Despite tensions mounting once again in the Ukraine and USA focused investors being concerned that many of the USA indices might be overbought as reporting season begins, the main indices in the USA shot up after retail data in the USA rose sharply at 1.1%, busting expectations of a modest 0.5% rise month on month. It was the sales of autos that propelled the data to the unexpected level; they were up 3.1% during the past month.
In an otherwise quiet day for news a jobs sentiment survey was published that suggested that USA workers believe that they have a close on fifty percent chance of getting a new position should they lose their job. January’s print was the recent high and it was naturally those under 40 who believed they had the highest chance of a quick return to the jobs market.
Retail sales jump 1.1% in March, beating estimates
Sales at U.S. retailers increased 1.1% in March to a seasonally adjusted $433.9 billion, the Commerce Department estimated Monday. This is the largest gain since September 2012. Sales rose an upwardly revised 0.7% in February, compared with previous estimate of a 0.3% gain. Ahead of the report, economists surveyed expected total sales to rise 0.8%. Excluding the 3.1% rise in motor vehicle sales, retail sales rose 0.7%. Economists had expected ex-auto sales to rise 0.4%. Gains were widespread across sectors. Sales at general merchandise stores had their biggest gain since March 2007.
Updated Budget Projections: 2014 to 2024
As it usually does each spring, CBO has updated the baseline budget projections that it released earlier in the year. CBO now estimates that if the current laws that govern federal taxes and spending do not change, the budget deficit in fiscal year 2014 will be $492 billion. Relative to the size of the economy, that deficit—at 2.8 percent of gross domestic product (GDP)—will be nearly a third less than the $680 billion shortfall in fiscal year 2013, which was equal to 4.1 percent of GDP. This will be the fifth consecutive year in which the deficit has declined as a share of GDP since peaking at 9.8 percent in 2009.
Consumers’ view of U.S. job market brightened in March: NY Fed
U.S. consumers grew more confident in the labor market last month; with younger workers in particular seeing a greater chance of finding work should they lose their current job, a survey from the Federal Reserve Bank of New York said on Monday. The monthly survey found that consumers in March perceived an average chance of 48.95 percent for finding a new job should they lose their current position. That is up from 46.1 percent in February and nearly matches January’s reading of 48.98 percent, which had been the highest since last June. Workers under 40 were the most optimistic.
Market overview at 10:00 PM UK time
The DJIA closed up 0.91%, the SPX up 0.82% and the NASDAQ up 0.57%. Euro STOXX closed up 0.48%, the CAC up 0.43% and the DAX up 0.26%. The UK FTSE closed up 0.34%.
The DJIA equity index future is up 0.72%, SPX future up 0.72% and the NASDAQ equity index future is up 0.77%. Euro STOXX future is up 0.62%, DAX future up 0.27%, CAC future up 0.46%, FTSE future up 0.21%.
NYMEX WTI oil was down 0.15% on the day at $103.58 per ounce, NYMEX nat gas was down 1.30% on the day at $4.56 per therm. COMEX gold was up 0.60% on the day at $1326.90 per ounce, COMEX silver was up 0.22% at $19.99 per ounce.
Forex focus
The euro weakened 0.5 percent to $1.3820 mid-afternoon in New York and lost as much as 0.6 percent, the most on an intraday basis since March 25th. It appreciated to $1.3906 on April 11th, the strongest level since March 19th. The 18-nation currency dropped 0.4 percent to 140.59 yen. The dollar gained 0.1 percent to 101.72 yen.
The Dollar Spot Index, which tracks the currency against 10 major peers, advanced 0.2 percent to 1,008.02 following a 1 percent loss last week. The euro dropped against most of 16 major counterparts after European Central Bank President Mario Draghi said further appreciation in the currency would trigger more monetary stimulus.
The euro has rallied 6.6 percent in the past 12 months, the best performer after the pound and franc of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 0.5 percent, while the yen weakened 3.2 percent.
Sterling strengthened 0.5 percent to 82.56 pence per euro late afternoon London time, snapping a three-day decline. The pound was little changed at $1.6733 after rising to $1.6820 on April 10th, the highest level since Feb. 17th.
The U.K. currency has gained 4.8 percent in the past six months, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes, as traders brought forward bets on when the Bank of England will raise interest rates. The euro has climbed 1.6 percent, while the dollar weakened by 0.5 percent.
Currency traders are more bullish on the pound that at any time in the past three years as the U.K.’s booming property market fuels speculation the Bank of England is getting closer to raising interest rates.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the pound compared with those on a drop climbed to 46,477 on April 8th from 33,572 a week earlier, figures from the Washington-based Commodity Futures Trading Commission showed on April 11. That’s the biggest net long position since February 2011.
Bonds briefing
Benchmark 10-year yields rose two basis points, or 0.02 percentage point, to 2.65 percent late afternoon in New York. The 2.75 percent security due in February 2024 fell 5/32 or$1.56 per $1,000 face amount to 100 7/8. The yield was as low as 2.60 percent, the least since March 3rd. Five-year note yields added four basis points to 1.61 percent. Treasuries declined for the first time in three days as stronger-than-forecast economic data boosted stocks and reduced the appeal of the safety of U.S. government bonds.
Fundamental policy decisions and high impact news events for April 15th
Tuesday sees the publication from the RBA in Australia of the latest monetary policy minutes. From the UK in the morning session we receive the latest data for inflation, scheduled to come in at 1.6%, RPI is expected in at 2.5%, HPI is expected in at 7.2% year on year. Europe’s trade balance is anticipated to show a figure of €13.9 billion. Germany’s ZEW sentiment index is expected in at 46.3, with Europe’s ZEW index in at 60.7. Focus then turns to North America where Canada’s manufacturing sales expected to come in up 1.1% and the USA CPI month on month expected in at 0.1% positive. The Empire State Manufacturing survey is expected in up to a figure of 8.2. Later that day Janet Yellen speaks, the NAHB housing index is expected in at 50. Later Fed member Plosser will speak. Late evening the New Zealand quarterly inflation data is published expected in at 0.5%.
