July 5, 2012

Yields continue to creep up on rate cuts and stimulus around the world.

As expected the European Central Bank has moved to stimulate the Eurozone, cutting its benchmark interest rate by a quarter-point to 0.75%.  The ECB has also cut its overnight deposit rate to zero in an effort to get banks to put their money into the economy rather than hording cash.

The Bank of England has announced about $80 billion in stimulus in an effort to boost the UK’s moribund economy out of recession.  The bank is printing new money that will be used for a third round of asset purchases.

And China’s central bank is also trimming its key rate.  On Friday it’ll drop to 6% from 6.31%.  It’s the second cut in two months.

In the U.S., the Institute of Supply Management’s latest reading of non-manufacturing industries shows an increase in May.  The service sector is up 0.02% from 53.5% to 53.7% in April, the 29th consecutive increase.  The three sub-indexes all registered growth but at slower rates.

The monthly ADP employment report shows the private sector added nearly 180,000 jobs in June, led by small business and service industries.  May’s numbers were revised upwards.  And the weekly read on U.S. jobless claims shows a drop of 14,000 – the biggest decline in two months.  The 4-week rolling average is down by about 1,500, to a little less than 386,000.