USA indices defy some poor data prints to finish up during Thursday’s sessions

Feb 21 • Morning Roll Call • 3563 Views • 1 Comment on USA indices defy some poor data prints to finish up during Thursday’s sessions

shutterstock_52634731The weekly unemployment claims in the USA were released on Thursday and came in at 336K, once again stubbornly trapped in the range that is quite a permanent feature of the weekly high impact news events. One area where the employment numbers may be helped in the USA is in the manufacturing sector which according to Markit Economics’ latest PMI data print rose to 56.7, up from 53.7, the best print since May 2010.

The Conference Board LEI was less optimistic but still showed a 0.3% increase in January. Whereas the Philly Fed print came in very poor but at -6.3 it’s an improvement on the print this time last year of over -12, with both prints the direct result of very poor weather conditions in the USA.

Natural-gas futures fall further after EIA data

Natural-gas futures on Thursday fell further after the U.S. Energy Information Administration reported that supplies of natural gas dropped 250 billion cubic feet for the week ended Feb. 14. The drop was within market expectations as analysts surveyed by Platts forecast a decline of between 248 billion cubic feet and 252 billion cubic feet. Total stocks now stand at 1.443 trillion cubic feet, down 975 billion cubic feet from a year ago and 741 billion cubic feet below the five-year average, the government said. March natural gas (NMN:NGH14) was at $5.93 per million British thermal units, down 22 cents, or 3.5%. It was trading at $6.09 before.

Philadelphia Fed Survey Says Severe Winter Weather Contributes To Weak Business Activity

Manufacturing activity was reduced in February, according to firms responding to this month’s Business Outlook Survey. The survey’s broadest indicators for general activity, new orders, and shipments suggest moderate declines this month, but comments suggested that much of the weakness was attributable to the severe winter weather that affected the region during the survey period. Firms continued to add to their payrolls, but average work hours fell. Despite the weakness in current indicators, many of the survey’s indicators of future activity improved this month, reflecting optimism about continued growth over the next six months.

Flash consumer confidence indicator for EU and euro area

In February 2014, the DG ECFIN flash estimate 1 of the consumer confidence indicator 2 decreased in the euro area (-12.7 after -11.7 in January 2014) and, to a lesser extent, in the EU (-9.3 after -8.8 in January 2014.

The Conference Board Leading Economic Index for the U.S

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.3 percent in January to 99.5 (2004 = 100), following no change in December, and a 0.9 percent increase in November. “The U.S. Leading Economic Index continues to fluctuate on a monthly basis, but the six-month average growth rate has been relatively stable in recent months, which suggests that the economy will remain resilient in the first half of 2014 and underlying economic conditions should continue to improve,” said Ataman Ozyildirim, Economist at The Conference Board.

U.S. manufacturing sector performance rebounds strongly in February

February data suggested a solid rebound in U.S. manufacturing business conditions following the slowdown recorded during the previous month. This was highlighted by a rise in the Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) 1, which is based on approximately 85% of usual monthly replies, from 53.7 in January to 56.7 in February. The latest reading pointed to the fastest overall improvement in U.S. manufacturing business conditions since May 2010. The upturn in the headline U.S. Manufacturing PMI was driven by sharp and accelerated increases in both production levels and incoming new work during February.

US Unemployment Insurance Weekly Claims Report

In the week ending February 15, the advance figure for seasonally adjusted initial claims was 336,000, a decrease of 3,000 from the previous week’s unrevised figure of 339,000. The 4-week moving average was 338,500, an increase of 1,750 from the previous week’s unrevised average of 336,750. The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending February 8, an increase of 0.1 percentage point from the prior week’s revised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 8 was 2,981,000, an increase of 37,000 from the preceding week’s revised level.

Market overview at 10:30 PM UK time February 20th

The DJIA closed up 0.58%, the SPX up 0.60%, NASDAQ up 0.70%. Euro STOXX up 0.03%, CAC up 0.33%, DAX down 0.43% and the FTSE up 0.24%. Looking towards the equity index futures the DJIA is up 0.52%, SPX up 0.59%, NASDAQ up 0.47%. Euro STOXX future is down 0.10%, DAX future down 0.52%, CAC future is up 0.36%, FTSE future up 0.11%.

NYMEX WTI oil closed down 0.38% at $102.92 per barrel. NYMEX nat gas down 2.29% at 6.01 per therm. COMEX gold finished the day up 0.20% at $1323.10 per ounce, with silver at $21.82 down 0.11%.

Forex focus

The yen was little changed at 102.35 per dollar after rising 0.1 percent yesterday. Japan’s currency climbed 0.1 percent to 140.42 per euro after depreciating to 141.03 on Feb. 18th, the weakest level since Jan. 29. The euro dropped 0.1 percent to $1.3720. The dollar rose to a one-week high as traders looked past weaker-than-forecast U.S. economic reports that may have been distorted by winter storms. The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 of its major counterparts, advanced 0.1 percent to 1,020.60 late in New York, after reaching 1,021.98, the highest level since Feb. 13th.

The yen has rallied 3.6 percent this year, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 0.3 percent, while the euro added 0.1 percent.

The pound traded at $1.6658 after declining as much as 0.3 percent to $1.6636. The U.K. currency was at 82.27 pence per euro from 82.34 pence yesterday. U.K. government bonds declined, with two-year gilts falling for the first time in six days, as Bank of England policy maker Martin Weale said interest rates may rise as soon as early 2015.

Bonds briefing

The UK two-year debt yield climbed three basis points, or 0.03 percentage point, to 0.52 percent late afternoon London time. The rate dropped six basis points in the previous five days. The 4.75 percent gilt due in September 2015 fell 0.065, or 65 pence per 1,000-pound face amount, to 106.48. Ten-year yields jumped seven basis points to 2.80 percent, the biggest increase since Feb. 12th. The U.K. debt office allotted the benchmark securities at an average yield of 2.73 percent, compared with 2.87 percent at a previous sale on Jan. 23rd.

The five-year USA yield increased three basis points, or 0.03 percentage point, to 1.54 percent late afternoon New York time. It reached 1.56 percent, the highest level in a week. The price of the 1.5 percent security maturing in January 2019 fell 1/8, or $1.25 per $1,000 face amount, to 99 26/32. Ten-year (USGG10YR) note yields rose one basis point to 2.75 percent.

Fundamental policy events and high impact news events for February 21st

Friday will see the beginning of the G20 meeting, whilst in the UK retail sales are predicted to have fallen by -0.9% in January. Public net sector borrowing in the UK is predicted to have fallen to -£9.3 bn. From Canada we receive core inflation data expected in at 0.1% with retail sales up 0.2%. Existing home sales in the USA are expected to come in at an annual rate of 4.73 million. The FOMC member Fisher will speak whilst the G20 meetings will continue over the weekend.

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