German confidence falls due to Crimea crisis as USA inflation remains constant, USA manufacturing sales rise as home sales stagnate

Mar 19 • Morning Roll Call • 1923 Views • Comments Off on German confidence falls due to Crimea crisis as USA inflation remains constant, USA manufacturing sales rise as home sales stagnate

shutterstock_174313403Germany’s confidence has apparently been hit by the Crimea crisis according to the latest ZEW reading which fell by a highly significant 9.1 points to 46.6. As to whether or not this is a convenient excuse will not become apparent until the next reading is taken.

The USA published its latest inflation figures on Tuesday with CPI coming in as analysts expected at a reading of 0.1% for the month. Over the last 12 months, the all items index increased by 1.1 percent in the USA.

Manufacturing sales improved strongly and ahead of analysts’ predictions at 1.5%. Sales were up in 12 of 21 industries, representing about 46% of the manufacturing sector sales in January. Sales advanced 8.0% to $3.8 billion in the primary metal industry in January.

Housing starts in the USA were little changed The 0.2 percent decrease to 907,000 homes at an annualized rate last month followed a revised 909,000 pace in January.

German ZEW Indicator Burdened by Crimea Crisis

Economic Expectations for Germany have worsened in March 2014. The ZEW Indicator of Economic Sentiment has decreased by 9.1 points and now stands at a level of 46.6 points (historical average: 24.6 points). “In this month’s survey the Crimea Crisis is weighing on experts’ economic expectations for Germany. Nevertheless, the indicator’s level suggests that the economic upswing is currently not at risk,” says ZEW President Prof. Dr. Clemens Fuest. The indicator reflecting the expert’s assessment of the current economic situation for Germany has improved by 1.3 points in March, reaching a level of 51.3 points.

US Consumer Price Index – February 2014

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in February on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.1 percent before seasonal adjustment. An increase in the food index accounted for more than half of the all items increase in February. The food index rose 0.4 percent in February, driven by a 0.5 percent increase in the index for food at home, with four of the six major grocery store food group indexes increasing. The energy index declined, with a decrease in the gasoline index.

Monthly Survey of Manufacturing, January 2014

Manufacturing sales rose 1.5% to $50.4 billion in January, the largest gain since February 2013. The increase mostly reflected higher sales in the primary metal, food and miscellaneous industries. Sales were up in 12 of 21 industries, representing about 46% of the manufacturing sector sales in January. On the durable goods side of manufacturing, sales were up 2.0% while non-durable goods sales rose 1.0%. Constant dollar sales increased 0.7%, indicating that just under half of the gain reflected higher volumes of goods sold. Sales advanced 8.0% to $3.8 billion in the primary metal industry in January.

Housing Starts in U.S. Little Changed From Stronger January

Housing starts in the U.S. were little changed in February after declining less than previously estimated a month earlier, indicating the home-building industry is stabilizing after bad winter weather curbed construction. The 0.2 percent decrease to 907,000 homes at an annualized rate last month followed a revised 909,000 pace in January, figures from the Commerce Department in Washington showed today. The median estimate in a Bloomberg survey called for a 910,000 rate after a previously reported 880,000 in January. Warmer temperatures, a pickup in demand during the spring selling season and limited housing supply may help fuel further.

Market overview at 10:30 PM

The DJIA closed up 0.55%, SPX up 0.72%, NASDAQ up 1.25%. Euro STOXX closed up 0.81%, DAX up 0.67%, CAC up 0.96% and the UK FTSE up 0.56%. The DJIA equity index future is up 0.59%, SPX future up 0.71% NASDAQ future up 1.19%. Euro STOXX future is up 0.75%, DAX up 0.65%, CAC up 0.94% and the FTSE up 0.55%.

NYMEX WTI oil finished the day up 1.51% at $99.56 per barrel, NYMEX nat gas was down 1.41% at $4.47 per therm. COMEX gold was down 1.28% on the day at $1355.30 per ounce with silver down 2.75% at $20.82 per ounce.

Forex focus

The kiwi advanced 0.7 percent to 86.23 U.S. cents late in New York and touched 86.40 cents, the highest level since April 12th 2013. It rose versus all of its 31 major peers. The Aussie, rallied 0.4 percent to 91.27 U.S. cents and reached 91.36 cents, the highest since Dec. 11th, while South Africa’s rand gained 0.4 percent to 10.7324 per dollar. The greenback depreciated 0.3 percent to 101.44 yen and slipped 0.1 percent to $1.3934 per euro. Japan’s currency gained 0.2 percent to 141.35 to the shared European currency. New Zealand’s dollar led gains among major currencies as investor risk appetite rose and stocks rallied after President Vladimir Putin said Russia isn’t seeking to split Ukraine further after annexing its Crimea region.

The loonie depreciated 0.8 percent to C$1.1135 to the greenback. It advanced 0.2 percent earlier to a one-week high of C$1.1026. The Canadian dollar dropped after central bank governor Poloz said in a speech the nation’s long-term economic outlook will be constrained by an aging population that’s driving up savings and stemming demand. Speaking in Halifax, Nova Scotia, to reporters after his remarks, Poloz said he “cannot” rule out lowering the nation’s benchmark 1 percent interest rate.

Bonds briefing

Benchmark 10-year yields dropped two basis points, or 0.02 percentage point, to 2.67 percent mid-afternoon New York time. They traded in a range of four basis points, the least since March 11th. The 2.75 percent note due in February 2024 gained 5/32, or $1.56 per $1,000 face amount, to 100 21/32. Treasuries rose for the first time in three days as Ukraine said clashes in the breakaway Crimea region intensified, killing at least one Ukrainian serviceman, driving demand for the safety of U.S. government debt.

Fundamental policy decisions and high impact news events for March 19th

Wednesday the BOJ governor Kuroda speaks, after the all industries activities index is published. In the UK we receive the unemployment claimant count number expected to show that the number fell by -23K, with the unemployment rate remaining static at 7.2%. The UK central bank’s MPC will reveal its decision regarding the base rate vote and the holding of the quantitative easing programme at £375 bn. Wednesday also sees the UK’s annual budget statement from the UK chancellor George Osborne.

Canada publishes its wholesale sales figure, expected to show a rise of 1.2% per month. The USA current account is expected to come in at -$88bn for the month. The Swiss central bank governor Jordan speaks.

The FOMC publishes its economic projections and analysis and publishes a statement to accompany the central bank’s base interest rate decision, expected to come in at no change at 0.25%. The FOMC will then hold a press conference to highlight the guidance of its economic policy and the explanation regarding its base rate decision. The New Zealand GDP publication rounds of the high impact news events for Wednesday.
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