14 December 2012

Posted by Graham Parlane on 14 December 2012

Good morning

Overnight

# Global equity markets are lower this morning in what is probably a classic case of 'buy the rumour, sell the fact' post the FED and after a 7% run up since mid-November. Certainly the extraordinary steps taken by the Fed yesterday can only be viewed as highly supportive of share prices. The EuroStoxx600 fell 0.36% and the S&P500 is dropping to session lows as I type, currently down 0.77%. The FED move really is unprecedented with the key take away that the FED Funds rate will remain near zero until unemployment falls to at least 6.5 %.

# In an interesting development, clearly at odds with the new FED policy, a sale of U.S 30 year bonds saw a yield of 2.917%, the highest at an auction of this maturity in seven months. Are the markets beginning to fret about the long term inflationary implications of the new, turbo charged, super easy policy?

# The European Economic Summit finally produced the goods, European finance ministers agreed on a framework for a common banking supervisor (which will lay the groundwork for banking union) and formally approved the latest Greek aid package, worth €49b.

# Ratings agency S&P revised the UK outlook to negative from stable (currently they enjoy a AAA rating), S&P expects government debt as percentage of GDP to rise in 2015 before declining, employment or growth shocks could pressure govt finances further. Surprisingly GBP/USD has shown limited downside, off about ½ a cent only so far.

# The CHF was notably strong after the Swiss National Bank maintained its EUR/CHF floor at 1.2000. Recently there had been a flurry of talk on the wires regarding a potential increase in the floor (implied CHF weakness) to combat the effects of a too strong CHF on the Swiss export sector.

# U.S. Retail Sales for November surprised positively. A combination of more online shopping around the Thanksgiving holiday, car buying and spending associated with cleaning up after super storm Sandy all conspired to lift sales +0.7% (ex food and energy) against expectations of +0.4.

# U.S. Jobless Claims dropped sharply to below trend, coming in at 343k against the 4 week moving average of 381.5k. Claims had jumped as high as 420k in the immediate wake of Sandy.

# In a reminder that the fiscal cliff isn't going away, Oil fell for the first time in three days as House Speaker John Boehner said the White House isn't serious about cutting spending. Prices dropped 1 % after budget-compromise talks stalled, with both White House and congressional officials saying no progress had been made. Regarding Oil, a theme we have been watching here is that the U.S. is forecast to be the world's biggest petroleum producer somewhere around 2017/2020. I hope to source an appropriate article on that shortly.

Ahead

# Japan Tankan report

# HSBC Flash China Manufacturing PMI

# Eurozone Flash Manufacturing PMI's

# Eurozone CPI

# U.S CPI

# U.S. Flash Manufacturing PMI

# U.S. Capacity Utilisation

# U.S Industrial Production.

Regards and good weekend to all

G.

BBY (NZ) Limited, a specialist advisor in Futures - FX - CFD - Options - Shares - Gold - Silver - Commodities

Tags: Bonds, Broker, CFD trading, CHF, Commodities, Equities, EUR, EURCHF, Europe, European Economic Summit, EuroStoxx, FED, Fiscal Cliff, Foreign Exchange, Futures, Futures trading, FX, FX trading, Greece, Jobless Claims, Oil, Other, Retail Sales, S&P, Swiss National Bank, Trader, UK, Unemployment, US