The MorningSnapshot- 07/26

The MorningSnapshot
July 26, 2012

Morning Commentary
Sentiment turned around this morning and U.S. equity futures reversed earlier losses after ECB President Mario Draghi said policy makers will do everything in their power to ensure the survival of the euro. Globally equity indices are trading higher, with S&P 500 futures up +1.38%, the Euro Stoxx 50 up 3.03%, and Asian markets also showed strength. The dollar is taking a beating versus the majority of its major peers. In Europe, sovereign debt spreads to German Bunds have tightened significantly, and the Spanish 10yr is back below 7% (see chart on attachment) and its spread to bunds is back under 600bps.  Commodities are mostly higher, with energy leading the way; Brent Crude is up +1.4%.

Today’s Economic Data Lineup (EST)
8:30 am: Durable Goods Orders, June, est. 0.3% (prior 1.3%)
8:30 am: Durables Ex Transportation, June, est. 0.1% (prior 0.7%)
8:30 am: Initial Jobless Claims, July 21, est. 380k (prior 386k)
8:30 am: Continuing Claims, July 14, est. 3.3m (prior 3.314m)
9:45 am: Bloomberg Consumer Comfort, July 22 (prior -37.9)
10:00 am: Pending Home Sales M/m, June, est. 0.3% (prior 5.9%)
10:00 am: Pending Home Sales Y/y, June, est. 12.1% (prior 15.3% )
11:00 am: Kansas City Fed Manf. Activity, July, est. 4 (prior 3)
11:00 am: U.S. to purchase $1.5-$2b notes due 2/15/36-5/15/42
1:00 pm: U.S. to sell $29b 7-yr notes

North America

  • Applications for jobless benefits decreased by 35K for the week ended July 21 to 353K versus the median forecast calling for 380K claims. “All in all, the labor market is gradually healing,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “We’ve got to take this report with a grain of salt. The jobs market is still tough and we’re setting ourselves up for a soft second half of the year.”
  • Orders to U.S. durable goods climbed higher than anticipated in June as a surge in demand for aircraft and military hardware overshadowed a slump in business equipment spending.

Europe

  • ECB President Mario Draghi says policy makers will do whatever necessary to preserve the euro, suggesting they could intervene in the bond markets as Spanish and Italian borrowing costs surge to levels considered unsustainable. “To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate,” Draghi said in a speech at the Global Investment Conference in London today. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” he said, adding: “believe me, it will be enough.”

Asia

  • The Philippines cut rates unexpectedly today, reducing the rate it pays lenders for overnight deposits to a record-low of 3.75% from 4%, a decision only four of 16 economists had forecast.
  • South Korea reported the slowest economic growth in almost three years and Europe’s debt crisis weighs on exports. GDP expanded +2.4% in the three months ending in June from a year earlier

“Every time you stay out late; every time you sleep in; every time you miss a workout; every time you don’t give 100%… you make it that much easier for me to beat you.”
Unknown
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Taylor Anderson
Business Analyst
Clearing House

T 312 634 8902
F 312 930 3187
C 312 618 8339

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