Macro Wrap
EDIT: Just in, Standard and Poors has just downgraded Spain to BBB+ from A on “concern the nation will have to provide further fiscal support to the banking sector as the economy contracts”
A mixed night in the markets, which got off to a good start in Europe, then stumbled on the release of poor EU economic sentiment numbers, coming in at 92.8 way below expectations of 94.1 – what were they expecting – unicorns and rainbows?
European equity markets slipped before the open of US markets, where weekly jobless claims “surprised” on the upside, again, coming in at 388K – an uptick clearly evident:
The Kansas City Fed manufacturing index came in lacklustre but positive, and this and continued expectations of a helping, but unsustainable hand from the Fed saw US markets rally, although they came off in the last hour or so, with risk returning to safe haven bonds on both sides of the Atlantic.
The Australian markets should open higher this morning – with the ASX200 up 15 points or so at 4390 points.
See charts of all major markets at bottom of post.
Bonds:
- US 10 year Treasuries were bid up amidst the equity rally, yields losing 4.6 pips to 1.93%
- German 10 year bunds were treated the same, yields falling 2 pips to 1.68%, UK 10 years stronger, yields falling 4 pips to 2.09%
- Spanish 10 year bonds and Italian 10 years were very shaky, but eventually steadied with yields at 5.79% and 5.61% respectively
Currencies:
- After a very weak Asian session, USD recovered spiking above 79 points on the dollar index (DXY):
- Euro was bid up throughout both sessions, before stalling in the last hour or so, now just above above 1.32 whilst the AUD was more ebullient, rising from 1.032 to almost 1.04 against the USD, again dismissing its domestic deflation and lower rates meme, but has now come back toe be at 1.037 at the start of Asian trading.
Equities:
- The broader Euro Stoxx 50 was flat at 2322 points with the FTSE 100 gaining 0.5% at 5748 alongside the German DAX up 0.5% to 6739 points. It was the peripherals that dragged again, Spanish IBEX down 1.3%, FTSE MIB down 0.7% and French CAC 40 down slightly
- The US bourses were the real movers, the S&P 500 closing up 0.7%, the Dow Jones Industrial Average up 0.9%, whilst the NASDAQ 100 also up 0.7%
Commodities:
- The CRB Index remains slightly above 300 points again, gaining 1.2 points to 303.2, slowing dragging off a bottom as oil prices were mixed, with ICE Brent up 0.4% at $119.62 per barrel and NYMEX WTI crude flat at $104.15 USD per barrel, whilst natural gas came off, down 2% to $2.12
- Gold (USD) had a bullish session, rising to over $1660 or almost $15USD an ounce, before tapering off, still up on the night, and as I warned in Trading Day yesterday, looking like finding a bottom:
- Iron ore import prices into China fell sharply again, after dipping over the ANZAC break, falling nearly $US3 per tonne to $US 143.80, after nearly hitting $150USD – one to watch
Today in Asia
- Data today locally is all Japanese: CPI, household spending, industrial production, unemployment and retail sales. This is sure to move Asian markets around somewhat, so watch out in the next couple of hours. Click here for our economic calendar.
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 |
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