Notable global economic data will be released from Germany and the UK tomorrow. The UK's YoY CPI is estimated to decline to 2.6% in April from 2.8% the month prior. Producer prices are expected to decline to 0.3% YoY from 0.4% the month prior. German producer prices for April are expected to decline to 0.2% from 0.4% the month prior.