Tuesday was a busy day for news from the USA. But firstly the news that the UK is hiring in the service sector, at the fastest rate for six years, adds more fuel to the belief that the UK economy is recovering at a better pace than many would have predicted at the start of the year. The survey was from the CBI, a noted cheerleader for everything ‘UK plc’, but nevertheless their predictions are normally accurate.
In the USA house price inflation appears to be running amok at 13.3% per year, whilst housing starts and permits are at recent highs, coming in above the one million annually figure. Quite a significant improvement, incidentally vis-a-vis population sizes the UK would be building circa 200K on a like for like comparison instead of the low figure of 130K per year, a subject that the UK’s BoE governor Mark Carney brought up when comparing Canada’s level of new start builds versus the UK’s in Tuesday’s inflation meeting hearing.
Whilst housing starts and house prices are up in the USA, confidence isn’t, the Conference Board confidence index fell to 70.4 from 72.2 this month, suggesting that consumer confidence on main street is still fragile and this print can’t relate back to the partial and temporarily government shutdown in October/November.
For those amongst us who like to find the obscure outlier economic indicator the USA frozen turkey indicator could prove to be it. Turkeys are piling up as consumers in the USA are keeping their Xmas hands in their shallow pockets later than ever this year. The view on ‘retail street’ is that retailers are going to have to put out all the stops to get customers this year.
The last high impact news event of the day concerned New Zealand and their record trading deficit, as a relatively small economy they do appear to have everything just about right in the land of Lord Of The Rings…
UK service sector hiring at fastest in six years – survey
British service sector firms are hiring new staff at the fastest rate in six years and are planning to ramp up investment as the country’s economic recovery gathers momentum, a survey showed on Tuesday. In the three months to November, a balance of 41 percent of consumer services firms and 28 percent of business and professional services companies said their staff numbers increased, the survey by British business lobby CBI showed.
U.S. housing permits breach 1 million mark, highest in 5-1/2 years
Permits for future U.S. home construction rose to their highest level in nearly 5-1/2 years in October, suggesting the housing market recovery remained intact despite recent signs of slowing down. The Commerce Department said on Tuesday building permits jumped 6.2 percent to a seasonally adjusted annual rate of 1.03 million units. That was the highest rate since June 2008. Permits increased 5.2 percent in September. August’s permits were revised to a 926,000-unit pace from the previously reported 918,000 units. Permits lead housing starts by at least a month.
US FHFA House Price Index Up 0.3 Percent in August
U.S. house price appreciation continued in August 2013, with prices rising 0.3 percent on a seasonally adjusted basis from the previous month, according to the Federal Housing Finance Agency (FHFA) monthly House Price Index (HPI). The August HPI change marks the nineteenth consecutive monthly price increase in the purchase-only, seasonally adjusted index. The previously reported 1.0 percent increase in July was revised downward to a 0.8 percent increase. The HPI is calculated using home sales price information from mortgages either sold to or guaranteed by Fannie Mae and Freddie Mac.
Home Prices Advance in Third Quarter According to the S&P/Case – Shiller Home Price Indices
Data through September 2013, released today by S&P Dow Jones Indices for its S&P/Case – Shiller Home Price Indices, the leading measure of U.S. home prices, showed that the U.S. National Home Price Index rose 3.2 % in the third quarter of 2013 and 11.2% over the last four quarters. In September 2013, the 10-and 20-City Composites gained 0.7% month – over – month and 13.3% year – over – year. While 13 of 20 cities posted higher year-over-year growth rates, 19 cities had lower monthly returns in September than August.
US Fifth District Survey of Manufacturing Activity
Manufacturing in the Fifth District improved in November, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments and the volume of new orders rose. Employment, average workweek, and wages also picked up this month. Capacity utilization and the backlog of orders flattened, while vendor lead-time rose at a slower pace. Manufacturers were optimistic about their future business prospects. Firms anticipated shipments and the volume of new orders would grow more quickly during the next six months.
US Consumer Confidence Declines Again in November
The Conference Board Consumer Confidence Index, which had decreased sharply in October, declined again in November. The Index now stands at 70.4 (1985=100), down from 72.4 in October. The Present Situation Index edged down to 72.0 from 72.6. The Expectations Index declined to 69.3 from 72.2 last month.
Lowest October trade deficit in New Zealand since the mid-1990s
The trade balance for October 2013 was a deficit of $168 million, Statistics New Zealand said today. This is the lowest deficit for an October month since the mid-1990s. October months historically have trade deficits. “The low trade deficit was due to exported goods recording the highest value for an October month,” industry and labour statistics manager Louise Holmes-Oliver said. “It was the highest value for exported goods for any month since March 2013.” The value of exported goods rose $783 million (23 percent) to $4.2 billion.
Market overview
The DJIA continued its ‘struggle’ to leave the critical psyche level of 16000 in its wake. The index closed flat on the day. The SPX closed up marginally by 0.01% whilst the NASDAQ fared better closing up 0.58%.
European markets fell throughout Tuesday, STOXX down 0.33%, CAC down 0.57%, DAX down 0.11% and the UK FTSE down 0.87% and this on a ‘neutral’ day for European high impact news events.
Looking towards Wednesday’s market open the DJIA equity index future is flat, as is the SPX, with the NASDAQ up 0.53%. STOXX is down 0.23%, DAX down 0.03%, CAC down 0.52% and FTSE down 0.93%.
NYMEX WTI oil closed down 0.44% on the day at $93.68 per barrel, NYMEX nat gas was up 0.77% at $3.82 per therm. COMEX gold was flat at $1241.50 per ounce and silver at$19.85 per ounce down 0.38%.
Forex focus
The euro strengthened 0.4 percent to $1.3572 per dollar late in New York time after rising to $1.3575, the highest level since Nov. 20th. The 17-nation currency was little changed at 137.46 yen. Japan’s currency appreciated 0.4 percent to 101.28 per dollar after gaining 0.5 percent, the most since Nov. 13th. Australia’s dollar fell 0.8 percent to 92.44 yen after decreasing 1 percent to 92.25, the weakest since Oct. 10th. The U.S. Dollar Index, which tracks the currency against 10 major counterparts, fell 0.2 percent to 1,018.83 after gaining 0.1 percent.
The euro strengthened against most of its major peers amid speculation the European Central Bank won’t add to monetary accommodation efforts that would push the shared currency lower.
Bonds
The yield on the current five-year note fell two basis points, or 0.02 percentage point, to 1.31 percent at 5 p.m. in New York. The yield on the benchmark 10-year note fell two basis points to 2.71 percent, the fourth consecutive daily decline. Treasuries rose for a fourth day as the government’s auction of $35 billion in five-year notes attracted stronger-than-forecast demand as investors bet the Federal Reserve will keep short-term borrowing rates low.
Fundamental policy events and high impact news events for November 27th
Wednesday sees the UK’s second estimate GDP figure is published, expected to come in at 0.8%. The preliminary business investment data is published, it fell by 2.7% last quarter the expectations is for a 2.3% rise in the latest figures. The GFK German consumer confidence is published expected in at 7.1, versus 7.0 in the previous month.
Durable goods orders for the USA are expected to fall by 1.5%, the Chicago PMI is excepted to fall to 60.6, with unemployment claims in at 331K. Natural gas and oil storage figures for the USA need watching carefully in relation to the volatility of trading oil and gas.
Retail sales in Japan are scheduled to fall to a 2.2% increase month on month. The New Zealand ANZ business confidence index is published in the evening, as is Australian data concerning new homes sales and private capital expenditure, the latter expected to fall by -1.1%.
