China’s trade balance improves markedly as USA lawmakers look to raise debt ceiling

Feb 12 • Mind The Gap • 1539 Views • Comments Off on China’s trade balance improves markedly as USA lawmakers look to raise debt ceiling

shutterstock_89297656The UK’s conference board figure has decreased by 0.1%, after five months of increases, the LEI decreased slightly in December. A substantial decline in the Volume of Expected Output, coupled with softening consumer confidence and lower stock prices, was behind the decline in December, but these were offset by the interest rate spread and order book volume.

In European news industrial production has fallen by 0.7% in December 2013 versus December 2012. In December 2013 compared with November 2013, production of capital goods decreased by 2.1%.

Asian equities rose higher in the overnight/early morning session/s taking the lead from Wall Street’s ‘Yellen’ rise of yesterday and this rise was despite discouraging data from Japan, where machine tool orders declined 15.7 percent in December, approx. four times worse than analysts’ estimates for a 4 percent decline.

Chinese exports and imports have risen sharply in January, despite expectations for a weak start to the year. Exports from China increased 10.6 per cent from a year earlier, whilst imports were up 10 per cent. Copper imports reached an all-time high.

Overnight The Republican-controlled House of Representatives voted to increase US borrowings after John Boehner, the speaker, ignored many conservatives in his party and declared he would not attach any conditions whatsoever to lifting the debt ceiling. The Senate is now expected to pass the bill later this week.

The Conference Board Leading Economic Index for the U.K.

The Conference Board Leading Economic Index (LEI) for the U.K. decreased 0.1 percent in December, after increasing 0.5 percent in November and 0.4 percent in October. Four of the seven components made positive contributions to the index this month. The index now stands at 108.2 (2004=100). After five months of increases, the LEI decreased slightly in December. A substantial decline in the Volume of Expected Output, coupled with softening consumer confidence and lower stock prices, was behind the decline in December, but these were offset by the interest rate spread and order book volume.

Industrial production down by 0.7% in euro area

In December 2013 compared with November 2013, seasonally adjusted industrial production fell by 0.7% in both the euro area (EA17) and the EU28 according to estimates from Eurostat, the statistical office of the European Union. In November industrial production rose by 1.6% and 1.3% respectively. In December 2013 compared with December 2012, industrial production grew by 0.5% in the euro area and by 0.9% in the EU28. Average industrial production for the year 2013, compared with 2012, dropped by 0.8% in the euro area and by 0.5% in the EU28. In December 2013 compared with November 2013, production of capital goods decreased by 2.1%.

Westpac Consumer sentiment falls further

The Westpac Melbourne Institute Index of Consumer Sentiment fell by 3.0% in February from 103.3 in January to 100.2 in February. This is a surprisingly weak result. The Index is now down 7.5% on a year ago; 9.5% on its recent September high and is at its lowest level since July last year. The theme from this survey appears to be that households are particularly worried about the future. The difference between the current conditions index and the expectations index widened further and is now at its highest level since June 2000.

Market snapshot at 10:00 am UK time

The ASX 200 closed up 1.06%, the CSI 300 up 0.25%, the Hang Seng up 1.44%, and the Nikkei was up 0.56%. Looking towards New York’s open the DJIA equity index future is up 0.26%, the SPX up 0.27%, NASDAQ up 0.30%. In Europe most bourses have opened in positive mood; the Euro STOXX up 0.52%, CAC up 0.62%, DAX up 0.90%, FTSE up 0.48%.

NYMEX WTI oil is up 0.61% at $100.55 per barrel, NYMEX nat gas is up 2.25% at $4.93 per therm, COMEX gold is down 0.18% at $1287.50 per ounce, with silver on COMEX down 0.14% at $20.13 per ounce.

Forex focus

The dollar traded at $1.3632 per euro from $1.3638, after reaching $1.3683 yesterday, the lowest since Jan. 29th. It lost 0.1 percent to 102.50 yen. Japan’s currency rose 0.2 percent to 139.74 per euro.

The Bloomberg Dollar Spot Index, which monitors the greenback against 10 major counterparts, slipped 0.1 percent to 1,022.73 early in London trading, after touching 1,021.99 yesterday, the lowest since Jan. 13th. The dollar weakened versus most of its major counterparts before a report tomorrow forecast to show U.S. retail sales stalled last month. Australia’s currency rose to a four-week high after China trade surged.

Australia’s currency gained 0.3 percent to 90.65 U.S. cents, erasing an earlier loss. It touched 90.67 U.S. cents, the highest since Jan. 13th. New Zealand’s kiwi gained 0.5 percent to 83.65 U.S. cents, after reaching 83.67 U.S. cents, a level unseen since Jan. 15th.

The pound was little changed at 82.93 pence per euro early London time after appreciating 0.4 percent yesterday, the biggest gain since Jan. 27th. The U.K. currency dropped 0.1 percent to $1.6432 after climbing to $1.6487 yesterday, the strongest level since Jan. 31st. The pound snapped its biggest advance in two weeks versus the euro (made yesterday) before the Bank of England releases its quarterly Inflation Report today and provides an update on its interest-rate guidance.

Bonds briefing

Benchmark U.S. 10-year notes yielded 2.72 percent early in London. The 2.75 percent note due in November 2023 traded at 100 7/32. The yield climbed six basis points yesterday, the most since Dec. 31st. Treasury yields were near a three-week high versus their Group of Seven counterparts before the U.S. sells 10-year notes today and 30-year bonds tomorrow, as the Federal Reserve pledges to keep cutting its debt purchases.

Japan’s 10-year borrowing costs were little changed at 0.615 percent, after falling to 0.595 percent on Feb. 5th, which was the lowest level since November. Australia’s climbed as high as 4.23 percent, the most in almost four weeks.


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