As US markets were closed for Thanksgiving Day there wasn’t all that much going on. Most of the focus has been on that ‘flash’ estimate of China’s PMI that we saw in our session yesterday. Recall the index rose to 50.4 from 49.5, which signals economic expansion. We already knew that from the hard data anyway, so I’m not sure the signal was all that valuable. But it was something and with nothing on the cliff or European pantomime to offset it, global equities pushed higher – starting in the Asian session yesterday and then into the European session overnight, although admittedly volumes were light. At the close the Dax was 0.8 per cent higher, the CaC rose 0.6 per cent, while the FTSE100 was up 0.7 per cent.
As for the euro-specific news flow, reports on Greece are conflicting – so I mean, who knows? The European Commission doesn’t seem to have too many concerns that Greece will eventually get the next tranche of aid, and suggest it will be signed and sealed this coming Monday. Indeed, the Greek prime minister himself has said he’s not worried, but obviously would prefer no delay. Then we keep hearing reports that the IMF and Germany can’t agree how to get Greek debt on a sustainable footing and that the IMF can’t lend them more money until that is agreed.
Elsewhere for the ‘periphery’ Spain held another successful bond auction, despite being fully funded for the year, no doubt taking advantage of the relative calm while it can. It had intended to sell about €2.5-€3.5 billion in 3 to 10-year bonds but ended up selling €3.9 billion at lower yields. So it’s all good. In the secondary market we saw Spanish 10-year yields off about 5bps (5.64 per cent), while the Italian equivalent fell 4bps or so to 4.72 per cent. US Treasuries didn’t trade obviously, and German bunds and UK gilts did little. I should add that the eurozone PMI also came out and was little changed at 45.8 on the composite index (from 45.7), while the manufacturing index rose to 46.2 from 45.4.
Price action elsewhere was subdued and while commodities did trade they may as well not have – gold was up a buck or so to $1729, crude off 0.3 per cent ($87.12) while copper was flat basically ( 0.1 per cent). Then in the forex space we’re looking at an Australian unit around 1.0387 or unchanged from 1630 AEDT yesterday. The euro had a better session of it after Spain’s successful bond auction and ended 40 pips higher at 1.2883. Closer to home South Korea is reportedly reposing to Japanese efforts to weaken the yen, by trying to weaken the won. We’ll all be printing money in due course. Hey, why not? It’s free, right, and has absolutely no consequences. Just ask Ben Bernanke.
Don’t really know that there is too much else to tell you. In case you were wondering, San Francisco Fed President John Williams said he reckons that the Fed hasn’t reached its limit on bond buying, which investors already know, I would imagine – infinity has no limit, and if they ever stopped, the sky would fall on our heads anyway. Odds on for early New Year.
Looking at the day ahead, the SPI suggests our market will be flat today (up 4 points to 4427) while debt futures did nada – with the 3s and the 10s down a tick on a two tick range. As for the calendar today, it took a whole two seconds to look at. There's the German IFO survey and third-quarter GDP breakdown. Otherwise, nothing really worthwhile.
Have a great weekend…