MORNING ROLL CALL
Euro rises after Mario Draghi’s bullish press conference, U.S. equities remain flat, whilst unemployment claims rise
Focus shifted away from the USA on Thursday to the ECB’s various interest rate decisions being published, whilst president Mario Draghi held court both before and after the rate decisions. As excepted the series of interest rates remained unchanged, however, Draghi did commit to lowering the asset purchase scheme from its current €80b a month, to a revised €60b a month. He also came out in support of the euro and the Eurozone stating (once again) that the “euro was irrevocable”. This steadfast stance caused the euro to rise versus its major peers, in the afternoon New York session.
Initial weekly jobless claims in the USA came in at 243k, ahead of the forecast of 238k. USA import prices have risen by 0.2% in the month of February, whilst year on year import prices have risen by 4.3% over the year. Adding to the belief that inflation pressures are building up in the economy, perhaps providing a timely reason for the Fed to raise rates, during their meeting next week.
On the subject of the Fed and because it was a slow news day on Thursday, we thought we’d shoehorn in this low impact calendar event publication, concerning the rise of individual net worth of the residents in the USA. The bulk of financial assets is still held by a tiny fraction of the total USA population and net wealth rose by $2 trillion to $92 trillion in 2016, mainly as a result of a $1.5 trillion increase in financial assets.
According to the latest BEA revision, USA nominal 2016 GDP was $18.86 trillion, an increase of $632 billion from 2015. The puzzle is how much money was created in order to generate this growth. Total credit rose to a new record high $66.1 trillion in 2016, an increase of $2.511 trillion during the past year, therefore in 2016, it “cost” $4 in new debt, in order to generate just $1 in new economic growth.
Both the DJIA and SPX were close on flat at the end of the trading day; DJIA up 0.01% and the SPX up 0.08%. In Europe the STOXX 50 index rose by 0.60%, in reaction to Draghi’s commitments, DAX closed up 0.09%, CAC up 0.42%, with the UK’s FTSE closing down 0.27%, the negatively received spring budget and miners weighed down the index.
The dollar index was little changed on Thursday. EUR/USD rose by circa 0.3% to $1.05718, retreating from its earlier gain above $1.06. The single bloc’s currency rose versus the majority of its major peers, with the exception of EUR/CHF, closing the day out at circa 1.0707. USD/JPY rose to 115.15 towards the close of trading. The Swiss franc made gains versus the majority of its peers in the New York session.
WTI oil continued its slump, losing circa 2% on the day, at one stage breaching the $48 per barrel handle. Gold slipped to the key psyche $1,200 per ounce handle, whilst silver slumped to $16.96 per ounce.
Economic calendar events for March 10th all times quoted are London (GMT) time.
07:00, currency impacted EUR. German Trade Balance (euros) (JAN). The forecast is for the trade balance to fall moderately to 18.0b, from 18.7b in December.
07:00, currency impacted EUR. German Exports s.a. (MoM) (JAN). German exports are predicted to have recovered to a 2.0% rise, from the previous surprise fall of -3.3%.
09:30, currency impacted GBP. Industrial Production (YoY) (JAN). The prediction is for a fall to a growth figure of 3.2%, from a 4.3% rise in December.
09:30, currency impacted GBP. Manufacturing Production (YoY) (JAN). The estimate is for a fall to a 2.9% growth figure, from 4.0% growth in December.
09:30, currency impacted GBP. Construction Output SA (YoY) (JAN). The forecast is for a fall to 0.2%, from 0.6% previously.
09:30, currency impacted GBP. Total Trade Balance (Pounds) (JAN). The prediction is for a slight improvement in the UK’s trade balance to -£3,100, from -£3,304 previously.
13:30, currency impacted CAD. Unemployment Rate (FEB). The rate is expected to remain unchanged at 6.8%.
13:30, currency impacted USD. Change in Non-farm Payrolls (FEB). The prediction is for 200k “non farm” jobs to have been created in Feb, below the figure of 227k in Jan. However, with ADP numbers beating expectation earlier in the week, this number could surprise to the upside.
19:00, currency impacted USD. Monthly Budget Statement (FEB). The forecast is for a significant deterioration in the USA monthly budget statement to -$152.0b, from $51.3b in January.
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