by Chris Becker
Macro Wrap
Well that was a fun short holiday. Let’s see what I missed over the long weekend and what’s going to happen today, as Budget night looms large.
After the horror week of PMI data, and an election win to the Socialists in France, this week began on a very sour note, with commodities falling sharply, and other risk markets effected. But last night, markets were surprised strongly by German manufacturer’s orders and US consumer credit, both printing well on the upside.
The former was up 2.2% over the month (on expectations of -0.3%!) and the latter – consumer credit – rising to $21.4 billion, on expectations of only $9.8 billion:
As a result, these reports and comments by Warren Buffet that US banks are “fine” – cough **talking book*** – cough, and weakness in the Euro arrested further falls in risk markets last night: in fact, in Europe, bus-aness was-a BOOMING.
Today, the major data release to watch is March’s trade balance figures, with markets pessimistly expecting at $1.3 billion deficit (prior was only half a billion). There’s nothing else locally or regionally until tonight. I’ll update our economic calendar shortly.
See charts of all major markets at bottom of post.
Bonds:
- US 10 year Treasuries were unchanged, but German 10 year bunds were sold off slightly, up 2 pips to 1.6%
- Peripheral bonds continue to recover, with French 10 years yields falling post the election, down 3 pips to 2.77% and Italian and Spanish bonds stabilising
- As for the Aussie – wow, just wow – they fell 14 pips yesterday and are currently up 2 pips in morning trade, at near record low at 3.42%
Currencies:
- The USD rose sharply, breaking the 80 point barrier on the Dollar Index as the Euro weaken appreciably, and dicing with support:
- AUD fell almost below 1.01 against the USD but has recovered to be just above 1.02 in the last 24 hours – the trend is still down and will likely be volatile with the budget tonight
Equities:
- The Eurostoxx 50 was up 1.5% with the FTSE down nearly 2% and the continental markets all up 1.5% to 2%+
- The US bourses actually reacted poorly intraday to the consumer credit numbers, and finished flat as a result, with the S&P 500 even, the Dow Jones off 0.2%
Commodities:
- There was a divergence in price moves in oil, with ICE Brent sold off to $113 per barrel and NYMEX WTI crude relatively up, at $98USD per barrel
- Gold (USD) continued its slump from the weekend, falling in the NYMEX session before recovering to $1637USD an ounce
- Iron ore import prices into China have slipped very slightly at $144.10 a metric ton, still in an uptrend from the October lows, but slowing down. One to watch.
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 |
|