In a relatively quiet day in terms of high impact news the main equity markets continued their journey north on Monday on the basis of slightly higher retail and other consumption figures from the USA and an improved sentiment publication courtesy of the University of Michigan. Canada’s GDP rose 0.3% in October, in the USA personal incomes rose 0.2% in November, whilst expenditure in the month rose by 0.5%. Looking at the UOM sentiment survey the print came in at 82.5, quite a jump from the disappointing print of 75.1 in November.
Canada Gross domestic product by industry, October 2013
Real gross domestic product rose 0.3% in October, up for a fourth consecutive month. The output of goods-producing industries grew 0.4% in October, mainly as a result of an increase in manufacturing. Construction as well as mining and oil and gas extraction were unchanged in October. The agriculture and forestry sector and utilities edged down. The output of service industries increased 0.3% in October, as almost all major industrial sectors registered growth. A notable gain was recorded in wholesale trade. Increases were also recorded in retail trade, transportation and warehousing services.
US Personal Income and Outlays, November 2013
Personal income increased $30.1 billion, or 0.2 percent, and disposable personal income (DPI) increased $16.2 billion, or 0.1 percent in November according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $63.0 billion, or 0.5 percent. In October, personal income decreased $11.7 billion, or 0.1 percent, DPI decreased $25.6 billion, or 0.2 percent, and PCE increased $44.2 billion, or 0.4 percent, based on revised estimates. Real disposable personal income increased 0.1 percent in November, in contrast to a decrease of 0.2 percent in October.
Consumer sentiment up in December on improved economic outlook
USA consumer sentiment rose to its strongest level in five months in December as Americans’ outlook on the economy and job prospects improved, a survey released on Monday showed. The final reading on the Thomson Reuters/University of Michigan’s overall index of consumer sentiment jumped to 82.5 for December, up from the 75.1 posted in November but unchanged from the preliminary reading released earlier this month. This was the highest reading for the index since July, though it was slightly under expectations for a reading of 83.
Market overview at 11:00pm UK time
The DJIA closed up 0.45%, the SPX up 0.53%, and the NASDAQ up 1.08%, the latter being particularly bullish given the Apple – China deal excited tech investors. In Europe the STOXX index rose 0.71%, the CAC up 0.51%, the DAX up 0.94%, with the FTSE closing up 1.09%.
Looking at the equity index futures the DJIA future is up 0.35% at the time of writing, the SPX future is up 0.46% with the NASDAQ up 0.92%. STOXX future is up 0.59%, DAX up 0.83%, CAC up 0.56% and the FTSE future is up 1.32%.
NYMEX WTI oil is at the time of setting down 0.41% on the day at $98.91 per barrel, NYMEX nat gas is up 1.02% at $4.46 per therm. COMEX gold is down 0.56% at $1197 per ounce with silver on COMEX down 0.07% at $19.44 per ounce.
Forex focus
The dollar was little changed at 104.11 yen late New York time. It climbed to 104.64 on Dec. 20th, the highest since October 2008. The greenback slid 0.2 percent to $1.3696 per euro. Japan’s currency dropped 0.2 percent to 142.59 per euro. The Dollar Index, which tracks the U.S. currency versus 10 major counterparts, slipped 0.1 percent to 1,020.35, after rising 0.5 percent last week. The measure is up 3.4 percent this year. The dollar dropped versus most of its major peers amid speculation investors were exiting bets on further gains before year-end.
The Canadian dollar strengthened for a third day after a report showed economic growth was led by manufacturing and wholesale trade. The loonie, as the Canadian dollar is known, rose 0.3 percent to C$1.0605 per U.S. dollar.
The dollar has appreciated 3.9 percent and the euro has climbed 8.3 percent this year, according to Bloomberg’s Correlation-Weighted Indices that tracks the 10 developed-nation currencies. The yen has weakened 15.1 percent, the largest decline, followed by the Aussie’s 12.2 percent drop.
The pound rose 0.1 percent to $1.6355 after climbing to $1.6484 on Dec. 18th, the highest since August 2011. The U.K. currency slipped 0.2 percent to 83.81 pence per euro.
Bonds
The benchmark 10-year gilt yield increased two basis points, or 0.02 percentage point, to 2.97 percent late London time after climbing to 2.995 percent on Dec. 20th, the highest since Sept. 18th. The 2.25 percent bond due in September 2023 fell 0.17, or 1.70 pounds per 1,000-pound ($1,636) face amount, to 94.01. U.K. government bonds fell, pushing 10-year yields toward a three-month high, on concern policy makers may need to take action to curb a rally in house prices. Gilts have lost 4 percent this year through Dec. 20th. German securities fell 1.9 percent and U.S. Treasuries declined 2.9 percent.
Fundamental policy decisions and high impact news events for December 24th
Tuesday we’ll receive the latest BOJ report. It contains the statistical data that the BOJ Policy Board members evaluated when making the latest interest rate decision, and provides detailed analysis of current and future economic conditions from the bank’s viewpoint.
Tuesday sees the publication of the French consumer spending figures, expected in at 0.3% positive from the -0.2% negative figure published in the previous month’s data. The UK publishes its latest data on mortgage approvals courtesy of the BBA, the British bankers’ association, in which the expectation is for an increase from 42.8K to 44.2K, a significant rise year on year from the 33.6K published December 2012.
From the USA we’ll receive several key data releases in the afternoon trading session, core durable orders are published and the anticipation is for a rise to 0.9% from the previous month’s figure of 0.4%. Durable goods orders are expected in at 1.7% positive from the previous month’s -1.8% negative. This data measures the total value of new purchase orders placed with manufacturers for durable goods. This data is usually revised via the Factory Orders report released about a week later. Durable goods are defined as hard products having a life expectancy of more than 3 years, such as automobiles, computers, appliances, and airplanes.
New home sales data is published in the USA, the expectation is for a moderate rise from 444K to 449K. The Richmond manufacturing index is also published, expected in at 15 from the previous month’s figure of 13. It’s a survey of approx. 100 manufacturers in the Richmond area which asks respondents to rate the relative level of business conditions including shipments, new orders, and employment. Above 0 indicates improving conditions, below indicates worsening conditions. The index tends to have a muted impact because there are earlier regional indicators related to manufacturing conditions.
