Overnight Points of Interest
2013 May 20 by Graham
Good morning
Overnight
# Equity markets continued the magnificent bull run, this time buoyed by a strong U.S consumer confidence reading. The EuroStoxx600 ended Friday up 0.24% to round out a 1.22% gain for the week. Within the Eurozone the German DAX posted a fresh all-time intraday high, daily and weekly closing highs. Stateside, the S&P500 rose 1.03% to end the week up 2.07%.
# The University of Michigan Consumer Confidence Survey rocketed to a 6-year high of 83.7 versus 77.9 expected as rising real estate values and record stock prices boosted household wealth. The gains appear to show that Americans are overcoming the effects of higher taxes and a package of federal spending cuts, known as sequestration.
# The amazingly robust reading drove U.S. 10 year bond yields back towards the highs of the week, ending up at 1.95% from 1.87% earlier.
# In a unwelcome development for a slowing economy, China April home prices jumped 4.9% on year, the fastest gains since April 2011. 67 out of 70 cities showed new home prices rising. This leaves China authorities face a deepening dilemma in trying to curb property prices while at the same time supporting an economic recovery.
#Best to worst performing currencies last week
CCY May10 May 17 % changes
EUR 1.2992 1.2838 -1.19%
GBP 1.5363 1.5172 -1.24%
JPY 101.58 103.18 -1.58%
CHF 0.9566 0.9723 -1.64%
CAD 1.0100 1.0285 -1.83%
AUD 1.0017 0.9730 -2.87%
NZD 0.8307 0.8060 -2.97%
# The USD strengthened across the board last week breaking key resistance and rising to a 3 year high – but it was a terrible week for the commodity/risk currencies. Commodity prices remained sluggish andChinagrowth concerns resulted in macro-funds targeting the AUD and NZD. Expectations the Fed is softening the ground for scaling back QE efforts broadly supported the USD – while expectations the RBA has further to go in its easing cycle made the AUD particularly vulnerable.
# Friday most commodities moved higher with Copper and U.S. Crude gaining a bit less than 1.0% despite the rise in the US dollar. Both commodities lifted on the much betterUSsentiment data, while Copper was also underpinned by inventory stats indicating greater draw-downs fromChina. The hawkish shift in Fed expectations and stronger USD kept Gold under pressured and the ETF’s kept selling. Gold fell close to 2.0% to close at 1,358 – the lowest weekly close since Feb 2011. IronOrecontinued to tumble closing 2.35% lower at 123.23 from Thursday’s close at 126.19.IronOrehas fallen 23.35% from the Feb 20 high at 160.78. For the week Copper fell 1.04%, Crude ended the week flat. Gold had a terrible week falling 6.15% andIronOredidn’t do much better – putting in a weekly loss of 5.86%.
Ahead
BBY (NZ) Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 May 9 by Graham
Good morning
I will be on annual leave from tomorrow until Thursday, as such the OPI output will take a break until then.
Overnight
# European stocks were buoyed by the 2nd consecutive day of positive German data surprise, the Eurostoxx600 rising 0.64%. Meanwhile, the S&P500 advanced for the 5th straight day once again setting new all-time highs. The S&P500 rose 0.41%v ending on its intraday high.
# German Industrial Production helped underpin the EUR and European stocks. March IP rose 1.2%m/m, well above the 0.1% decline expected. Coming just a day after the similarly upbeat German factory orders figures, the data has buoyed hopesGermanymay yet avoid recession.
# One of the market trends that has occurred recently, and largely without fanfare, is the decline in borrowing cost for the European ‘periphery’. From 350bps in early April, Italian-German 10-year bond spreads have fallen to almost 250bps. Spanish equivalents have plunged from 375bps to 280bps over the same period. As various commentators have noted, these declines are doing far more to ease European financial conditions than the ECB’s 25bps refi rate cut.
# Legendary investor Stanley Druckenmiller, ex Soros Fund, hit the wires saying the commodity swoon is not just a correction, the party is over due to oversupply and the AUD is going to come down hard. http://au.businessinsider.com/druckenmiller-pessimistic-on-commodities-2013-5
# The U.S. Treasury’s sale of $24 billion in 10-year notes got a lukewarm reception from investors, drawing $2.70 in bids for every $1 worth of notes on sale, below the average.
$2.89 from the past eight auctions, according to CRT Capital Group. As a result, theU.S.government is paying a higher interest rate of 1.810% for the new notes, more than the 1.800% for similar notes already in circulation before the auction.
# Commodities were well bid, Gold futures posted the biggest gain in almost two weeks as demand for bars and jewellery increased in India and China, the world’s largest consumers of the metal. Gold futures for June delivery advanced 1.7 % to settle at $1,473.70 an ounce. U.S. Crude rose to a one-month high after supplies fell at Cushing, Oklahoma, the delivery point for the contract. Brent oil’s premium to WTI shrank below $8 for the first time since January 2011. U.S. Crude for June delivery increased $1 to $96.62. Dr Copper also rose, climbing 2.0% on the back of the strong China trade data yesterday and the German IP data overnight.
Ahead (big day in this neck of the woods)
# NZ Employment Change
# Australian Employment Change
# China CPI
# Japan Leading Indicators
# UK Manufacturing and Industrial Production
Cheers G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 May 2 by Graham
Good morning
Overnight
# European shares gave back early gains to end up only 0.07% whilst U.S shares were down from the get go, tried to rally on the FED, but were ultimately undone by a large miss in the ADP private payrolls figure. The S&P500 ended near its lows, down 0.93%.
# The ADP Payrolls figure for April was disappointingly weak coming in at +119k versus expectations of a 150k gain. The gain was the smallest in 7 months and provided more evidence that theU.S.economy is reacting to the recent tightening in fiscal policy and higher taxation. Further, the March figure of +158k was subject to a large negative revision down to +131k.
# The Fed pledged to continue its bond buying program at the $85 bio a month pace, made no mention regarding the previous ‘tapering’ talk and left policy options open saying it is “ready to raise or lower that level as economic conditions evolve”.
# Fonterra’s latest GDT milk auction showed dairy prices fell 7.3% on average from the previous event. This is a correction following the strong 60% surge from December last year to April this year. Despite the drop prices still sit 77% higher than a year ago.
# Commodity currencies took a hit with the NZD amongst the weakest. The NZD/GBP and NZD/EUR now sit toward the lower-end of ranges maintained in recent months.
# The pound (GBP/USD) was well supported by a rare piece of better than expectedUKdata. Whilst still signalling contraction by the narrowest of margins, the UK Manufacturing PMI reading was much better than analysts had expected. The gauge came in at 49.8, up from March’s upwardly revised 48.6, and well higher than the 48.5 expected.
# U.S. Crude tumbled as U.S. oil inventories reached an 82-year high amid signs of economic slowdown in the U.S. and China. Crude retreated $2.43, or 2.6 %, to settle at US$91.03 a barrel, falling the most in 2 weeks.
# Likewise Gold fell the most in 2 weeks. Gold holdings in exchange-traded products plunged 174 metric tons last month, the biggest drop ever, as prices entered a bear market and wiped $17.9 billion from the value of the funds.
Ahead
# JapanMonetary Policy Meeting Minutes
# ANZ NZ Commodity Price Index
# AustralianBuildingApprovals
# HSBCChinaFinal Manufacturing PMI
# Eurozone Final Manufacturing PMI
# ECB Interest Rate Decision
# U.S. Trade Balance
# U.S. Unemployment Claims
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 April 11 by Graham
Good morning
Overnight
# The exuberance is back but is it irrational? European stocks roared higher gaining the most in a month and posting the longest winning streak since January. Positive China news in recent days and an agreement on a U.S budget compromise fuelled gains. The S&P500 also ended sharply higher up 1.22% at close of play, a new all-time high to complement the recent new highs in the Dow and Dow Transports .
#The NZD has been the strongest of the G-10 currencies driven by talk that the infamous ‘carry trade’ is back on in full force. With the Japanese authorities clearly happy to see the JPY devalue, the market is borrowing JPY at next to no cost, selling it and buying higher yielders. With leverage plumping up the returns combined with an expectation that the borrowed currency will depreciate, the strategy is highly compelling. The NZD/USD sits at 18 month highs at 0.8572 whilst NZD/JPY has risen nearly 10% to 85.60 since the BOJ announcement on Thursday. USD/JPY is within spitting distance of the magical 100.00 mark, residing on its highs at 99.75 presently.
# The divide between the core and periphery of Europe was starkly documented on the release of European Industrial Production data. French Industrial Production bounced back in February, gaining 0.7% the previous month as manufacturing activity provided the main driver of growth. The market had looked for a rise of 0.2%. However Italian and Spanish IP showed sharp falls, suggesting that the bloc’s third and fourth largest economies are still mired in recession. On an monthly basis, Spanish Industrial Production fell by 1.2% to be down 6.5% annualized. Italian IP fell 0.8% on the month for a 3.8% annualized loss.
# An accidental release of the FED Minutes some 5 hours early by a long term, career FED employee provided an interesting sideshow on the day. The minutes revealed the lively debate at the Fed about when exactly to begin winding down asset purchases. A growing consensus appear to favour ‘tapering’ purchases from sometime later this year despite the unemployment target expressed in recent minutes. Interestingly, the early release gave the market half an hour to digest the news (and reducing volatility) before equity markets opened, leading some to question why the Fed doesn’t embrace the earlier time slot going forward. The minutes were formulated before last Friday’s U.S. employment report which may stunt the ‘tapering’ talk for now.
# Prices for government bonds dropped further after President Barack Obama released his budget proposal, which calls for more than $700 billion in new taxes over 10 years. The plan would also increase spending 6% from 2013 levels and allow the debt, as a share of the economy, to grow to 73% by 2023–much higher than the 54.8% level that the House Republicans had called for. U.S 10 year bond yields rose to 1.80% from 1.70% 2 days ago.
# Gold fell the most in 5 months on the FED ‘tapering’ talk (stimulus removal) and news that Cyprus plans to sell “the excess amount of gold” owned by the state, yielding an estimated 400 million euros. Gold fell US$28 or 1.8%
# Japan’s Kuroda will explain latest easing measures at G-20 if needed, BOJ easing not aimed at weakening yen, no plans to adjust policy for now, will scrutinize policies monthly
# IMF’s Lagarde Doesn’t expect higher growth in 2013 than 2012, EZ banks need higher capital buffers, too big to fail more dangerous than ever, CB easing needed, may create new financial risks, EZ should recapitalize troubled banks
Ahead
# NZ Business Manufacturing Index
# Australian MI Inflation Expectations
# Australian Employment Change (last month they had the unbelievable +71k result – today’s release will be very interesting)
# U.S Unemployment Claims
Cheers till Tuesday
G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 April 2 by Graham
Good morning
Overnight
# European stock markets remained closed for the Easter break. Meanwhile U.S. stocks edged lower on an underwhelming U.S. ISM manufacturing PMI. There was quite a range between the U.S indexes, the big board S&P500 ended down 0.45%, the Nasdaq down a solid 0.88% however the Dow, the best performing of recent months, was only down 0.05% at the close.
# The ISM Manufacturing PMI considerably underwhelmed, coming in at 51.3 from 54.2 in Feb and expectations of 52.0. That said, the release documented the fourth consecutive month of expansion, with manufacturing continuing to grow but at a slower pace, with the auto and housing sectors leading the gains.
# China had earlier released their March manufacturing PMI data which also underwhelmed coming in at 50.9 versus expectations of 51.6 and a previous (lunar new year influenced) 50.1
# USD/JPY was the big mover with the JPY, benefitting from the shunning of the USD after the ISM data, dropping sharply to 93.15 now well off the recent 96.70 highs. The JPY had already been on the move after yesterdays “Tankan’ corporate survey showed large Japanese manufacturers expect USD/JPY to average 85.22 this calendar year when the Abe and Kuroda show have already pushed the pair to levels in the mid 90’s.
# U.S. benchmark 10 year bond yields moved back to the bottom of this year’s range currently sitting at 1.84% against a yearly low of 1.80% and high of 2.09%.
# Talk circulated, apparently from government sources, that Spain is looking to revise its 20’13 GDP f/c to -1% from -0.5% with a new budget deficit target of 6% from 4.5% of GDP (the European Union treaty requests members abide to a 3% deficit!). Highlighting their current plight, data released showed Spain new car sales fall 13.9% in March.
# Silver fell out of the very narrow range that has prevailed this year, taking it on the chin from the apparent slowing of global manufacturing as evidenced by the Chinese and U.S. PMI’s. Silver fell 1.2% to the lowest levels of the year at US$27.95.
Ahead
Graham Parlane
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 March 26 by Graham
Good morning
Overnight
# European stocks spent much of the night in positive territory buoyed by relief over the Cyprus bailout deal. However, late comments from a key Eurogroup member resulted in a vicious bout of selling sending the EuroStoxx600 to a negative close, down 0.27%. Stateside the tone was set and the S&P500 followed to a loss of 0.33% by the close.
# Potentially setting a precedent by the Cyprus deal, Eurogroup head Dijsselbloem suggested that the taxing of bank depositors as part of Cyprus’s rescue package may not be a one-off for dealing with European banking crises. Dijsselbloem said “if a bank gets in trouble, the response will no longer automatically be that we’ll come and take away your problem”, “the uninsured deposit holders” may be called upon to help recapitalise the bank.
# The EUR/USD was the biggest loser mirroring the early stock market moves, initially rallying to a high of 1.3050 before getting crushed to 1.2830. Various other European ‘risk’ indicators showed stress with German bond yields falling whilst ‘periphery’ yields pushed higher.
# The good U.S. news kept coming with the Federal Reserve releasing two regional manufacturing surveys. The Chicago index was mildly positive whilst the Dallas area survey surged to the highest reading in a year.
# At the LSE in London, Fed Chairman Bernanke defended the use of monetary accommodation in advanced economies. He argued such policies were not designed to weaken currencies, but to support “domestic aggregate demand in each country. Certainly there was no hint of a change in course from the FED anytime soon.
# Copper fell the most in four sessions on speculation that metals demand will slow as China’s government will take steps to tame inflation and global growth weakens. China’s swap market is signalling interest-rate increases for the first time since 2011, after inflation accelerated to a 10-month high and the government measures failed to slow the rise in housing prices. Hedge funds are making the biggest bet against copper on record, U.S. government figures showed last week.
Ahead
# N.Z. Trade Balance
# RBA Gov. Stevens Speaks
# UK Chancellor Osborne Speaks
# U.S Durable Goods Orders
# Case Shiller U.S. House Price Index
# U.S. CB Consumer Confidence
# U.S New Home Sales
Cheers G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Market Insight Newsletter – Vol. 2, Issue 37 Futures, FX, CFDs, Equities
2013 March 25 by Company
Please click here to view the latest copy of our newsletter.
If you would like to subscribe to the Market Insight newsletter, please click here.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Reserve Bank of Australia Deputy Gov Lowe says Critical that Non-mining Investment Strengthen
2013 March 19 by Graham
All
What he is saying is that when the resources investment boom begins to soften (i.e. still investment but at a slower rate than previously in the boom) then that becomes a net drag on Australian GDP. When that occurs the Australian economy will need the ‘old’ part of the economy to lift so that they can stay growing at close to trend (3-3.5%).
Problem is that the ‘old’ part of the economy being manufacturing, tourism, banking and retail are all growing at about the slowest level in 20 years around 1%.
In my opinion it is going to be ridiculously hard to get that trend growth when resource investment peaks. I say likely impossible. That makes me think that the AUD is one of the most vulnerable currencies on the planet.
The AUD has been the beneficiary of haven flows because of the AAA rating, proximity to China, no recession in 21 years and relatively high yields. When you combine those massive inflows that have come in over the last 5 years with what should be a struggle to grow at trend from the end of the year then you have a recipe.
G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Overnight Points of Interest
2013 March 18 by Graham
Good Monday morning
Overnight
# Equity markets ended the week under pressure from profit taking after a long run of solid gains. The EuroStoxx600 ended down -0.36% and the S&P500 ended down -0.16%.
# Something to watch here, the U.S. actually registered a pulse of inflation in Feb with US Feb CPI m/m coming in at 0.7%, f/c 0.5% previous 0.0%. (0.7% over 12 months would be near 10% so one swallow doesn’t make a summer of course but worth watching given the ultra-loose policy which is expected to create inflation down the track). For the year to date a very benign 2.0%, versus f/c 1.9% prev 1.6%.
# U.S. Feb Industrial Production rose 0.7% against f/c 0.4% and a previous 0.0%.
# March University of Michigan Sentiment was sharply weaker than expected at 71.8 v f/c 78. This likely reflects the impact of the US payroll tax hike and rising gasoline prices.
# The US Empire Manufacturing survey came in around expectations at 9.24 vs. 10.0 expected.
# EZ Finance Ministers agree to “unprecedented” 10 BLN EUR bailout for Cyprus EZ Finance ministers agreed Saturday to 10 BLN EUR rescue package for Cyprus. The terms include an unprecedented demand by the EU for a one-off 10% levy on Cyprus bank deposits that will raise 6 BLN EUR. The “savings levy” led to a run on cash machines all over Cyprus. The terms of the bailout was met with incredulity and anger in Cyprus. (This could be a precedent and if I was a citizen in say, Italy or Spain, I’d be heading to the bank of Monday morning. So a run of European banks then……????)
# IMM data shows net longs increasing from 23.57 BLN USD to 25.46 BLN. Long USD positions are the highest in eight months.
# The best to worst performing currencies last week
AUD 1.0237 1.0409 1.68%
GBP 1.4923 1.5123 1.34%
NZD 0.8218 0.8290 0.90%
JPY 96.02 95.25 0.80%
CAD 1.0285 1.0205 0.78%
EUR 1.3003 1.3076 0.56%
CHF 0.9513 0.9468 0.47%
# The Dow ended a 10-day winning streak (longest since 1996) and closed down 25.03 points or 0.17% lower at 14,514.11; the S&P fell 2.53 points or 0.16% lower at 1,560.70; NASDAQ closed down 9.86 points or 0.30% lower at 3,249.07. For the week the Dow rose 0.81%; the S*P gained 0.61% and the NASDAQ ended the week with a 0.12% loss.
# Commodity prices closed the day mixed – with Copper closing down 0.44% due to rising concerns of over-supply as inventories in Shanghai and London continue to rise while Crude closed up 0.45%. Gold ended the day at 1,591.50 up slightly from 1,589 while iron ore clawed back some of the week’s hefty losses with a 1.70% gain to 135.28. For the week Copper edged 0.15% higher; Crude rose 1.63%; Gold rose 0.92% and Iron Ore dropped a whopping 8.72% for the week.
Ahead
Regards G.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities
Market Insight Newsletter – Vol. 2, Issue 36 Futures, FX, CFDs, Equities
2013 March 11 by Company
Please click here to view the latest copy of our newsletter.
If you would like to subscribe to the Market Insight newsletter, please click here.
Edge Capital Markets Limited, a specialist advisor in Futures – FX – CFD – Options – Shares – Gold – Silver – Commodities