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Forex Blog - US Market Update (TTN)
US Market Update
Dow -15 S&P -3.5 NASDAQ -2.7
- (IR) Ireland Sept CPI EU Harmonized M/M: -0.2% v 0.2% prior; Y/Y: -1.0% v -1.2% prior
- (BR) Brazil Aug Retail Sales M/M: 2.0% v 1.6%e; Y/Y: 10.4% v 10.0%e%e
- (CA) Canada Aug Int'l Merchandise Trade: -C$1.3B v -C$2.3Be
- (US) Aug Trade Balance: -$46.3B v -$44.0Be
- (US) Sept Producer Price Index M/M: 0.4% v 0.1%e; Ex Food & Energy M/M: 0.1% v 0.1%e
- (US) Initial Jobless Claims: 462K v 445Ke; Continuing Claims: 4.40M v 4.45Me
- (US) Weekly EIA Natural gas Inventories: + bcf vs. +85 to +95 bcf estimate range
- (US) Weekly DOE Energy inventories: Crude: -420K v +1.5Me; Gasoline: -1.77M v -1.3Me; Distillate: -255K v -1.5Me; Utilization: 81.9% v 83.1%E
- With the data looking fairly grim, QE2 expectations continue to overwhelm other considerations this morning as US equity indices recover from early softness. The tenuous improvement in US weekly unemployment numbers seen last month evaporated with this morning's claims data. The downdraft in late September doesn't appear to have had any more staying power than the uptick in August. The trade deficit widened more than anticipated in August, driven by all-time highs in the trade deficit with China. Monthly data from RealtyTrac showed that the number of homes taken over by banks topped 100K for the first time in September (although foreclosures are expected to slow in coming months as lenders work through questionable mortgage paperwork). The full impact of an investigation by all 50 state AGs into bank foreclosure processes is making itself felt on individual names, as credit default swaps on US financial stocks moved higher this morning and banks shares declined, with BAC down around 4% and other major banks in the red. Front-month crude is testing last week's highs, popping momentarily above $84 before trading off. At its October meeting, OPEC held output levels steady and also scheduled an extraordinary meeting for Dec 11th (note that OPEC has held quotas at 24.842M bpd since Dec 2008). Gold is slightly off its latest all-time high, trading around $1,377. Treasury prices are slipping marginally ahead of today's 30-year reopening with the 10-year yield backing up 3 basis points to 2.45%. The long bond is outperforming the rest of the curve after the 10-30-year spread reached the widest levels on record yesterday at 140 basis points.
- In earnings, industrial supplies distributor WW Grainger came in well ahead of analysts' expectations in its Q3 report, although revenue was merely in line. The firm also hiked its 2010 outlook, but warned that Q4 revenue results would be not so good, given tough comps, end of the Gulf clean-up and higher customer inventories. GWW fell as much as 3%. Private education name Apollo Group beat profit estimates slightly, but missed on the top line and withdrew its FY11 guidance. More importantly, Apollo warned that enrollment would fall off much further in early 2011 thanks to the impact of government scrutiny of the sector. APOL is down a whopping 25%, while the rest of its for-pay education competitors are down 15-20%. Safeway was right in line with the Street in its Q3, and executives noted that its pricing environment has been very favorable - a marked change from the deflation it cited as a problem back in July. SWY rose as much as 4%, but is well off its best levels.
- Currency trading has been wholly focused on the possibility that China will soon allow the CNY to appreciate at a faster clip. After Singapore announced overnight that it would widen the SGD trading band (sending SGD to highs not seen since the 1980s), dealers pondered whether the trend in other Asian currencies would accelerate the Chinese timetable to make the CNY more flexible, given that when a currency is pegged to the dollar, the arrangement makes the Fed the related country's de facto central bank. With pegged currencies, the concern would be that as many Asian economies are performing well economically, the last thing they would need or want is more monetary stimulus.
- The greenback has moved off its worst level as the debate over the size of QE2 intensifies. Overall dealers have jokingly suggested that central bankers may need to broaden their strategies from weakening their own currencies to strengthen the currencies of their competitors, moving from defense to offence in the evolving currency war. EUR/USD is around 1.4070, USD/JPY is back above the 81 handle and USD/CHF is at 0.9535, nearly 50 pips off recent all-time lows.
- 12:00 (TU) Turkey Central Bank Benchmark Interest Rate Decision: Consensus expectations to leave the Benchmark rate unchanged at 7.00%
- 13:00 (US) Treasury to sell 30-Year Bonds Reopening
- 13:00 (EU) EU's Barroso Speaks at Friends of Europe Dinner
- 17:00 (US) Fed's Kocherlakota Speaks in Bloomington, Minnesota
- 17:00 (CL) Chile Central Bank Nominal Overnight Rate Target decision: Expected to raise rates by 25bps to 2.75% from the current 2.50% level
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