Macro Morning

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Macro Wrap

A slew of data releases, the release of IMF economic forecasts and successful peripheral European debt auctions gave markets the energy to whip themselves out of the current dip. Chronologically, we had the EU release its harmonised CPI figure, that showed inflation ticked up a notch in March, then US housing starts which disappointed coming in well below expectations. Weekly Redbook sales also disappointed at 3% growth, compared to 4.1% prior, and finally US industrial production numbers were flat, with manufacturing actually slipping 0.2%, when expectations were for a 0.3% rise.

The main macro news was the IMF updating its global growth forecasts, with GDP rising in 2012 to 3.5% from 3.3%, with the US improving at 2.1% from 1.8%, and 2013 global growth at 4.1% from 4%.

Market Update

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Debt markets were shaky to begin with coming into the Euro session, but then stabilised and rallied as Spain sold 12 and 18 month bills successfully which saw a big rally in the 10 year Spanish, Italian and Portugese bonds. This caused a large surge in European stocks – all up over 2 or 3%. US stocks also climbed out of their funk, with Apple rising over 5%, as earnings reports continued to come in.

See charts of all major markets at bottom of post. 

Bonds:

  • US 10 year Treasury slipped slightly, yields remaining at 1.99%
  • German 10 year bunds also slipped, yields gaining 3 pips to 1.74%
  • Spanish 10 year bonds yields fell 19 pips to 5.83% whilst Italian 10 years were similar, down 11 pips to 5.45%
  • Australian 10 year government bonds remain steady at 3.79%

Currencies:

  • Big moves in equities were not translated to FX, with USD ended the night flat, the dollar index DXY remaining at 79.55 points
  • Euro remained in a trading band between 1.308 and 1.316
  • AUD was sold off before surging to over 1.04 against the USD, coming back to 1.039 where it remains at the start of Asian trading.

Equities:

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  • The broader Euro Stoxx 50  surged 2.8% to 2301 points
  • The FTSE 100 gained 1.7% to 5766, whilst German DAX was up 2.6% to 6801 points
  • The FTSE MIB Italian was the bigger winner, up nearly 4% to 14942
  • The S&P 500 closed up 1.5% at 1390, the Dow Jones Industrial Average also up 1.5% to 13115, the NASDAQ 100 was up 2% to 2723 points

Commodities:

  • Oil prices were mixed again with ICE Brent flat at $118.65 per barrel – with NYMEX WTI crude rising 1.3% to $104.26 USD per barrel, whilst natural gas slumped again 1down 3.3% to be at $1.94, fallen 34% YTD
  • Gold (USD) was eventually steady, settling at $1649USD an ounce as we wait the start of the Asian session, but a huge intraday spike towards the end of the London session was weird, to say the least:
  • Silver also flat at $31.71 an ounce, and base metals on the London Metals Exchange also continued the mixed/flat meme
  • Iron ore import prices into China were off very slightly again, at $US 149.2 per metric tonne

Today in Asia

  • As Asia wakes up to the risk-on story the ASX200 futures are pointing to a much higher open, at least 1% higher or 45 points to 4340 points.
  • Data today locally includes the release of New Zealand CPI numbers, Westpac Leading Index along with production report from BHP-Billiton. Regionally, Japanese merchanise trade numbers in the afternoon. Click here for our economic calendar.

Market Charts

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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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