Macro Wrap
It was going oh so well last night as the nearly 24 hour market cycle turned into Euro-land, where Spain has entered the “Recession Club” and then the United States of unsustainable easing, when even the most pessimistic economic tea leaf reader got the Chicago PMI print wrong. Even though it was still broadly positive (anything over 50 being expansion) the print coming in at 56.2 when consensus was expecting just over 60 and last month being 62 spooked everyone.
Equity markets were sold off, bonds picked up, commodities stayed basically stable. Some earnings results in the US quarterly season came in a little lower than expected which didn’t help, although most have reported good earnings so far. Secondary data in Europe included Italian CPI, which although relativly benign is still well above wage growth in the embattled 7th largest economy in the world. Flash CPI for the whole EMU came in at 2.6% slightly above consensus.
See charts of all major markets at bottom of post.
Bonds:
- US 10 year Treasuries were bought up slightly, yields falling 2 pips to 1.91%
- German 10 year bunds were even stronger, off 3.5 pipes to 1.66%, UK 10 years steady at 2.11%
- Spanish and Italian 10 year bonds both saw massive gains, yields falling by 10 and 12 pips respectively to 5.72% and 5.48%
Currencies:
- The USD started and ended the session the same, the Dollar Index remaining at 78.8, with the Euro unchanged at 1.324 against King Dollar
- AUD was sold off , losing almost 0.5 cent and almost falling below 1.04 against the USD, to be at 1.0427 at the start of Asian trading.
Equities:
- The broader Euro Stoxx 50 was down 1.6% to 2064 points with the FTSE 100 and German DAX both losing 0.6% and looking toppy for now.
- The peripherals slumped, with Spanish IBEX down 1.9%, FTSE MIB off 1.2%, and the French CAC 40 down 1.6%
- The US bourses were again not as badly off, but still down across the board, the S&P 500 closing down 0.4% to 1397 – still up nearly 10% year to date, but are we moving into “Sell in May” season again?
- The Dow Jones Industrial Average flat, only down 0.1%, whilst the NASDAQ 100 losing Friday’s gains, down 0.6%, with Apple (AAPL) falling nearly $20 to be well below $600USD:
Commodities:
- The CRB Index remained steady at just above 305 points as oil prices were sold off very slightly, with ICE Brent down 0.5% at $119.27 per barrel and NYMEX WTI crude flat at $104.89 USD per barrel, whilst natural gas continues to be very volatile, up 4.5% to $2.28
- Gold (USD) had another volatile night during NYMEX trading, slumping almost $20 on the open (getting the conspiracy theories raging) before recovering to end where it started at $1665USD an ounce
- Iron ore import prices into China were unchanged at $US 145.40
Today in Asia
- Data today obviously is centered on the RBA, which is likely to cut rates by 0.25% although some are calling for 0.5% cut. What’s more important is how much Megabank passes this on… other data includes the long awaited ABS 8 capital city house price index and the RBA’s Index of Commodity Prices – our twin economy, the Houses and Holes…
- The futures are pointing to a flatopen for the ASX200, probably at 4400 points – the bulls want to believe!
- 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 | ||||||||
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JAPAN | GREECE | IRELAND | SPAIN | ITALY | FRANCE | GERMANY | PORTUGAL | AUSTRALIA |
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