PFS News

The Federal Reserve likely to keep rates unchanged.

gerryjm — Tue, 15 Dec 2009 09:11:55 +0000

In the US, The Federal Reserve starts a two-day meeting on Tuesday and is likely to keep rates unchanged near zero. However the key factor will be whether the Fed will reiterate its dovish bias.

The central bank’s policy-setting meeting today and tomorrow will mark a year since the Fed cut benchmark interest rates to near zero. A year on the economic picture has vastly improved and the recovery is gaining strength, no doubt bringing closer the day the Fed starts to inch away from its supportive policies.

Policy-makers, however, have continued to point to still strained credit markets and high unemployment as reasons the economy will crawl rather than bounce back to health.

The UK market and the European markets have opened in positive territory up flat. US futures markets are pointing to a flat start to trading with the Dow opening up 7 points.

Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street

Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.

Please note this report provides a guide to some of the relevant areas that individual investors should consider discussing with an authorised adviser in relation to their specific circumstances, it does not constitute individual advice. As a result no action should be taken or refrained from being taken as a result of its content.

Top credit ratings of U.S. and Britain not under threat of a downgrade.

gerryjm — Mon, 14 Dec 2009 12:00:05 +0000

Moody’s said the top credit ratings for the U.S. and Britain are not under threat of a downgrade at the moment, though a worst-case scenario could see a cut by 2013. Moody’s classifies the U.S. and the U.K. as “resilient” rather than “resistant.”

This week in the UK, we have CPI data on Tuesday, which is forecast to be 0.2% MoM and 1.8% YoY. Also on Tuesday, of importance is the German Zew Report. UK RPI data is released as well. Wednesday is data regarding the unemployment rate is released and European CPI data. Thursday is retail sales, and Friday is Public finance and M4 money supply data.

In the coming week, the Fed holds its final meeting of the year, and inflation data, industrial production, jobless claims and housing reports will dominate the economic news. They also expect the coming week will see even fewer players participating in the markets ahead of year end.

The dollar rose on the week, with the dollar index finishing 0.8% higher at 76.53. The S&P 500 is just 4 points from its year closing high of 1110, set on Nov. 25. The Dow is within a fraction of a point from its 2009 high, set on December 1st.

The euro lost 0.7% against the dollar in the past week and weakened to $1.4623 per euro. At the same time, many commodities fell. Oil was 7.4% lower at $69.87 per barrel, and gold dipped 4.2% to $1,119.90 per troy ounce.

The UK market and the European markets have opened in positive territory up around 1%. US futures markets are pointing to a positive start to trading with the Dow opening up 68 points.

Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street

Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.

The Bank of England held rates at 0.5%.

gerryjm — Fri, 11 Dec 2009 09:27:18 +0000

The Bank of England left its asset purchase program intact at 200 billion pounds and held interest rates at 0.5% on Thursday, as widely expected. Policymakers indicated they are likely to stay on hold until at least February when they will get their new growth and inflation forecasts and the scheduled asset purchases run out. It could be a while before policymakers feel confident enough about growth to start raising interest rates.

The economy is now showing signs of picking up again, house prices are rising and forward-looking surveys point to an ongoing recovery in activity, suggesting Britain will pull out of recession by the end of the year.

China has shown further signs of economic recovery with its industrial output surging and its export slump easing. Consumer prices also grew year-on-year in November for the first time in 10 months. The index rise of 0.6% beat expert expectations of rise of 0.4%. Industrial output rose to its strongest position since June 2007. November’s year-on-year fall in exports of 1.2% was the slowest of 2009, although growth had been expected. Imports rose 26.7% in November from a year earlier.

The trade surplus narrowed to $19.9bn in November compared to $24bn in October. The latest figures generally exceeded the expectations of economists who thought output would rise by 18%. Instead it rose by 19.2% in November compared to 16.1% in October. The National Bureau of Statistics (NBS) said that retail sales were up 15.8% in November compared to the same time last year.

The UK market and the European markets have opened in positive territory. US futures markets are pointing to a positive start to trading with the Dow opening up 46 points.

Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street

Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.

Bank of England likely to hold interest rates today.

gerryjm — Thu, 10 Dec 2009 09:08:42 +0000

The Bank of England is expected to announce no change in policy when it reveals the outcome of its most recent meeting later. The Bank is likely to hold interest rates at 0.5% and leave its £200bn asset purchase programme unchanged.

Last month, the central bank said that the fragile economy and the risk of inflation falling below its target of 2% had led it to extend its quantitative easing scheme, which runs out in January.

Yesterday, Chancellor Alistair Darling said the economy would shrink by 4.75% this year and that consumer inflation would rise from 1.5% to about 3% early next year before falling back.

In the US today’s data includes closely watched weekly jobless claims and international trade; both at 1.30pm Treasury Secretary Tim Geithner talks TARP at a Congressional Oversight Panel hearing at 3pm.

The UK market and the European markets are currently flat. US futures markets are pointing to a slightly negative start to trading with the Dow opening down 15 points.

Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street

Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.

The downgrade of Greece’s credit rating gave pause to the “risk trade”

gerryjm — Wed, 09 Dec 2009 09:58:15 +0000

The downgrade of Greece’s credit rating gave pause to the “risk trade” and could send even more buyers into the relative safety of Treasurys through year end.

The dollar strengthened, bonds moved higher and the stock market sold off yesterday as investors fretted about the strength of the global recovery and concerns that Greece’s fiscal problems are the precursor for other global trouble spots.

The Obama administration plans to announce today that it intends to extend the life of the $700 financial bailout fund until next October, administration officials said yesterday. An administration official told CNBC that it will dedicate $175 billion of TARP money to deficit reduction. The amount represents the total the Treasury expects to be repaid by banks through 2010. The move will leave $140 billion of uncommitted Tarp funds unused, allowing Congress to allocate as it sees fit,presumably for jobs programs.

Today in the UK, the pre- budget report will be delivered by the chancellor at 12.30pm.

The UK market and the European markets are currently flat. US futures markets are pointing to a slightly positive start to trading with the Dow opening up 25 points.

Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street

Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.

Safe-haven stock plays, flavour of the day Monday.

gerryjm — Tue, 08 Dec 2009 09:26:37 +0000

Safe-haven stock plays, like the high-yielding utilities and telecoms, were the flavour of the day Monday, while investors pulled back from financials and tech stocks.

Bernanke helped cool things down temporarily, saying it’s still too soon to tell if the recovery will last. “We still have some way to go before we can be assured that the recovery will be self-sustaining,” Bernanke said in prepared remarks to the Economic Club of Washington.

Today in the UK of note is industrial output data and manufacturing production data, and later this evening Nationwide consumer confidence for November. Tomorrow is the pre budge report, and the Chancellor has warned of tough times ahead, saying: “On Wednesday I will set out what I think we need to do. That will involve some very difficult choices. It will mean making public spending much tighter.”

The UK market and the European markets are currently down about 0.2%. US futures markets are pointing to a slightly negative start to trading with the Dow opening down 7 points.

Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street

Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.

In the week ahead, markets will be tested.

gerryjm — Mon, 07 Dec 2009 09:17:23 +0000

In the week ahead, markets will be tested by a fresh batch of economic news and will be dominated by the debate over whether the dollar’s behaviour signals the beginning of a turn for the greenback.

In the UK, on Tuesday we have industrial production data, as well as manufacturing data being released and details on German industrial production. Also released is Nationwide Consumer confidence data. On Wednesday we have the NIESR GDP Estimates for November and the Pre-Budget Report, and details of the visible trade balance. On Thursday, it is the Bank of England rate decision, and details of the asset purchase target. On Friday it is PPI Output data.

In the US, the data calendar is heaviest at the end of the coming week. Today is consumer credit; Tuesday has the NFIB small business survey, and Wednesday is wholesale trade. On Thursday, weekly jobless claims are released, as is international trade and the federal budget. Retail sales for November, import prices, consumer sentiment and business inventories are reported Friday.

The UK market and the European markets have opened down about 0.7%. US futures markets are pointing to a slightly negative start to trading with the Dow opening down 26 points.

Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.

Traders say it was jitters about November employment report that took stocks low.

gerryjm — Fri, 04 Dec 2009 09:24:14 +0000

In the United States yesterday traders say it was jitters about the November employment report that took stocks lower into the close even though they had mostly traded quietly throughout the day. A relative bright spot Thursday was the weekly jobless claims number, which fell to the lowest level since September, 2008.

The number declined to 457,000, its fifth consecutive weekly drop.

However the report was eclipsed by the ISM report, which raised concerns about service sector jobs. BNP Paribas cut its jobs forecast as a result of that report, and now expects a decline of 160,000 non farm payrolls in the November report.

Today economists expect November’s decline in non farm payrolls to come in at about 125,000, and unemployment is expected to hold steady at 10.2%. The jobs report is released at 1:30pm. October factory orders are reported at 3pm.

A news wire story reporting rumours that Japan was considering the sale of a big chunk of Treasury bonds got trading desks buzzing but many dismissed it. They pointed to a rival story that speculated Japan was considering intervention to stop the yen’s rise against the dollar, a move that would make more sense and contradicted the first rumour.

The UK market and the European markets have opened down about 0.3%. US futures markets are pointing to a slightly positive start to the markets with the Dow opening up around 15 points.

Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street

Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.

ECB meets today with no change in rates expected.

gerryjm — Thu, 03 Dec 2009 09:26:03 +0000

The ECB meets today with a press conference afterwards. With no change in rates from 1% expected, the mainfocus will be on the 1-year operation, which will be allotted on 16 December.

The European Central Bank may announce plans to scale back its emergency lending while keeping interest rates at a record low to foster an economic recovery.

In the US, traders will have their eyes on the nation’s retailers as they report their November same-store sales numbers. Another major corporate story, traders will be watching is the Bank of America news from late Wednesday that it will be repaying the $45 billion in TARP money after it completes a securities offering.

Also Bernanke goes before the Senate Banking committee at 3pm as part of the confirmation process for his second term. Bernanke is expected to be taken to task by Congress, which has been angling to curb some of the Federal Reserve’s powers.

The UK market and the European markets have opened up around 0.5% to 0.75%. U.S futures markets are pointing to a positive start to the markets with the Dow opening up around 45 points.

Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street

Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.

UAE backs the region

gerryjm — Tue, 01 Dec 2009 09:04:36 +0000

Investor’s were not overly convinced yesterday by the UAE assurances that it would “stand behind” the regions debt. However, the announcement overnight that Dubai World is looking to restructure just over half $26bn of its outstanding debt has garnered more support. This has helped fuel a further rally in Asian markets but only with the support of the emergency meeting of the BOJ and the strength of Australia’s economy being highlighted as the central bank raised rates again.

The emergency meeting of the BOJ has increased speculation that they will be putting a cap on further yen appreciation. Thus, the spectre of intervention has increased. Initially reaction by the currency market is to back away from provoking the central bank any further. Japan over the years has become very adapt at intervention and currently from a technical perspective intervening in the short term is likely to see a significant move in the currency as momentum levels already support such action. Longer-term though the success of intervention is more mixed and it is unlikely that even persistence central bank intervention will change the fundamental trend of the market.

Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.