There was mixed economic news from the USA on Wednesday, the Conference Board index improved by 0.2%, short of expectations and less than the previous 0.9% increase for the month of September. Crude oil supplies rose, the USA weekly unemployment claims fell sharply; down to 316K down circa 10,000 from the previous week. However, durable goods orders were down significantly, the ‘blame’ (aired by publications such as Bloomberg) apparently being the temporary government shutdown, although as an excuse its wearing a bit thin now.
In the UK the leading Economic think tank institute the CBI published its report on the state of UK retail in the run up to the Xmas shopping season. The prediction was for a reading of 23, the reading came in at 1. This was quite a miss and adding evidence to the views that the many sections of UK society is quite frankly all ‘spent up’. However, no doubt we’ll discover record Xmas sales once January’s sales figures are published. It’ll then be fascinating to witness how much of the sales are on credit and just how far back sales fall in the inevitable lull after Xmas.
The USA markets are closed on Thursday due to the annual Thanksgiving celebration.
The Conference Board Leading Economic Index for the U.S. Increased
The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.2 percent in October to 97.5 (2004 = 100), following a 0.9 percent increase in September, and a 0.7 percent increase in August. [quote]The modest rise in the Leading Economic Index in October follows the strong advances recorded in the prior two months, which helps lift the six-month annualized growth rate to 5.1 percent from 3.7 percent in the previous six months[/quote] said Kathy Bostjancic, Director of Macroeconomic Analysis at The Conference Board.
Crude-oil supplies up 3 million barrels: EIA
Oil futures pared losses on Wednesday following weekly data from the U.S. Energy Information Administration showing that crude supplies climbed by 3 million barrels for the week ended Nov. 22. Analysts polled by Platts were looking for a decline of 1.5 million barrels but the American Petroleum Institute had reported a much bigger 6.9 million-barrel increase. Gasoline supplies rose by 1.8 million barrels, while distillate stockpiles fell 1.7 million barrels, the EIA said. Gasoline stockpiles were expected to be up 1 million barrels while distillate supplies were seen down 1.3 million barrels.
US Unemployment Insurance Weekly Claims Report
In the week ending November 23, the advance figure for seasonally adjusted initial claims was 316,000, a decrease of 10,000 from the previous week’s revised figure of 326,000. The 4-week moving average was 331,750, a decrease of 7,500 from the previous week’s revised average of 339,250. The advance seasonally adjusted insured unemployment rate was 2.1 percent for the week ending November 16, a decrease of 0.1 percentage point from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending November 16 was 2,776,000, a decrease of 91,000.
Orders for U.S. Durable Goods Drop as Shutdown Hurts Confidence
Orders for U.S. durable goods dropped in October, reflecting a broad-based retreat and signaling the government shutdown hurt business confidence. Bookings for goods meant to last at least three years decreased 2 percent, matching the median forecast of economists surveyed by Bloomberg, after a 4.1 percent gain in September that was larger than initially reported, the Commerce Department reported today in Washington. Orders for aircraft and capital goods, such as machinery and computers slumped.
UK High-street sales flat for second consecutive month
High-street sales were flat in the year to November, disappointing retailers’ expectations for the second consecutive month, the CBI said. Department stores, grocers and clothing shops were some of the worst hit, whereas hardware & DIY performed very strongly, according to the CBI’s latest Quarterly Distributive Trades Survey of 129 firms. Following lower than expected sales, the volume of orders placed with suppliers was flat this month, having held up in the year to October. But despite two disappointing months for sales, employment in the retail sector increased in the year to November.
Market overview
The DJIA closed up 0.15% just short of 16,100, the SPX up 0.25% and the NASDAQ up 0.67%. European STOXX up 0.65%, CAC up 0.36%, DAX up 0.66%, FTSE up 0.20%. Looking towards the market open on Thursday the DJIA equity index future is up 0.09%, SPX future up 0.13% and the NASDAQ up 0.62%. STOXX FUTRE is up 0.59%, DAX up 0.55%, CAC up 0.35% and the FTSE up 0.23%.
NYMEX WTI oil fell 1.41% to $92.36 per barrel. NYMEX natural gas was up 1.1% at $3.91 per therm. COMEX gold was down 0.33% on the day at $1237.40 per ounce with silver at $19.66 down 1.20% per ounce.
Forex focus
The dollar gained 0.9 percent to 102.16 yen late in in New York and touched 102.19, the strongest level since May 29th. It slipped 0.1 percent to $1.3579 against the common currency, having dropped as much as 0.3 percent earlier. The euro advanced 0.9 percent to 138.73 yen after touching 138.79, the highest since June 2009. The U.S. Dollar Index, which tracks the currency against 10 major counterparts, rose 0.3 percent to 1,021.55. The dollar rose to a six-month high against the yen as an unexpected drop in U.S. jobless claims and a rise in leading economic indicators added to speculation the Federal Reserve may start reducing stimulus next month.
The Canadian dollar weakened to the least since July as crude oil touched the lowest level in almost six months. The loonie dropped 0.5 percent to C$1.0595 after touching C$1.0603 per U.S. dollar, the weakest since July 5th. The Australian dollar depreciated 0.5 percent to 90.79 U.S. cents and New Zealand’s kiwi slid 0.6 percent to 81.48 U.S. cents.
The U.K. currency advanced 0.4 percent to $1.6287 after climbing to $1.6331, the highest level since Jan. 2nd. The pound gained versus all its 16 major counterparts as the Office for National Statistics said gross domestic product increased 0.8 percent in the three months through September, matching an initial estimate.
Bonds
The benchmark 10-year yield gained three basis points, or 0.03 percentage point, to 2.74 percent late New York time. The price of the 2.75 percent note maturing in November 2023 dropped 1/4, or $2.50 per $1,000 face amount, to 100 3/32. The yield is up 19 basis points this month, the first increase since August. Treasuries fell for the first time in five days as a strengthening economy added to concern the Federal Reserve is closer to reducing bond purchases and held demand at the government’s auction of seven-year notes.
Fundamental policy decisions and high impact news events for November 28th
Thursday we receive data on German inflation expected to remain in a fairly static range. The Bank of England will publish its financial stability report, whilst the BoE governor Mark Carney will give a speech.
The USA has a bank holiday therefore information from the States will be less than usual. A raft of Japanese data is published late Thursday; manufacturing PMI, household spending is expected to fall to a 1.2% increase, with core CPI up 0.9% year on year. The unemployment rate is expected in at 3.9%, a small drop from the 4% previously. Private sector credit in Australia is expected to be up 0.3% month on month.
