One of the most important weekly high impact news events, the unemployment claims in the USA, came in as the economists polled had predicted. However, the headline figure that the mainstream media led with, actually betrayed the negative information that lay just beneath the surface. Despite the claim count falling the four weekly average is still up, as a rolling average it’s now at 356K. Further the seasonally adjusted figure showed an increase of 31,000 on the preceding week. So all things considered it wasn’t a great print, but the ready made ‘excuse’ is that the govt. shutdown and the lack of info. from Nevada and California, still has to work its way through the system. Here’s the critical data;
[quote]”In the week ending October 26, the advance figure for seasonally adjusted initial claims was 340,000, a decrease of 10,000 from the previous week’s unrevised figure of 350,000. The 4-week moving average was 356,250, an increase of 8,000 from the previous week’s unrevised average of 348,250. The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending October 19, unchanged from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending October 19 was 2,881,000, an increase of 31,000 from the preceding week.”[/quote]
Euro area unemployment rate rises to 12.2%
Sadly the unemployment numbers from Europe are showing little signs of improvement, with youth unemployment still an incredible blight across so many of the States. The euro area (EA17) seasonally-adjusted unemployment rate was 12.2% in September 2013, stable compared with August. The EU28 unemployment rate was 11.0%, also stable compared with August. In both zones, rates have risen compared with September 2012, when they were 11.6% and 10.6% respectively. These figures are published by Eurostat, the statistical office of the European Union. In September 2013, 26.872 million men and women were unemployed in the EU28, of whom 19.447 million were in the euro area. Compared with August 2013, the number of persons unemployed went up by 61 000 in the EU28.
Canada’s gross domestic product rose 0.3% in August
Real gross domestic product rose 0.3% in August, after increasing 0.6% in July and declining 0.5% in June. The output of goods-producing industries grew 0.4% in August, led by oil and gas extraction. The agriculture and forestry sector also increased. In contrast, manufacturing and utilities declined. Construction was unchanged. The output of service industries increased 0.3% in August, after gaining 0.4% in July, as almost all major industrial sectors registered growth. Gains were recorded in accommodation and food services, wholesale and retail trade, professional services as well as transportation.
Chicago ISM Business Barometer Rose to 65.9 in October From 55.7
The Chicago Business Barometer provides a monthly snapshot of U.S. economic activity as seen by a survey panel of local purchasing and supply management professionals. The MNI Chicago Report business barometer rose to 65.9 in October from 55.7 a month earlier. Readings above 50 signal expansion. The median projection in a Bloomberg survey of economists was 55. Estimates of 54 economists ranged from 51 to 58.3. The index averaged 54.6 in 2012 and 62.8 in 2011.
Australian Manufacturing Reaches for Recovery in Oct
The latest seasonally adjusted Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) improved by 1.5 points in October, rising to 53.2 points. This was the second consecutive month that the Australian PMI has moved above 50 points, indicating mild expansion across the manufacturing industry (50 points marks the separation between expansion and contraction in the Australian PMI). This month’s overall expansion was driven by stronger readings (with levels above 50 points) for the new orders and production sub-indexes.
Market overview
The DJIA closed down 0.47%, the SPX down 0.38%, NASDAQ down 0.28%. The European markets had mainly closed by the time the USA indices began to reverse. The STOXX closed up 0.90%, FTSE down 0.68%, CAC up 0.60%, DAX up 0.26%. The IBEX closed up the most of the European indices up 1.32% on the day.
Commodities suffered a down day; ICE WTI oil closing down 0.40% on the day at $96.38 per barrel. NYMEX natural closed down 0.20% on the day at $3.57 per therm. COMEX gold closed down 0.05% at $1322.80 per ounce.
Equity index futures are mainly positive at the time of writing; the DJIA is up 0.21%, SPX up 0.15% and the NASDAQ equity index future is up 0.17%. The if FTSE is down 0.64%, CAC up 0.62% and DAX up 0.23%.
Forex focus
The Canadian dollar rose versus all of its major peers after the nation’s economy expanded 0.3 percent in August, topping forecasts for a 0.1 percent increase. The currency, nicknamed the loonie, gained 0.5 percent to C$1.0431 per dollar.
Europe’s 17-nation currency slid 1.1 percent to $1.3584 late in New York time and fell as much as 1.2 percent in the biggest intraday drop since April 17th. The euro sank 1.3 percent to 133.60 yen. Japan’s currency gained 0.2 percent to 98.36 per dollar after depreciating yesterday to 98.68, the weakest level since Oct. 17th. The euro pared a monthly advance versus the dollar to 0.4 percent. It has gained 3 percent this year. The U.S. currency was little changed versus the yen in October and has climbed 13 percent since the start of the year. The euro slid the most in six months versus the dollar after the inflation rate in the region unexpectedly cooled, fueling speculation the European Central Bank will cut interest rates to spur the economy.
The U.S. Dollar Index rose for a fifth day as the MNI Chicago Report’s business gauge rose to 65.9 this month, the fastest pace since 2011, from 55.7 in September. Readings above 50 signal growth. The dollar gauge increased as much as 0.4 percent to 1,011.73, a two-week high.
Sterling advanced by 1.1 percent to 84.70 pence per euro late in the London session, the biggest gain April 25th. The rally came after the U.K. currency slipped to 85.85 pence on Oct. 29th, the weakest since Aug. 29th. Sterling was little changed at $1.6047. The pound jumped more than 1 percent versus the euro, the biggest gain in over six months, after euro-area inflation slowed and the jobless rate climbed to a record.
Bonds
The benchmark 10-year yield rose two basis points, or 0.02 percentage point, to 2.55 percent at 5 p.m. New York after touching 2.57 percent, the highest since Oct. 22nd. It earlier fell four basis points to 2.50 percent. The 2.5 percent note maturing in August 2023 dropped 1/8, or $1.25 per $1,000 face amount, to 99 17/32. Ten-year note yields have fallen six basis points this month after sliding 17 basis points in September. Treasury 10-year note yields touched the highest level in more than a week after business activity expanded at the fastest pace in more than two years, adding to speculation the Federal Reserve’s stimulus is working.
High impact news events and fundamental policy decisions that may affect market sentiment on November 1st.
Several PMIs are published on Friday, the first is the UK’s manufacturing PMI expected to come in at 56.3. The USA final manufacturing PMI is scheduled to print at 51.2. In the USA FOMC member Bullard will speak in the afternoon, where we’ll also receive the ISM prints for manufacturing.
