July 9, 2013
Equities rose yesterday ahead of U.S. earnings season and after Portugal reached a deal to hold its ruling coalition together, with the S&P 500 climbing +0.53 as eight of ten sectors rose, led by utilities. Gold rose +1.88% while crude oil halted its advance, falling -0.17% to $103. The dollar index declined -0.32% while the euro rose +0.36%. Treasury yields fell moderately throughout the curve, with tens down -9.59bps to 2.643%.
Sentiment is higher across most global asset classes after Alcoa’s earnings report sparked a wave of risk asset purchases with most emerging market currencies outperforming, while the dollar, franc, and yen are selling. The euro is underperforming most of its peers despite Greece winning the release of €3B in aid on continued stringent terms. Equities are higher while most sovereign yields are falling and relative the German Bund most yield spreads are tightening. Chinese consumer and producer prices are weighing on aluminum and copper, while crude oil continues a second day of declines. U.S. treasuries resumed declines that pushed yields to the highest levels since Aug. 2010.
Today’s Economic Data Lineup (EST)
7:30am: NFIB Small Business Optimism, June, est. 94.6 (prior 94.4)
10:00am: JOLTs Job Openings, May, est. 3790k (prior 3757)
11:00am: Fed to purchase $2.75b-$3.5b notes in 8/15/2020 -5/15/2023 range
11:30am: U.S. to sell 4wk bills
1:00pm: U.S. to sell $32b 3Y notes
- NYSE Euronext will reportedly take over the running of LIBOR starting next year, according to the U.K. Treasury. More on Bloomberg’s website here.
- Egypt’s interim leader pushed ahead with a timeline for new elections as the fatal shooting of more than 50 Islamists by the army threatened to split the opposition coalition that led calls for Mohamed Mursi’s ouster
- Alcoa kicked-off earnings season in the U.S., beating analyst estimates following outperformance at its unit that supplies components to aerospace and power companies.
- European governments agreed to release €3B of aid for Greece, attempting to restore order in the markets to prevent another debt-crisis showdown until after German elections in Sept.
- Manufacturing in the U.K. unexpectedly shrank in May, with factory output falling -0.8% from April when it declined -0.2% amid a drop in pharmaceuticals and metals output. The median forecast of 25 economists surveyed by Bloomberg News called for a gain of +0.4%. Thanks to increases in oil and gas production, total industrial production was unchanged.
- A house-price gauge in the U.K. rose in June to 21, the highest level since Jan. 2010, from 5 in May as government measures help push property market demand to the highest in nearly four years.
- New Zealand business optimism neared a four-year high and consumer spending rose at nearly double the pace forecast by economists, adding to signs the central bank may be forced to raise rates sooner than it has signaled. 32% of firms surveyed last quarter expect the economy to improve over the second half of the year, the most since 2009. Spending on credit and debit cards increased +1.1% in June compared to the +0.6% increase predicted by economists.
- Consumer prices in China stayed subdued in June while a decline in factory-gate prices extended it longest streak in a decade, with CPI rising +2.7% YoY compared with the median estimate of +2.5% and a +2.1% gain in May. Producer prices fell -2.7% compared with estimates calling for -2.6%.
- China’s central bank is tightening rules on interbank bond market trading by ordering all transactions to be conducted through the National Interbank Funding Center as it seeks to boost transparency.
“I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”