In many ways the markets were delivered some positive data on Thursday; USA unemployment claims fell by 9000 week on week, with the four week moving average decreasing by over 6000. Retail sales in the USA also came in ahead of expectations as the reading rose for the first time in over three months. Also, the cost of imported goods has fallen by circa 1.1% year on year. In Canada new home prices have risen by a touch; up 0.3% in January.
However, despite the positive data regarding wider North America the markets were overshadowed by the news regarding Ukraine and in particular the veiled threats courtesy of the USA via John Kerry citing that there would be grave consequences if Russia sought to escalate the situation. All the USA bourses closed down, as did the main European bourses.
Treasuries rose for a fourth day, the longest streak since November, as investors sought refuge from turmoil in Ukraine’s Crimea region and bolstered demand at the government’s auction of $13 billion of 30-year bonds.
US Unemployment Insurance Weekly Claims Report
In the week ending March 8th the advance figure for seasonally adjusted initial claims was 315,000, a decrease of 9,000 from the previous week’s revised figure of 324,000. The 4-week moving average was 330,500, a decrease of 6,250 from the previous week’s revised average of 336,750. The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending March 1st, unchanged from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 1st was 2,855,000, a decrease of 48,000 from the preceding week’s revised level of 2,903,000.
Retail Sales in U.S. Increase for First Time in Three Months
Retail sales in the U.S. rose in February for the first time in three months, a sign consumers are starting to shake off the effects of the harsh weather that curbed spending even more than previously estimated. The 0.3 percent advance followed a 0.6 percent drop in January that was larger than initially reported, Commerce Department figures showed today in Washington. The median forecast of 84 economists surveyed by Bloomberg called for a 0.2 percent advance. The rebound in demand was broad-based with nine of 13 major categories showing increases.
Canada New Housing Price Index, January 2014
The New Housing Price Index (NHPI) rose 0.3% in January, following a 0.1% gain in December. The national increase was the largest since May 2012 and mainly the result of strong gains in the Prairie region. The metropolitan region of Calgary was the top contributor to the January rise, with prices up 1.3% over December. Builders reported that higher material and labour costs as well as market conditions were the primary reasons for the increase, the largest in the region since April 2007. The biggest monthly price gain in January was in Saskatoon (+1.4%).
U.S. Import and Export Price Indexes – February 2014
U.S. import prices increased 0.9 percent in February following a 0.4 percent advance the previous month, the U.S. Bureau of Labor Statistics reported today. The February advance was led by higher fuel prices which more than offset declining non-fuel prices. U.S. export prices rose 0.6 percent in February, after increasing 0.2 percent in January. Imports All Imports: Import prices rose for the third consecutive month in February, increasing 0.9 percent. Despite the recent increases, prices for overall imports decreased 1.1 percent for the year ended in February, after declining 0.6 percent from February 2012 to February 2013.
Market overview at 10:00 PM UK time March 13th
The DJIA closed down 1.41%, SPX down 1.17%, NASDAQ down 1.46%. Euro STOXX closed down 1.50%, CAC down 1.29%, DAX down 1.86%, FTSE down 1.01%. The DJIA equity index future is down 1.36%, SPX future down 1.12%, NASDAQ future down 1.50%. Euro STOXX future is down 1.47%, DAX future down 1.96%, CAC future down 1.74%, FTSE future down 1.40%.
NYMEX WTI oil finished the day up 0.24% at $98.23 per barrel, NYMEX nat gas down 2.54% at $4.38 per therm. COMEX gold finished the day up 0.04% at $1371.00 per ounce with silver down 0.81% at $21.18 per ounce.
Forex focus
The euro fell 0.3 percent to $1.3868 late New York time, after rallying earlier to $1.3967, the highest since October 2011. The yen strengthened 0.9 percent to 101.84 per dollar and touched 101.54, the strongest level since March 4th. The Japanese currency climbed 1.1 percent to 141.25 per euro and reached 140.72, the strongest since March 6th. The euro fell versus the dollar as the European Central Bank signaled it’s monitoring gains in the currency for deflation risks. The yen rose on demand for a haven amid turmoil in Ukraine and pessimism about China’s economy.
Australia’s dollar climbed after the statistics bureau said employers added 47,300 positions last month, surpassing the 15,000 gain forecast in a Bloomberg survey. The Aussie gained as much as 1.3 percent to 91.04 U.S. cents, the highest since March 7th, before trading at 90.31 cents, up 0.5 percent. The Canadian dollar rose against the majority of the greenback’s 31 most-traded peers, gaining 0.4 percent to C$1.1076 per U.S. dollar.
The U.K. currency rose 0.4 percent to $1.6681 late afternoon London time, the biggest gain since Feb. 14th. Sterling climbed 0.2 percent to 83.49 pence per euro after depreciating to 83.78 pence, the weakest since Dec. 27th. The pound strengthened the most in a month against the dollar as speculation the Bank of England will increase interest rates helped the currency extend its rally.
Sterling has rallied 12 percent in the past year, the best performer of the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro advanced 7 percent, while the dollar weakened 1.2 percent.
Bonds briefing
Japan’s currency extended its advance against the dollar today as yields on U.S. Treasury 10-year notes dropped, dimming the appeal of dollar-denominated assets. The yields sank as much as nine basis points, or 0.09 percentage point, the most since Jan. 23rd on an intraday basis, to 2.64 percent. They increased earlier to 2.75 percent.
The U.K. 10-year yield fell six basis points, or 0.06 percentage point, to 2.69 percent, the lowest level since March 4th. The 2.25 percent gilt maturing in September 2023 rose 0.48, or 4.80 pounds per 1,000-pound face amount, to 96.315.
Yields on 30-year bonds decreased eight basis points, or 0.08 percentage point, to 3.59 percent at 5 p.m. New York time after dropping nine basis points, the biggest drop since Jan. 23rd. The yield was the lowest since March 4th on a closing basis. The 3.625 percent security due in February 2044 added 1 1/2, or $15 per $1,000 face amount, to 100 5/8. Treasuries rose for a fourth day, the longest streak since November, as investors sought refuge from turmoil in Ukraine’s Crimea region and bolstered demand at the government’s auction of $13 billion of 30-year bonds.
Fundamental policy and high impact news events for March 14th
Friday sees China’s foreign direct investment numbers published, the previous reading being +16.1%. Japan’s revised industrial production is predicted to come in at 4% up month on month. Germany’s final CPI is expected in at 0.5% up month on month. Swiss CPI is expected in at 0.3% up. Europe’s employment change is expected to remain at zero, quarter on quarter.
From the USA PPI is expected in at 0.2%, core inflation at 0.1%. Preliminary university of Michigan consumer sentiment is expected in at 81.9.
