The USA markets are shut for the annual Thanksgiving day therefore the afternoon trading session is expected to be quiet. Overnight investors saw the Nikkei reach a six year high as the DJIA had risen to a record high, just short of 16,100 on Wednesday.
In Europe Germany’s import prices have fallen circa 3% year on year, whilst export prices have fallen circa 1% year on year. Germany’s unemployment rate has spiked by 10,000 in the latest print, with analysts polled expecting the number to come in flat. Meanwhile retail sales in Europe appear to be moderating, again the lull before the traditional Xmas rush could be the reason as customers leave their gift buying until closer to December’s pay packet.
The pound continues to strengthen versus the dollar and euro as investors believe that the UK economy is recovering well, although there are many dissenting voices in the analyst community who are suggesting that the UK economic growth is unbalanced, relying too much on consumer spend and debt as illustrated by the most recent import/export and business investment data published yesterday.
Volcker rule imminent for USA banks
US Regulators have scheduled dates for Volcker vote. The CFTC and the FDIC are among the regulators scheduling dates for a vote on the highly anticipated Volcker rule, according to people familiar with the matter. The FDIC plans to meet on December 10 to consider the rule aimed at banning proprietary trading, which involves banks trading from their own accounts.
German Import prices in October 2013: –3.0% on October 2012
As reported by the Federal Statistical Office (Destatis), the index of import prices decreased by 3.0% in October 2013 from the corresponding month of the preceding year. In September and in August 2013 the annual rates of change were –2.8% and –3.4%, respectively. From September 2013 to October 2013 the index decreased –0.7%. The index of import prices, excluding crude oil and mineral oil products, was 2.2% below the level of a year earlier. The index of export prices decreased 1.0% in October 2013 from the corresponding month of the preceding year.
German unemployment rose for a fourth month in November, signalling an uneven recovery in Europe’s largest economy. The number of people out of work climbed a seasonally-adjusted 10,000 to 2.985 million, after gaining by a revised 3,000 in October, the Nuremberg-based Federal Labor Agency said today. Economists predicted no change.
Moderate downturn in Euro-zone retail sales continues in November
Markit’s latest batch of retail PMI data for the Eurozone signalled an on-going downturn in sales in the penultimate month of 2013. The overall drop in sales revenues masked sustained growth in Germany, however, and remained at a pace that was weaker than those registered in the first half of the year. Italy remained the main source of weakness, while French retailers reported only a marginal decline in sales. The Markit Eurozone Retail PMI, which tracks month-on-month changes in the value of retail sales, edged up to 48.0 in November, from 47.7 in October.
Monetary developments in the euro area
The annual growth rate of the broad monetary aggregate M3 decreased to 1.4% in October 2013, from 2.0% in September 2013.1 The three-month average of the annual growth rates of M3 in the period from August 2013 to October 2013 decreased to 1.9%, from 2.2% in the period from July 2013 to September 2013. Private loans fell by 2.1% in the EA.
Market snapshot at 10:00 am UK time
Wall Street optimism crossed over to Asia to push Japanese stocks to a six-year high and saw Hong Kong stocks rise to near three-year highs. The Nikkei closed up 1.80%, the CSI up 1.04% and the Hang Seng down 0.07%. STOXX is up 0.13%, CAC up 0.15%, DAX up 0.19% and UK FTSE down 0.05%.
NYMEX WTI oil is currently flat at $92.30 per barrel, NYMEX natural gas is down 0.10% at $3.89 per therm, COMEX gold is up 0.20% at $1240.40 per ounce with silver at $19.70 per ounce. WTI for January delivery was as low as $92.17 a barrel in electronic trading on the New York Mercantile Exchange, down 13 cents in early European trading. The contract slid $1.38 to $92.30 yesterday, the lowest close since May 31st. The volume of all futures traded was about 67 percent below the 100-day average. Prices have dropped 4.4 percent in November. West Texas Intermediate traded near the lowest price in almost six months as crude stockpiles rose for a 10th week in the U.S., the world’s biggest oil consumer.
Forex focus
The pound rose 0.1 percent to $1.6305 early in London time after climbing to $1.6331 yesterday, the highest since Jan. 2nd. The U.K. currency gained 0.2 percent to 83.25 pence per euro after appreciating to 83.01 on Nov. 7th, the strongest level since Jan. 17th. The pound gained 7.3 percent in the past six months; the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes amid speculation a strengthening economy will prompt the Bank of England to increase its borrowing costs. The euro has appreciated 4.2 percent, while the dollar has fallen 1.9 percent. The pound advanced, approaching the highest level since January versus the dollar, before the Bank of England releases its semi-annual Financial Stability Report.
Bonds
The 10-year bund yield was at 1.71 percent early London time after falling to 1.65 percent on Oct. 31, the lowest level since Aug. 8. The price of the 2 percent bond due in August 2023 was 102.53. Germany’s government bonds were little changed before a report analysts said will show inflation in the euro area’s largest economy accelerated in November.
