06 března 2009

6/3 US Employment Report Commentary

The US Change in Nonfarm Payrolls came out almost exactly in line with Bloomberg expectations at -651k vs. -650k expected, but the previous month's number was actually revised down to -655k from the original -598k reported. That made the January number the worst in 60 years.
Of perhaps more concern was the alarming acceleration in the jobless rate to 8.1% from 7.6% in January. This saw the jobless rate springing above the previous 7.8% high from 1992 and therefore posting a level not seen since 1983. The rate at which Americans are losing their jobs is also of concern, as the 6-month and 12-month accelerations in joblessness are the steepest since the mid-1970's.

Looking at the market reactions, it seems markets are almost immune to the bad US jobs numbers when they are released, as they are largely priced in before the event due to plenty of warning signs already in the pipeline, like the weekly initial jobless claims and the ADP numbers. US S&P futures traded up about a percent about 15 minutes after the release. Previously, the USD seemed to thrive on bad news on safe haven trading, but the initial USD weakening after the release of the figure could be suggesting a change in this pattern.

6/3 What's going on the capital markets today?

Stocks continuing the sell-off, generally down 4%. It more and more looks like October-November. S&P500 closed at 682.55. We are maintaining that 500 will be tested. Our CDS price index is edging higher. Now at 121 bps. GE CDS at 1037 bps.

50 bps. cut from both ECB (to 1.5%) and BoE (to 0.50%). BoE now starting Quantitative Easing, wants to purchase £75B worth of Gilts and private sector securities. UK Break-Even Inflation rates actually dropping on the announcement. Gilts rising 2.35%. EURGBP stable. Weird stuff…

Of all outstanding US mortgages, 7.88% are now delinquent, yesterday’s figures showed. That is extremely worrying.

6/3 What's going on the capital markets today?

Stocks continuing the sell-off, generally down 4%. It more and more looks like October-November. S&P500 closed at 682.55. We are maintaining that 500 will be tested. Our CDS price index is edging higher. Now at 121 bps. GE CDS at 1037 bps.

50 bps. cut from both ECB (to 1.5%) and BoE (to 0.50%). BoE now starting Quantitative Easing, wants to purchase £75B worth of Gilts and private sector securities. UK Break-Even Inflation rates actually dropping on the announcement. Gilts rising 2.35%. EURGBP stable. Weird stuff…

Of all outstanding US mortgages, 7.88% are now delinquent, yesterday’s figures showed. That is extremely worrying.

05 března 2009

5/3 Bank of England cuts interest rates

The Bank of England cut 50 bps from already historically low rates of 1.00% to bring the central bank's rate to 0.50%. This move was widely expected. Of more interest were the announcements related to the bank's inexorable move toward "nontraditional" monetary policy in the form of quantitative easing: the outright purchase of assets aimed at easing credit markets. Today the bank declared that it would buy 75 billion pounds of assets over the next three months using its already announced asset purchase facility.

Concerning the mix of assets to be purchased, the bank said it would purchase mostly medium and long-term gilts, but also some private assets. The pound was relatively stable after the announced measures, as they were largely expected. Still, the most interesting aspect of this is the announcement that the BoE will be purchasing government debt, as this represents outright debt monetization, which can be considered one of the most desperate forms of money printing by a central bank. Not even the US Fed has taken this step yet, though it has declared that it is considering the effects of doing so.

5/3 Could the China stimulus package only last 24 hours?

China to the rescue! Hopefully. And that’s all it appears to be at the moment, HOPE. Talk that China would add another $586 bln to its stimulus plans was the main driver of activity and direction in FX markets overnight, with risk appetite staging a comeback on hopes that it will help drive demand both internally and hence in the global economy. As yet there has been no official confirmation or announcement that such a plan exists as the Chinese legislature sits for its annual session, with Premier Wen Jiabao making no mention in his speech to the annual Party congress. That may become a bit of a worry later on if nothing definitive is forthcoming and force a reversal out of the “risk trades”. Indeed, the early signs of such an outcome were evident late in the Asian session.

During his report to the annual congress, Premier Wen admitted that the country is facing unprecedented difficulties and challenges with the economic slowdown becoming a major problem. However, he reaffirmed the 2009 growth target of 8% (worth noting that in China circles the number 8 is regarded as an auspicious number). The Finance Minister announced that, amid declining government revenues and increased government spending, the 2009 total national budget deficit is projected to be 950 bln Yuan (less than 3% of GDP), which will be offset by bond issues. This compares with a deficit of 180 bln Yuan in 2008.

While talking about kick-starting economies, the European stage features central bank meetings in the UK and EU with both expected to announce 50bp rate cuts. The BOE looks certain to reveal some quantitative easing, having laid the ground work earlier, though the exact nature and extent of the policy implementation is still a bit vague.
Full details are expected to be released along with the publication of correspondence between UK Chancellor Darling and BOE Gov King. The ECB on the other hand appears to be far away from this kind of approach, still sticking with “straight-forward” rate cuts (granted they have a lot more leeway than other central banks given their delay and reticence in cutting earlier. The post-meeting press conference will either confirm or dash hopes for further easing at the May meeting and may contain reference to thoughts on “non-conventional” policy measures.

The run in to Friday's US non-farm payrolls continues with the relase of the weekly jobless claims data. Following on from yesterday's ADP employment report, which recorded its worst reading of the current cycle, market projections are for a marginally lower figure from last week's 667k. Median forecasts are for 650k but a higher number may already be discounted in the current environment. However, the return of risk appetite that featured yesterday may have been built on a fragile base and risks a sharp reversal into the end of the week.

5/3 Gold increases

Gold increased from the low in more than a month as investors deemed an eight-day plunge in prices as too excessive. As Crude oil gained to trade above $45 a barrel helped supporting the metals gain as a typical inflation hedge tool. Gold reached a low of $900 level yesterday.

Gold is currently testing the $880 to $910 support level.

Support: 910 890 880
Resistance: 925 930 940

5/3 Crude on the up

Crude oil traded up gaining more than 9% from yesterday keeping above $45 a barrel and testing the resistance level at $45.70. Main news was the China’s signaling their continued investments into boosting growth. Furthermore Inventories report showed a decrease in inventories which were unexpected.

The contango narrowed as oil for delivery in May is more than $1 dollar a barrel higher than for Front month (April). The difference has narrowed from $2.83 Feb 23.

Support: 44.20 42.58 41.84
Resistance: 45.70 47.17 48.00

04 března 2009

4/3 Novinky z kapitálových trhov

Zlato: XAUUSD sa posledné dni dostalo pod výrazný predajný tlak a včera testovalo hranicu 905. Dnes mierne koriguje smerom k 915. HLavným dôvodom poklesu je posilňujúci USD a hlavne masívne "dlhé" pozície na zlate vo Futures a ETF kontraktoch, ktoré sú investori nútení zatvárať s klesajúcou cenou zlata. Dôležité supporty okolo 905; 896 a 886. Rezistencie 922; 930.

CEE meny: Ceská koruna na rozdiel od svojich susedov mierne posilnila a dostala sa pod úroveň 27,800. EURPLN sa hýbe v pásme 4,71-4,79 posledné dni. Jediný forint začína znovu vyraznejšie strácať a dostal sa na úroveň EURHUF 310. Výhľad pre region ostáva stále mierne negatívny, avšak je možná určitá divergencia CZK od ostatných mien.

4/3 Crude update

The Dollar index rose to its strongest level since April 2006 on the back of surprisingly dismal GBP data from Australia. Against the Euro it made a new high for the year.

This dollar strength combined with the extraordinarily weak economic outlook makes it difficult to see any major commodity demand for now. Short term the contract is capped between $38.70 and $42.10.

Long only funds begin their monthly roll from April to May on Friday and it will last for five days.

Weekly storage data today at 15:30 GMT, expect +1000k for Crude.

Support: 38.70 36.50
Resistance: 42.10 45.10

4/3 Gold heading for the longest losing streak

Gold heading for the longest losing streak since June 2006 as investors continue to reduce positions. The renewed dollar strength combined with the massive long position through Futures and ETF’s has left the market very nervous about the direction from here.

A strong band of support awaits the market between $886 and $895 and should hold the market for now.

Support: 905 896 890 886 866
Resistance: 922 930 940

03 března 2009

3/3 Gold continues to loose ground

Gold continues to loose ground suffering from a market that has been caught with too much of a onesided bet. Crucial support at the $890 to $895 should cap the market for now. A break below could see a quick run down to 848,70 being 50% retracement of the whole Oct 08 to Feb 09 rally.

Gold prices have come under pressure because investor inflows into gold exchange traded funds (ETF) have stalled, leading to uncertainty about the market’s outlook as other demand drivers, jewellery consumption and industrial usage remain weak. The sharp fall in stock markets on Monday may have forced some hedge funds to close long gold positions in order to pay for higher equity margin calls.

3/3 Aktuálně z kapitálových trhů

Jaký vývoj můžeme dnes a v dalších dnech čekat od české koruny?
Trh snad již konečně pochopil, že česká ekonomika je jiná než Pobaltí, Ukrajina a Maďarsko a prodávají CZK méně.
Jakým vývojem prochází cena ropy a co ji ovlivňuje?
Data o zásobách a zejména očekávání poptávky. Trh očekává další omezení poptávky a nespoléhá se na kroky OPEC, které jsou spíše neúčinné.

02 března 2009

2/3 Aktuálně z kapitálových trhů

Summit Evropské unie odmítl žádost Maďarska na vytvoření fondu ve výší 190 miliard euro pro východoevropské země. Jak na to budou podle Vás reagovat měny v regionu?
Všechny měny oslabili blíže k úrovním ze 17/02. Trh to chápe jako spíše negativní zprávu a měny našeho regionu budou nadále pod tlakem.
***
Asijské trhy ztrácely. Jak podle Vás naváží evropské burzy?
Jednoznačně poklesem. Už nyní klesají někde mezi 2 a 3,5%. Myslíme si, že tam zůstanou.
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Jak se v současné době vyvýjejí ceny stříbra a a platiny a co je ovlivňuje?
Stříbro je více vzácný než průmyslový kov. Platina spíše opačně. Stříbro začalo kopírovat zlato a následuje averzi k riziku, tedy minulý týden oslabovalo a dnes posiluje. Platina se po nějaké době vrátila na úroveň, kdy je dražší než zlato.

2/3 Oil manages to hold onto last week's gains

After the shift higher last week CLJ9 has traded sideways in a new range between 20 and 50 days moving average which today comes in at $42.55 and $45.40 respectively.

Despite the continued economic weakness and dollar strength Crude has managed to hold onto last week’s gains, a continued sign that the demand and supply situation is getting more balanced.

The long only funds will begin to roll their April position on Friday and it will last between 4 and 5 days. The US Oil fund will roll its 87,000 lots over four days from Friday after having been accused of destabilising the market with their previous decision to roll their whole position in just one day. The recent barrage of negative news about this fund has seen their position shrink from above 95,000 lots last week.

Risk adversity in the market is still high so do not expect any major move higher near term from current levels.

Support: 42.55 41.50 40.00
Resistance: 45.40 48.00

2/3 Gold climbs for the first time in 6 sessions

Gold climbed for the first time in six sessions in London as the financial markets continue to tumble on speculation that economies are worsening now trading at $950. This all add to the metals current appeal as a store of value.

Big caution is advised in the near term. Look for trading range between $928 and $970. Break below $928 could set back to important support at $892. For the upside resistance is seen at $980 with a further break above $1,000 would set a positive trend up to the high of 2008 at $1034.

Support: $928 $892
Resistance: $980 $1005