by Chris Becker
Macro Wrap
Well that was another very interesting night – so interesting I reckon I should stay nocturnal (I’m up til all hours as it is now, apologies for lateness this morning) because the Asian session is getting rather boring!
As the other MB crew have regaled this morning, a slew of good for now/bad for later/good for speculators/bad for investors data came out of the US last night, namely CPI (down, heading for deflation), jobless claims (up, again), current account (deficit blowout, again) and natural gas reports (gassy).
Read House’s and Holes here for a take – the important thing to remember it was bad enough to make it good enough for Crazy Ben to consider turning on the taps. This is what made markets move up, in the US at least, whilst the Europeans are running sh%t scared coming into this weekend’s Greek election.
Read Delusional Economic’s take on Germany vs Greece here – I actually watched the Spanish yields pop over 7% live on Twitter. Great resource, but I’m switching mine off for a few more days to concentrate on work!
Democracy is a bitch, and as the Troika has tried everything in their power to destroy the last remnants of democracy in Europe, its just going to be plain fun to see what happens next.
The contrarian (and anarchist) inside me hopes the Greek do the middle finger to the Troika, even though that will cause immense pain elsewhere. You know what? It’s time for pain.
What to expect today and tonight
Today the Queensland government is likely to find out if its property stamp duty Ponzi scheme – ala little PIIG Victoria – is on the nose with an audit of its current financial position. Can do Campbell Newman wants the AAA rating back and he will sack as many public servants (not necessarily a bad thing in the long run, but they always seem to pick the good ones to sack….) as possible to get it!
Locally and regionally there is no more data to ponder, except from our good brothers in New Zealand, where the Business PMI and ANZ/Westpac Consumer confidence index’s are being released today. I haven’t heard or seen one piece of analytical news about NZ this week in the MSM – strange considering in aggregate their economy has as much an impact as one State in Australia (remember – their banks are our banks).
I’ve given up expecting the MSM analysis crowd to work out its private debt (and acceleration/deceleration) and government spending that drives economic growth (but not prosperity, which they too seem to confuse). I guess they’re all watching The Voice or something.
Trader’s are going ga-ga on the SPI futures, which are up around 20 points for the ASX200 open. And the Aussie dollar is over parity again.
Hooray. I’m off to eBay before it crashes.
Here’s a quick summary of last night’s move in markets. For a longer term view, check out my Trading Week article here or wait til tomorrow morning (hopefully I’ll get some sleep before then) for this week’s edition.
Bonds:
- US 10 year Treasuries yields were up a bit on the risk back on move, to 1.64%, whilst German 10 year bunds yields were unchanged at 1.48%
- The real move was obviously Spanish bonds – yields up 16 points to 6.85%, but they actually crossed into 7% territory briefly. The only other major mover was someone buying Greek bonds – yields fell 40 points to – wait for it – 27.4% yield. Wow.
- Aussie 10 years are slipping in early morning trade, currently at 2.97% and will probably crack 3% again today
Currencies:
- Mr Miyagi said risk on, so the US Dollar Index fell. Well not really, it just slipped below 82 points, because even though the Euro strengthened to 1.2633 (up 76 pips), the Loonie and Swissie were sold off
- The risk proxy de jeure (I will punch anyone who says its a “safe haven” again. Anyone who says that obviously has no idea how markets work, or are stupid enough to think those of us who do won’t notice) the Australian dollar is riding a nice wave at the moment, it finished last night just above parity. Deus Forex Machina is sure to have something to say about it this morning, so I’ll leave it up to him.
Equities:
- The Eurostoxx 50 finished up 0.2% on a wild night in European bourses. The Spanish IBEX 35 was strong again, up 1.2% but the FTSE MIB was even better – up 1.4% Maybe Australian stockbrokers should ask for a downgrade from Moody’s?
- The German DAX fell slightly, with the FTSE 100 also doing the same. In fact, none of the majors saw any action
- It was the US that showed us clarity. The Dow up 1.2%, the broader S&P500 up 1% and the NASDAQ only up 0.6%
Commodities:
- Commodities also had some clarity – energies up, precious metals up, industrial metals up. What was that? Oh no, not on economic strength! Amateurs..
- WTI Crude was up 0.5% to $84USD per barrel, ICE Brent the same up to $97USD
- Gold (USD) almost broke out, getting to $1627USD per ounce at one stage before coming back to $1622 of this morning. I watched this live and it jumped immediately on the CPI report….so inflation goes down and gold goes up? Why? Because a certain lever will be pulled on “bad” inflation figures! Crazy hey?
- Iron ore continues to bounce off the $130 support level, climbing another $1 per metric tonne yesterday to $134.70 a tonne. This is looking bullish – time to buy Chinese equities?
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