Peak Oil ? Markets for the week ending 6-Jun-08

U.K. producer prices increased at the quickest rate in two decades in May, double the median forecast of 32 economists in a Bloomberg News survey. From a year earlier, prices rose 8.9 percent. Core producer prices, which exclude food, beverages, tobacco and petroleum, rose an annual 5.9 percent in May, the most since 1991.
Implication:
Increases the odds the Bank of England will refrain from interest-rate cuts even as the economy edges toward a recession.


After hitting above $139, crude oil for July delivery declined as much as $3.27, or 2.4 percent, to $135.27 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Friday's jump was the biggest-ever oil gain in dollar terms and the largest on a percentage basis since June 1996.
Implication:
Rising oil prices cut earnings prospects for airlines and automakers.
Inflation is now the biggest threat to the global economy as the credit crisis starts to recede
Oil will remain the focus this week.


US Payrolls fell 49,000 in May, the jobless rate increased by half a point to 5.5 percent, higher than every forecast in a Bloomberg News survey.
The U.S. lost jobs for a fifth month and the unemployment rate rose by the most in more than two decades
Implications:
European stocks fell, heightening concern the US economy won’t rebound from its slowest growth in six years.
The dollar traded near a one-week low against the yen on speculation an industry report today will show the worst housing slump in a quarter century is weighing on the U.S. economy.
The dollar was at the lowest in almost two weeks versus the euro .
The dollar traded near its weakest level in 25 years against Australia's currency as investors reduced bets the Federal Reserve will raise interest rates this year.

Eric Tan, London