Market Headlines May 19

$       US University of Michigan preliminary May consumer sentiment fell to 59.5 from 62.6 in April; the drop was led by current conditions which declined 5.3 pts to 71.7 in May; the expectations component fell by 1.6 pts to 51.7

$       US housing starts quickened to an annualized pace of 1.032m in April from 0.954m previously (initially 0.947m); building permits rose as well in April, by 4.9% to an annualized pace of 0.978m

$       Fed’s Lockhart said he expects economic weakness to bring down inflation; “there is some indication, some hope, that we’re seeing a slowing of the pace of inflation”

£       UK BoE spokesman: “As we made clear initially, there is no arbitrary limit on the size of the [Special Liquidity] scheme…We expect initial use to be around £50bn. We are not speculating on the size of the scheme — that will reflect its use over time.”

€       ECB President Trichet: “Price stability and credibility in price stability in the medium term is the best way to have a high level of sustainable (economic) growth and sustainable job creation”; there is no room for complacency on inflation

€       Eurozone trade balance posted a deficit of €2.3bn in March versus a surplus of €0.8bn in February; on a year-to-date basis in March the deficit was 8.4% wider than in 2007

€               Bank of France business sentiment dropped to 101 in April from a downwardly revised 104 in March (initially 105)

£       UK Rightmove house prices accelerated at an annual pace of +2.2% in May versus +1.3%YoY in April

USD Rebounds Versus Lost Majors After Data

The dollar stormed back to the upside versus most majors Monday morning after the Conference Board released its report on leading economic indicators in the month of April, showing that its leading indicators index experienced a modest increase for the second consecutive month.

The report showed that the leading index edged up 0.1 percent in April, matching the increase that was seen in March. Economists had been expecting the index to come in unchanged.

The dollar rebounded from a two-week low against the euro, rising more than a penny to 1.55. The dollar jumped to 104.50 versus the yen and to 1.9470 against the euro.

The buck failed to gain much traction against the surging Canadian loonie, staying near this morning’s 2-month low of .99. The loonie has rallied lately as the price oil has risen to new record highs above $127 a barrel.

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