by Chris Becker
Macro Wrap
The dip continues! I’m getting more surprised that the consensus is surprised there could be a dip in a rally. Shock, horror.
The Greeks continue to stir things up, although the next payment from the bailout package is confirmed as on its way to the embattled and rudderless nation. Euro markets are still shaky on what the ramifications of a Socialist government in France will do to the core nations efforts since the GFC in rescuing the un-capitalised banks that irresponsibly lent huge amounts of money to irresponsible, yet democratic nations. Of course what is missing is a solution that is democratic…not autocratic.
Apart from the usual politicking, the only data prints of note were merchandise trade numbers from France and Germany with the former weakening and the latter strengthening. No surprise really.
Across the Atlantic, apart from President Obama finally recognises (informally) the marriage rights of same-sex couples, the only major data/event movers were wholesale trade numbers for March, which like Obama, underdelivered, and oil inventories. Consensus was looking for at least 0.4% but only got 0.3% – whilst oil inventories continued to surge from the new year low:
Share markets came back in the afternoon sessions, but across the board (apart from lucky, lucky Germany) most were down, but only a normal half to 3/4 of a percent, as expected in a dip.
Today the laser focus will be on unemployment numbers for April, with the consensus crowd tipping a 0.1% rise to 5.3%. Look – that’s an unmeasurable number, because as we’ve said here before at MB, the actual print is so noisy and with a huge confidence interval, the real numbers could be +/- 0.2% either way of the print.
Nonetheless, we’re expecting an uptick given then ANZ jobs balls-up recently and the Roy Morgan divergence should eventually close. The futures are pointing to a lower open on the S&P/ASX200 share market, down around 10-15 points to 4255 or so.
See charts of all major markets at bottom of post.
Bonds:
- US 10 year Treasuries were unchanged, but the real moves were again in German 10 year bunds, bid up with yields falling 2 pips to 1.51% and UK gilts down 3 pips to 1.9%
- Peripheral bonds exploded, Italian and Spanish bonds sold off, with yields rising above 6% on the latter (jumping nearly a quarter of a percent) and 14 pips to 5.57% on the former
Currencies:
- The USD remains strong breaking above the 80 point barrier on the Dollar Index as the Euro weakened appreciably, breaking support at 1.30
- AUD is dicing with death – well, parity, just above 1.0054 against the USD – in a short term decelerating downtrend. It wants to break…
Equities:
- The Eurostoxx 50 was down 0.5% but the DAX was the standout at 0.5% rise for the night, the Spanish market falling nearly 3% again
- The US bourses slumped through the mid session before staging a modest recovery but all were down, the S&P 500 falling nearly 0.6% and dicing with support at 1350 points, the Dow Jones off 0.7%
Commodities:
- There was a divergence in price moves in oil again, with ICE Brent this time rising, back above $113 per barrel and NYMEX WTI crude falling 0.4% to $96.4USD per barrel
- Gold (USD) had a surprising NYMEX session, after falling sharply recently, actually rising for the day to $1590USD an ounce
- Iron ore import prices into China have been hammered this time, down to $141.30 a metric ton, formalising the short term trend
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 |
|