There was extremely positive news regarding the UK published in the morning, firstly the IMF opined that in their opinion the UK’s growth in terms of GDP will be the highest in Europe and higher than the USA’s at 2.9% in 2014. Secondly and perhaps the reason cable exploded to the upside despite the UK equity indices slipping, was the publication of industrial production which has risen 0.9% over the quarter and up 2.7% year on year.
From the USA the news items were mixed. Firstly, job openings are up 3.3% on February. Jobs have increased to 4.2 million openings from the 3.9 million in January. Secondly, the latest Small Business Optimism Index rose 2 points to 93.4, mostly reversing the February decline but failing once again to breach the 95 ceiling that has capped the Index during the recovery.
From Canada the news regarding housing was poor. Municipalities issued building permits worth $6.1 billion in February, down 11.6% from January. This decrease followed an 8.1% gain the previous month. Housing starts in Canada were trending at 184,476 units in March compared to 191,126 in February, according to Canada Mortgage and Housing Corporation (CMHC).
US Job Openings and Labor Turnover – February 2014
There were 4.2 million job openings on the last business day of February, up from January, the U.S. Bureau of Labor Statistics reported today. The hires rate (3.3 percent) and separations rate (3.2 percent) were unchanged in February. This release includes estimates of the number and rate of job openings, hires, and separations for the non-farm sector by industry and by geographic region. Job Openings There were 4.2 million job openings in February, up from 3.9 million in January. The number of openings rose for total private and was little changed for government.
Canada Building Permits, February 2014
Municipalities issued building permits worth $6.1 billion in February, down 11.6% from January. This decrease followed an 8.1% gain the previous month and was mainly driven by lower construction intentions for multi-family dwellings in all provinces. Construction intentions for residential buildings declined 21.0% to $3.6 billion, following a 26.1% increase the previous month. This was the third decline in four months. Lower residential construction intentions were recorded in every province, except Prince Edward Island. Alberta, Quebec and British Columbia registered the largest decreases.
March 2014 Housing Starts in Canada
Housing starts in Canada were trending at 184,476 units in March compared to 191,126 in February, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR)1 of housing starts. In March, the trend in housing starts declined below 190,000 units for the first time in six months, reflecting a decrease in multiple unit starts. Lower starts activity over the remainder of the year compared to 2013 is anticipated as builders continue to adjust activity in order to manage inventory levels.
April 2014 Report: Small Business Rollercoaster Continues
The latest Small Business Optimism Index rose 2 points to 93.4, mostly reversing the February decline but failing once again to breach the 95 ceiling that has capped the Index during the recovery. Six of the Index components improved, two were unchanged, and two were lower. [quote]Overall, the March gain more or less reversed the February decline. While the Index still can’t seem to get above 95, we can be encouraged that the economy is at least crawling forward and not heading in reverse.[/quote] said NFIB chief economist Bill Dunkelberg. The outlook for real sales gains accounted for about half of the improvement.
UK Index of Production, February 2014
Production output increased by 2.7% between February 2013 and February 2014. This reflects increases of 3.8% in manufacturing; 8.5% in water supply, sewerage & waste management and 0.2% in mining & quarrying. The only decrease was in electricity, gas, steam & air conditioning output, which decreased by 8.8% between February 2013 and February 2014. This was attributed to the average temperature in February 2014 being warmer than February 2013. The main manufacturing components contributing to the increase between February 2013 and February 2014 were the manufacture of rubber & plastic products.
Market overview at 10:00 PM UK time
The DJIA closed up 0.06%, the SPX up 0.38%, the NASDAQ up 0.81%. Euro STOXX closed down 0.26%, CAC down 0.25%, DAX down 0.21% and the UK FTSE 100 down 0.49%. The DJIA equity index future is flat, SPX future up 0.38%, NASDAQ up 0.84%. Euro STOXX future is down 0.16%, DAX future down 0.23%, CAC future down 0.36%, FTSE future is down 0.55%.
NYMEX WTI oil was up 1.88% on the day at $102.33 per barrel. NYMEX nat gas was up 1.43% on the day at $4.54 per therm. COMEX gold was up 0.42% at $1309 per ounce with silver on COMEX down 0.75% at $20.06 per ounce.
Forex focus
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 of its major counterparts, declined 0.6 percent to 1,008.59 afternoon time in New York after falling to 1,007.92, the lowest level since Oct. 31st.
The dollar dropped 0.4 percent to $1.3797 per euro after sliding 0.3 percent yesterday. The greenback depreciated 1.4 percent to 101.70 yen and touched 101.55, the weakest since March 19th. Japan’s currency rose 1 percent to 140.31 per euro. The dollar dropped to the lowest level in more than five months against a basket of peers as the threat of more stimuli from the European Central Bank receded and U.K. industrial output exceeded forecasts.
The Australian dollar rose 0.9 percent to 93.49 U.S. cents after reaching 93.66 cents, the highest since Nov. 20th New Zealand’s currency jumped 0.8 percent to 86.67 cents. The South African rand gained 0.6 percent to 10.4654 per dollar after appreciating to 10.4144, the strongest since Jan. 1st.
The pound advanced 0.8 percent to $1.6747 after adding as much as 0.9 percent, the biggest gain since Feb. 12th. The U.K. currency rose 0.4 percent to 82.38 pence per euro after reaching 82.33 pence, the strongest level since March 6th. The pound rose by the most in eight weeks versus the dollar as a jump in industrial production spurred bets the Bank of England will hasten plans to raise interest rates.
Sterling appreciated to the strongest level in a month against the euro after a separate report showed wage growth accelerated to the fastest pace in almost seven years. Factory output rose 0.9 percent in February, compared with a 0.3 percent growth estimate of analysts in a Bloomberg News survey.
Bonds briefing
U.S. 10-year yields fell two basis points, or 0.02 percentage point, to 2.68 percent as of 5:00 p.m. in New York. The price of the 2.75 percent note due in February 2024 gained 5/32, or $1.56 per $1,000 face amount, to 100 18/32. The yield touched the lowest level since March 28th. The yield on the current three-year note was little changed at 0.85 percent.
Treasuries rose, pushing 10-year note yields down for a fourth day, after the U.S. sale of $30 billion in three-year debt attracted the most demand in more than a year from a group of investors that includes pension funds and insurers.
The three-year note auction drew a yield of 0.895 percent, compared with a forecast of 0.892 percent in a Bloomberg News survey of seven of the Fed’s 22 primary dealers. The auction yield compared with 0.802 percent at last month’s sale and was the highest since 0.913 percent on Sept. 10. The auction yield was last 1 percent or higher on May 10, 2011.
The bid-to-cover ratio at the auction, which gauges demand by comparing total bids with the amount of securities offered, was 3.36, versus an average of 3.3 for the past 10 sales.
Fundamental policy decisions and high impact news items for April 9th
Wednesday we start with the Westpac consumer sentiment index expected in above the previous reading of -0.7% previously. Home loans in Australia are predicted to have come in at 1.7% up. Germany’s trade balance is expected in at €18 bn positive. The UK’s trade balance is predicted in at £-9.3 bn. The USA will hold a ten year bond auction and the Fed’s minutes will be published.
