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U.S. Market Update Dow +53 NASDAQ +1 S&P +4.6
- Equity markets are making a little headway in second session of the year. Strong earnings from Monsanto +6% helped shares of SYT +6% move higher in sympathy. Shares of State Street +7% are experiencing a relief rally after providing guidance ahead of the open. Large cap consumer stocks are faring well as KO MO MCD and PG are some of the best performing names in the Dow. Several of the top pharmacies reported Dec SSS results that were lackluster. WAG -5% CVS -6. 6% RAD -10% The auto stocks are ticking lower ahead of Dec vehicle sales data. GM -3% F -1.5% DAI -2% Semis are holding back the NASDAQ for the second straight session. SMH -1.6% Treasury futures were trading higher ahead of the NY open with continued safe haven demand in the shorter maturities. A better than expected ADP jobs reading sparked a reversal in the bond market pushing the long bond future down more than a half a point. Twos and Fives continue to hold up better than tens and thirties pushing the 2-10 year spread back out to 110 basis points. Energy futures are modestly lower following weekly inventory data while gold has added another $5 in the Feb contract to trade at $865, after ticking above $870 in the overnight session.
- The USD rebounded from its weakness experienced in European trading in a volatile, choppy session. Risk aversion theme was prevalent prior to the US open with JPY and CHF buying and flows into the short end of the gov't yield curve. The release of the BOE Credit Condition Survey aided in the session capitulation. The BOE noted that corporate credit availability was reduced significantly during Q4. Gold tested fresh all-time highs above the $868 level with Oil hovered just under the $100 level. The release of the ADP employment report helped to support the equity markets and the USD. Ahead of Friday's release of the US non-farm payrolls. Also capping the USD losses were comments from German wholesaler BGA who noted that it saw 'grave risks' from oil prices and strong Euro. JP Morgan revised its BOE interest rate forecast lower to 4.75% by end Q2. The UAE central bank stated that it will maintain USD peg after a review. The UAE noted that the Euro's strength has hindered growth in Euro reserves and that inflation does not lie under a peg. Dealers were noted that the Asset-Backed Commercial Paper Outstanding rose by $26.3B w/w to $773.8B, its first increase in 21 weeks. Some EUR/USD technical resistance is seen at the 1.4850 area (its former post sub-prime uptrend line). Support is seen at 1.4590 approach.
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