Category: Future Trading News

The ECB officially kicked off its QE purchases on Monday, driving the euro toward parity with the dollar and inspiring wild action in European sovereign bond yields. US equities slipped lower as continental European indices headed higher, implying a continuing rotation into European stocks. The dollar index continued to test 12-year highs, and crude prices fell under the foot of the strong dollar (plus more worries about inventories). China published jumbled economic data, distorted by the Lunar New Year holiday: a record trade surplus was undercut by imports showing their worst decline in six years, while PPI continued to contract even as CPI was hotter than expected. With Europe easing and the US on the verge of rate lift off, the Bank of Korea was the latest of nearly two dozen central banks to add to policy accommodation in recent months, surprising the markets with its first rate cut in five months, setting policy at a record low of 1.75%. The German DAX and French CAC notched fresh record highs, while US stocks were volatile and gave up ground. For the week, the Nasdaq dropped 1.1%, the DJIA lost 0.6%, and the S&P500 fell 0.9%.

There were some big misses in US January and February sales data out this week. Jan wholesale trade sales contracted more than 3%, far more than expected, for the biggest drop since early 2009. Feb retail sales declined 0.6%, missing expectations for a slight gain, auto sales declined 2.5%, ex autos and gas sales fell by 0.2%. Broad-based declines were seen across all categories in the reports, lending credence to analysts blaming the brutal winter weather. PPI data continued to drag, with another negative reading that could be a cautionary counterpoint to the higher than expected core CPI reading in February. Meanwhile the January JOLTS job openings report – Fed Chair Yellen’s favorite gauge of employment demand – were not far off the 14-year highs seen in January.

The ECB bought €9.8 billion of bonds with an average maturity of nine years in the first three days of its new QE program. Recall that the ECB said it would buy a total of €60 billion a month in government and private debt through to September 2016. EUR/USD dropped from 1.0850 on Monday to fresh 12-year lows below 1.0500 on Friday, inspiring tons of analyst commentary that dollar parity was inevitable in 2015. With the start of QE, yields on sovereign debt fell dramatically, with the German 10-year bund testing record lows around 0.187% even as German 2-year and 5-year yields sank deeper into negative territory. There was talk that the ECB bought 5-year German debt at negative rates, although keep in mind that the bank said it would only buy sovereign debt down to a -0.20% negative rate.

Continue reading “Economic Reports & Futures Levels 3.17.2015”