As earnings season officially begins in the USA concerns that valuations are sky high, in particular on the heavily tech invested NASDAQ market, caused jitters that reverberated across global markets. The dollar also fell versus the majority of its major peers, falling to a five-month low against a basket of peers on speculation a drop in initial jobless claims won’t be enough for the Federal Reserve to accelerate plans to raise interest rates.
The sudden sell off came in an otherwise quiet day for data. The UK’s MPC kept the base interest rate at 0.5% for now entering a 5th year and the QE programme fixed at £375 bn.
USA weekly jobless claim numbers reached a reading not seen since 2007 at 300K, however, we have been here before – as recent as early December 2013 when the number was then readjusted upwards and with lawmakers in the USA still delaying decisions on extended benefits these figures may be corrupted.
U.S. Import and Export Price Indexes – March 2014
U.S. import prices advanced 0.6 percent in March, after a 0.9-percent increase in February, the U.S. Bureau of Labor Statistics reported on Thursday. Higher fuel prices and non-fuel prices each contributed to the rise in import prices in March. U.S. export prices increased 0.8 percent in March following a 0.7-percent advance the previous month. Imports All Imports: Import prices rose 0.6 percent in March and increased 1.9 percent over the first quarter of 2014. The advance from December 2013 to March 2014 was the largest 3-month rise since the index increased 2.5 percent between July and October 2012.
US Unemployment Insurance Weekly Claims Report
In the week ending April 5, the advance figure for seasonally adjusted initial claims was 300,000, a decrease of 32,000 from the previous week’s revised level. The last time intial claims were this low was May 12, 2007 when they were 297,000. The previous week’s level was revised up by 6,000 from 326,000 to 332,000. The 4-week moving average was 316,250, a decrease of 4,750 from the previous week’s revised average. The previous week’s average was revised up by 1,500 from 319,500 to 321,000. There were no special factors impacting this week’s initial claims. The advance seasonally adjusted insured unemployment rate was 2.1 percent.
Bank of England maintains Bank Rate at 0.5%
The Bank of England’s Monetary Policy Committee at its meeting on 9 April voted to maintain Bank Rate at 0.5%. The Committee also voted to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion. The Committee reached its decisions in the context of the monetary policy guidance announced alongside the publication of the August 2013 Inflation Report. The minutes of the meeting will be published at 9.30 a.m. on Wednesday 23 April. The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009.
Market overview at 10:00 PM UK time
The DJIA closed down 1.62%, the SPX down 2.09%, the NASDAQ closed down 3.10%. Euro STOXX closed down 0.94%, CAC down 0.66%, DAX down 0.55%, the UK FTSE 100 was up 0.10%.
The DJIA equity index future is down 1.41%, the SPX future is down 1.88%, the NASDAQ equity index future is down 2.91%. Euro STOXX is down 0.90%, DAX future is down 0.61%, CAC future is down 1.71% and the FTSE future is down 0.90%.
NYMEX WTI oil finished the day down 0.27% at $103.32 per barrel, NYMEX nat gas was up 0.96% at $4.63 per therm. COMEX gold was up 0.93% on the day at $1318.00 per ounce with silver on COMEX up 1.37% at $20.04 per ounce.
Forex focus
The yen advanced 0.6 percent to 101.43 per dollar after appreciating to 101.33, the strongest level since March 19th. Japan’s currency gained 0.3 percent to 140.84 per euro. The dollar fell 0.2 percent to $1.3886 after sliding to $1.3899, the weakest since March 19th.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major counterparts, fell 0.1 percent to 1,005.01 late afternoon in New York after touching 1,004.01, the lowest level since Oct. 30th.
The dollar fell to a five-month low against a basket of peers on speculation a drop in initial jobless claims won’t be enough for the Federal Reserve to accelerate plans to raise interest rates.
The Aussie advanced 0.3 percent to 94.15 U.S. cents after rising to 94.61 cents, the highest level since Nov. 8th. Australia’s dollar rose for a third day as the statistics bureau said employers added 18,100 jobs compared with the median forecast for 2,500 in a Bloomberg survey. The jobless rate fell to 5.8 percent, the lowest level since November and the first decline in six months.
Bonds briefing
The yield on the current 30-year note fell six basis points, or 0.06 percentage point, to 3.52 percent late afternoon New York time. Benchmark 10-year yields declined five basis points to 2.64 percent. The 2.75 percent note due in February 2024 rose 14/32, or $4.38 per $1,000 face amount, to 100 30/32. The yield reached the lowest level since March 14th. Treasuries rose as the U.S. sale of $13 billion in 30-year bonds drew higher-than-average demand a day after Federal Reserve minutes damped bets policy makers would accelerate interest-rate increases.
Fundamental policy decisions and high impact news events for April 11th
Friday sees Japan holding a meeting revealing its monetary policy minutes whilst China’s CPI is expected to print at 2.5% annually. Japan holds a thirty year bond auction. The USA PPI is predicted to come in at 0.1% month on month with core PPI at 0.2%. The preliminary university of Michigan reading is expected in at 81.2.
