by Chris Becker
Macro Wrap
Apart from the laser like (or lizard like going by MSM coverage) focus on the Australian Budget last night, markets were really worrying about the post-Greek election machinations with a new default loomin. A new government is struggling to be formed, and banks are worried that they won’t get their money back if the new administration “backs out” of the recent bailout agreements.
The Greek share market slumped almost 4%, but more importantly, the Euro continues to weaken appreciably, dicing with the 1.30 key level I warned about recently in Trading Week.
Bank stocks across Euroland fell sharply, with speculation (probably very true) that the Greek banks will be nationalised and a Spanish bank, Bankia SA, will also be nationalised.
In the USA, two secondary indicators of retail spending came out amidst the market noise. The S&P500 slid to a key level as well before rebounding, still closing in the red (see details below). Redbook sales growth came in at 2.6% whilst prior was 2.9%, whilst ICSC-Goldman Store Sales also weakened, down 0.3% week on week (noise basically), more importantly, year on year comparative store sales are only up 3.3% compared to 4.2% previously. This goes against the bullish consumer credit figures released on Monday night.
Amidst some US Treasury auctions, 10 year yields fell again, whilst commodities retreated alongside other risk markets, in particular gold which was smashed on the open of NYMEX (again) hitting below $1600 at one point. Some safe haven.
Today local data is sparse, with the March Bogan Exodus (Overseas Arrivals and Departures) figures coming out from the ABS and a preview of Chinese merchandise trade figures maybe leaked as well.
I’m watching the action on our bond market and discretionary sectors on the stock market in reaction to last night’s Budget.
See charts of all major markets at bottom of post.
Bonds:
- US 10 year Treasuries were bid up slightly, but the real moves were in German 10 year bunds bid up 6 pips to 1.53% and UK gilts down 6 pips to 1.93%
- Peripheral bonds reversed their recent recovery, Italian and Spanish bonds falling, with yields rising 6 and 9 pips closing in on 6%
Currencies:
- The USD remained strong staying below the 80 point barrier on the Dollar Index as the Euro weakened appreciably, and dicing with support at 1.30
- AUD has now fallen below 1.01 against the USD in response to the “golden budget” and the blowout in the trade deficit yesterday – watch this space, this is not just a volatile move, its a mover
Equities:
- The Eurostoxx 50 was down 2% the FTSE and DAX both hit as well, down 1.8% and 1.9% respectively
- The US bourses slumped mid session, the S&P 500 falling nearly 1.6% and dicing with support at 1350 points before rebounding in the afternoon only falling 0.4%, the Dow Jones off 0.6%
Commodities:
- There was a divergence in price moves in oil again, with ICE Brent continuing to slip, down to below $113 per barrel and NYMEX WTI crude steadying at $97.26USD per barrel
- Gold (USD) was assaulted again on the open of the NYMEX session, lsing over $30USD per ounce before barely recovering to $1605USD an ounce
- Iron ore import prices into China have slipped again, down $1.40 to $144.10 a metric ton, forming a moving short term trend – let’s hope for the coming massive CAD forecast that commodity prices stay up…..
Market Charts
| AUD_USD | EUR_USD |
| US DOLLAR INDEX | GOLD USD |
| S&P500 | VIX VOLATILITY |
| DAX 30 | SPOT BRENT CRUDE |
| RJ/CRB COMMODITY INDEX | CHINA IMPORT IRON ORE |
Sovereign 10 year bond yields
| UK | USA | ||||||||
|
JAPAN | GREECE | IRELAND | SPAIN | ITALY | FRANCE | GERMANY | PORTUGAL | AUSTRALIA |
|