Today the market is focused on Japan and the lack of stimulus. Reuters reports that "The Bank of Japan kept monetary policy steady on Tuesday and held off on taking fresh steps to calm bond market volatility, possibly judging that recent market turbulence has yet to pose a significant risk to the economy's recovery prospects. The yen edged higher against the dollar, Japanese equities futures slipped further and 10-year government bond futures extended losses, reflecting disappointment that the central bank had not taken the additional steps. Rising bond market yields have already pushed up some mortgage rates, raising concerns that a further rise in yields could increase other borrowing costs and so dent the economy's new found momentum under Prime Minister Shinzo Abe. Some central bankers had been considering the idea of extending the maximum duration of cheap, fixed-rate funds it offers via market operations to two years from the current one year."
Of course the commodity bulls wanted more. With a sense that the global economy is seemingly fading they are looking to central banks to keep the music playing. And oil producers are as well. Dow Jones reports that "Any slowdown in the economic recovery may upset an expected balance in the oil market for the second half of this year, OPEC said in a report Tuesday as it slightly downgraded its global oil-demand growth views. But the Organization of the Petroleum Exporting Countries warned that the predicted balance could be threatened if a strong hurricane season in the U.S. disrupted production. In its monthly oil-market report for June, OPEC — members of which produce more than one in three barrels of oil consumed each day in the world — said "uncertainties on both the demand and supply side have the potential to undermine the expected market balance in the second half of 2013."
Amid lingering economic uncertainty, OPEC marginally cut its global oil-demand growth forecast for 2013 by 10,000 barrels a day from last month's report. But demand for the commodity will still grow by about 780,000 barrels a day this year, it said. OPEC warned that "risks are skewed toward the downside" for demand. "This is due largely to the weak economic outlook for Europe, as well as to any possible setbacks in the U.S. economic recovery," it added. OPEC also pointed out that the use of fuel oil in Japan has recently weakened mainly due to it being replaced with natural gas and coal. It added that the threat from a slowdown in economic growth also existed in developing countries, which have been consuming more barrels of oil in recent years. But the group also said there was a risk markets wouldn't get as much as oil as expected if U.S. production is heavily hit by hurricanes. Due to a boost in non-conventional production, the U.S. will pump nearly two-thirds of the additional 1 million barrels a day coming from non-OPEC producers this year, according to the organization. But the "risks remain on the high side for the U.S. supply forecast," OPEC said. "The official forecast expects an 'active or extremely active' hurricane season this year, which could impact production in the coming period," it said. While the U.S. remains vulnerable to oil disruptions in its offshore, it's expected to increasingly rely on resources trapped in the rock onshore. A report released by the U.S. government Monday showed 10% of the world's recoverable crude-oil resources may be held in shale formations in the U.S. and elsewhere."