Dow closes above 16,000 for first time as dollar yen rises above 101
The DJIA rose more than 100 points and finally closed above 16,000 for the first time in history. The index crossed that psychological milestone earlier this week, but then sold off for three days as the index closed in the red. The S&P 500 also closed up, while the Nasdaq rose more than 1%. The market moved higher despite investors seeing USA retail figures disappoint this week and the Philly Fed number coming in significantly below expectations at 6.5 versus expectations of 15.0 The Markit Economics PMI for manufacturing recovered from October’s yearly low to come in at 53.4.
The unemployment claims in the USA fell slightly in the past week, although once again the figures appear to be lodged stubbornly in a range of between 320K-350K week after week.
In other news the UK’s CBI published a highly optimistic print regarding the UK’s manufacturing output, apparently the strongest level since 1995, whilst UK’s net public borrowing figures reduced moderately.
UK Public Sector Finances, October 2013
In 2012/13, public sector net borrowing excluding temporary effects of financial interventions and also excluding the effects of the transfer of the Royal Mail Pension Plan and the transfers from the Bank of England Asset Purchase Facility Fund was £115.0 billion. This was £3.5 billion lower than in 2011/12. In 2012/13, public sector net borrowing excluding temporary effects of financial interventions (PSNB ex) was £80.6 billion. This was £37.9 billion lower than in 2011/12, when it was £118.5 billion.
Growth in manufacturing output strongest since 1995 – CBI survey
Growth in the UK’s manufacturing sector was the strongest for 18 years according to the latest CBI Industrial Trends Survey. Both the size of total order books and the pace of output growth over the past three months were the highest recorded since 1995, showing the recovery in UK manufacturing is accelerating. The survey of nearly 350 manufacturers found that total order books relative to normal levels were their strongest since March 1995. Export order books were also very firmly above average. Output volumes over the three months to November rose at their fastest rate since January 1995.
Unemployment insurance weekly claims report
In the week ending November 16, the advance figure for seasonally adjusted initial claims was 323,000, a decrease of 21,000 from the previous week’s revised figure of 344,000. The 4-week moving average was 338,500, a decrease of 6,750 from the previous week’s revised average of 345,250. The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending November 9, unchanged from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending November 9 was 2,876,000, an increase of 66,000 from the preceding week.
Markit Flash U.S. Manufacturing PMI
PMI recovers from October’s one-year low. Underlying growth trend remains modest. Stronger increases in both output and new orders. Modest rise in employment Data collected 12–20 November. At 54.3, the Markit Flash U.S. Manufacturing Purchasing Managers’ Index, which is based on approximately 85% of usual monthly survey replies, rose to an eight-month high in November. This was up from a one-year low of 51.8 in October. Meanwhile, the three-month average of the PMI, which gives an indication of the underlying trend, was at 52.9, consistent with an ongoing modest improvement.
Philly Fed Tumbles, Number Of Employees, Employee Workweek Both Plunge
The Philly Fed tumbled from October’s 19.8 to 6.5, missing expectations of 15.0, the biggest miss since February. The leading indicators of New Orders, Shipments and Unfilled Orders all plunged (from 27.5 to 11.9; from 20.4 to 5.6 and from 9.1 to -4.2, respectively).
Market overview
The DJIA finally closed up over the critical 16,000 psyche barrier, up 0.69%, the SPX closed up 0.81% and the NASDAQ up 1.22%. European bourses had closed too early to benefit from the related optimism in the USA’s markets; STOXX down 0.10%, CAC down 0.34%, DAX down 0.08%, UK FTSE closed flat.
The DJIA equity index future is up 0.61%, SPX up 0.79%, NASDAQ up 1.01%. STOXX is down 0.03%, DAX up 0.02%, CAC down 0.33% and the UK FTSE equity index future is up 0.09%.
NYMEX WTI oil closed up 1.46% on the day at $95.23 per barrel, NYMEX nat gas up 0.82% at $3.70 per therm. COMEX gold sold off sharply, closing down on the day by 1.31% at $1241.50 per ounce, with silver on COMEX at $20.00 down 0.51%
Forex focus
The yen fell 1.1 percent to 101.16 per dollar late in New York time, the weakest level seen since July 10th. Japan’s currency slid 1.4 percent to 136.37 per euro after declining to 136.40, the lowest since October 2009. The euro rose 0.3 percent to $1.3482. The U.S. Dollar Index, which tracks the currency versus 10 major counterparts, rose 0.2 percent to 1,020.97 after advancing 0.4 percent Wednesday. The dollar gauge breached its 100- and 200-day moving averages as it approached a two-month high.
The yen weakened past 101 per dollar for the first time since July as yields on U.S. securities rose to the highest relative to Japan’s since September amid the nations’ diverging monetary policies.
The Australian dollar fell the most in four months versus the U.S. currency as Reserve Bank Governor Glenn Stevens said in Sydney he was “open-minded” on intervention. The currency has climbed almost 50 percent in the four years ended Dec. 31st as the nation escaped the 2009 global recession and China’s mining investment boom spurred growth. The Aussie dropped 1.1 percent to 92.34 U.S. cents after sliding to 91.99 cents, the weakest since Sept. 9th.
Bonds
The benchmark 10-year yield fell one basis point, or 0.01 percentage point, to 2.78 percent late in New York time. The 2.75 percent note due in November 2023 rose 1/8, or $1.25 per $1,000 face amount, to 99 22/32. The yield rose as much as four basis points and touched the highest level since Sept. 18th. Treasury 10-year note yields reached the highest level in two months as a report showing U.S. jobless claims fell more than forecast last week added to speculation the Federal Reserve is moving closer to reducing (tapering) its bond purchases.
Fundamental policy decisions and high impact news events to look out for on November 22nd
Friday we receive the data concerning Germany’s final GDP figure expected in at 0.3% up, with the German IFO index expected in at 107.9. Friday also sees a raft of info. regarding Canada; core CPI data is published expected in flat, with CPI up 0.2%. Retail sales is predicted in up 0.5% for the month. Jolts job openings are published in the USA, it measures the number of job openings during the reported month, excluding the farming industry.
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