Overnight News and Data Releases
All eyes were on the US Federal Reserve meeting minutes (reported here by Houses and Holes), but beforehand, the European Union released its monthly Producer Price Index (PPI). Consensus was looking for only a 0.5% rise, but it came in at 0.6%, with year-on-year also higher than expected at 3.6%. In context however, the PPI has been falling since the June 2011 high, so inflation pressures are easing very quickly in the EU. Also, the Spanish budget was released, showing Spain’s debt‑to‑GDP ratio expected to rise from 68.5% in 2011 to 79.8% through 2012 – not good for an economy unable to spend its way out of depression.
In the US, Redbook retail sales were announced, up 4.6% rising from 3.8%, accelerating a trend that began in early January, although Redbook stated this was mainly seasonal due to good weather and Easter buying…
Factory orders were also released, rising 1.3% in February, missing the 1.5% expected, whilst shipping declined and inventories continued to stockpile, the January print was also revised down.
Overnight Markets Update
It was really the Fed’s take on inflation that upsets markets overnight, with no-one really Keen (sic) to engage in further stimulus, or as Deus Forex Machina tweeted this morning:
If markets really fell because the economy is ok but no more stimulus we have some real issues
US 10 year Treasury yields rose 11 pips to 2.3% on the associated sell off, with German 10 year bunds not responding in kind, staying steady at 1.8% whilst Australian 10 year government bonds were bid up, losing 7 pips to 4.06%.
On currency markets, the dragging of punchbowls away led to a return to king USD, the dollar index rising nearly 1% to 79.48 points as the Euro tumbled from 1.336 to 1.323, and the AUD – after snapping down from yesterdays expected but unexpected RBA rates hold – slumped to just above 1.03 even, before recovering ever so slightly to 1.032 against the USD where it remains at the start of Asian trading.
The S&P 500 closed 0.4% lower at 1,413, the Dow Jones Industrial Average further down 0.5% to 13,199 – mainly due to cyclical stocks – whilst Apple (AAPL) rose another 1.7% to $629 per share with analysts predicting it could go to $1000 a share!! If it cracks $1070, it will be worth over $1 trillion…no bubble here folks, phew.
European equities fell after the Spanish budget’s release, bank stocks leading the way. The FTSE 100 fell 0.6% to 5838, the German DAX down 1% to be just below the important 7000 point barrier at 6982 points, whilst most tellingly, the broader Euro Stoxx 50 finished 1.7% lower at 2456 points, mainly due to the Spanish and Italian bourses.
Oil remains high, with ICE Brent futures slipping slightly to $124.91 per barrel whilst Gold (USD) had a horror night. The session (marked in green below) started flat, easing slightly, until the FOMC minutes came out and then – BANG – immediately down $30USD an ounce…The shiny “currency” has recovered a bit to $1645USD an ounce, down almost 2% in 24 hours, as we wait the start of the Asian session.
As Asia wakes up to the news, the ASX200 futures are pointing to a slightly lower open – down around 20 points or 0.5% to 4310 points.
See more charts of all major markets at bottom of post.
The Day Ahead
Locally, the ABS will be releasing the international trade figures this morning, the AIG is expected to release its PSI – services index – whilst the RBA releases its monthly Chart Pack. Tonight, there is a deluge of PMI data from Europe and US private payrolls and non-manufacturing.
Keep up to date with our Economic Calendar, updated weekly here.
Remember to follow MacroBusiness on Twitter: www.twitter.com/MacroBusiness
Major Markets
| 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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