Welcome to your week.
– Interesting night Friday with a huge miss on the non-farm payrolls, which printed a rise of just 113,000 against an expectation by the market of 185,000. Private payrolls grew by 142,000 and the unemployment rate fell to a five-year low of 6.6%, which seems to be what the market focused on with the hope of a growth pick-up in coming months seeming to drive buyers of stocks. But as we highlighted in today’s chart of the Citi Economic Surprise Index, the recent data flow across the entire G10 has been worsening.
– For the moment though, the markets don’t care and have roared back from the weakness of early last week. The Dow was up 165 points or 1.06% on Friday, the Nasdaq rose 1.70% and the S&P 500 rose 24 points or 1.33% to 1,797. Incredibly, after last week’s early sell-off, that puts all three indices up 0.6%, 0.5% and 0.8% on the week.
– European stocks ended higher, although the release of the weak payrolls data caused some ructions with big falls and recoveries – almost instantaneously – on European Bourses. At the close, the FTSE was 0.21% higher, the DAX rose 0.49% and the CAC was up 0.95%. In Madrid and Milan, stocks rose 0.96% and 1.08 respectively.
– On the Sydney Futures Exchange, the SPI 200 March Contract rose 37 points to 5158 bid. On the Bond Boards, things were a little volatile as the weak data saw rates rally 10 points in the US to a low of 2.63% on the 10’s before rising back to 2.68%. Locally, the 3-year bond contract was unchanged at 96.97 (3.03%) and the 10’s rose 2.5 points to 95.925 (4.075%).
– On global FX markets, there was a little movement with the weakness in the US dollar belying the strength in stocks – the two divergent moves are simply not consistent in a macro sense. This morning the euro sits back above 1.36 at 1.3629, GBP is above 1.64 again at 1.6408 while USDJPY is trying to break through an old uptrend and sits at 102.39 in very early Sydney trade. The Aussie sits at 0.8950/60 this morning and will move with the US dollar, NAB Business Survey, House prices and Consumer Confidence until the employment data on Thursday gives some clarity to where the economy really is.
– On commodity markets, Gold rallied almost $6 to $1267.30 oz. Crude roared higher to $100.14 for a gain of more than 2% and closing in on a 5-month high. Dr Copper rallied again to $3.28 lb, coming back strongly from last week’s sell-off, while the Ags were mixed with Corn up 0.28%, Wheat falling 0.56% and Soybeans rising 0.43%.
– Bitcoin has crashed again and the $100 premium that Mt Gox enjoyed for most of the past two months over other exchanges has dipped to a $50 discount after the recent ructions there. You can read more on Mt Gox here.
On the data front, there is nothing of great note domestically but Chinese new loans might be of interest and the EU Investor Confidence survey tonight is the only other highlight.