Nine days to Christmas. Hang in there.
– Stocks in the US recovered a little lost ground on Friday but still managed to close the week in the red. On Friday at the close, the Dow was up 16 or 0.10% to 15,755. The Nasdaq just clung to the 4000 level, finishing up 3 to 4001 and the S&P 500 was down 1 point to 1,775.
– The market is clearly focused on the chances of a Fed cut to its balance sheet, buying in the bonds market at this week’s meeting, known as the “Taper”. Markets generally are getting more used to the notion and former Fed vice chairman Donald Kohn said on Friday that he thought the chances were now 60:40 in favour of the Taper. It is also worth noting that Reuters reported that US stock mutual funds saw their biggest outflow this year last week, with $6.51 billion being pulled by investors.
– But at the close, US 10-year Treasuries were 1 point lower on the week at 2.87% while German 10-year Bunds were at 1.83% and Gilts 2.90%.
– In Europe, stocks closed the week mixed with the FTSE off 0.08% to 6440, the DAX 0.12% lower at 9006 and the CAC down 0.22% to 4060. For a change, Milan and Madrid hardly moved on the day, gaining 0.01% each.
– Here at home, the ASX the December contract lost another 15 points to 5080 bid, while March lost 14 to 5050 bid, making it clear what futures traders think is going to happen on the ASX in the first three months of 2014.
– On FX markets, there was a little reversal of fortune for the US and Australian dollar, clawing back a bit of the ground they lost over the week. In the end, the euro was 0.1% lower at 1.3741 but it had been much stronger earlier. Likewise, the USDJPY had been a lot higher before closing at 103.19 and the Aussie is still pressured but closed the week at 0.8962. Watch out for the minutes of this month’s board meeting on the Aussie due tomorrow.
– On commodity markets, Nymex crude was a little lower, down 0.92% at $96.47 Bbl, Gold rose 0.79% to $1239 and is caught in a $1220-$1265 range for the moment. Copper is very strong, up at $3.35 lb. On the Ags, Corn took a beating, dropping 1.81%, while Wheat went out in sympathy, dropping 0.68%. Soybeans traders took beans up 0.28%.
– Bitcoin had week-over-week uncommon quietness, closing Saturday at $850 before rallying a little over the weekend.
On the data front today we get Tankan in Japan, which used to be important before Abenomics, but has lost its edge. But honed to a fine edge is the HSBC Chinese manufacturing PMI, which is due out in the preliminary form for this month along with a raft of global Markit and HSBC PMIs tonight.
In the US, we get non-farm productivity and unit labour costs as well as the New York Empire manufacturing index and the Markit PMI for the US. Also important will be the US TIC flows which will inform the market on what investors have been doing with regard to the US markets over the past month.