Tag: Economic Reports

The first quarter of 2015 came to an end this week, with Europe and Asia equities up big, while the S&P500 underperformed and the DJIA posted a losing quarter for the first time in two years. There were some green shoots in European and Chinese data. China’s March PMI data showed manufacturing returned to expansion after two months of contraction, while Euro Zone manufacturing registered its 21st straight month of growth. But Friday’s US payrolls data disappointed, posting the worst gain in over a year, and sending treasury yields and the dollar lower. The Iran talks were extended past the Tuesday deadline, allowing negotiators to arrive at a preliminary agreement that hopes to curtail Tehran’s nuclear ambitions. For the week, the DJIA rose 0.3%, the S&P500 gained 0.3% and the Nasdaq slipped 0.1%.

Though most Western markets were closed for Good Friday, the US Labor Department remained open on the religious holiday and released a hair raising jobs report. March Nonfarm payrolls came in at a +126K versus the +245K estimate and February was revised down by over 30K, taking the Q1 average monthly gain down to +197K (vs. +324K in Q4). Similar to last year’s slow start, the weak numbers were largely blamed on poor weather conditions. In illiquid holiday trading, the dollar sank after the jobs reports. After remaining in a fairly tight range through early Friday, the greenback slid about 1% to one-week lows against other major currencies, rising to above 1.10 against the euro and dropping below 119 yen. The 10-year treasury yield approached a two month low around 1.82% after the payrolls number.

The Iran nuclear talks went into double overtime, with the P5+1 negotiators extending talks through Thursday after missing the deadline to reach a preliminary deal on Tuesday. The additional 48 hours of talks yielded a framework agreement that, if fully implemented, will curtail Iran’s nuclear activities for up to 25 years. In the draft document, Iran agreed to remove or dilute 95% of its enriched uranium stockpiles, and to confine its centrifuge operations to one location, moves that purportedly would extend Iran’s “break out” period for developing a nuclear weapon to more than 12 months. In return, the EU and US agreed to lift all financial and economic sanctions once IAEA inspectors confirm Iran’s compliance. The preliminary deal starts the clock on a more detailed final round of talks with a June 30th deadline.

Elsewhere in the tumultuous Middle East, the Saudi-led coalition continued bombing Yemen even as Houthi rebels consolidated their grasp on most of the country and began taking the key port city of Aden, the last big holdout of government forces. Saudi ground forces gathered on the Yemen border have not entered the country yet.

Continue reading “Futures Trading Levels & Economic Reports 4.07.2015”

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”