SCOREBOARD: Four-day run

Better data and another batch of stronger-than-expected earnings conspired to lift equities last night (the fourth consecutive gain), though the sell-off in treasuries eased up. It was touch-and-go initially and at one stage the S&P500 was off 0.3 per cent. CIT and the apparent failure of that group to get a bailout probably weighed, but probably buoyed Treasuries. Now remember they are a top 20 bank and apparently lend heavily to your smaller-end companies, so it's not insignificant.

And yet you've got the likes of Goldman and JP Morgan raking it in – JP Morgan's profit result showed the bank's Q2 earnings well in excess of the median forecast, and it would have been even higher if they hadn't padded up their provision for bad debts (the bank is expecting credit losses for the year). Selling the fact, financials fell 0.2 per cent.

The drivers of the market were basic materials, industrials and tech, rising on generalised earnings optimism. It's been a good week so far for the tech sector. Reporting after the close and following Intel's upbeat results, IBM's Q2 earnings beat estimates and they raised their full-year earnings forecast well above the average analyst expectation.

Google's results were okay with Q2 profits beating expectations, but revenue growth slowed from Q1. Anyway, at the close the S&P500 was up 0.9 per cent (940), the Dow rose 95pts (8711), the Nasdaq 1.2 per cent (1885) and the SPI 1 per cent (4011). Last night's move brings the weekly gain to 6.6 per cent in the US market and it's just shy of recent highs recorded mid-June.

Looking at rates, trading ranges on the major treasury coupons were between 7bps and 11bps, though they didn't end up changing much from 1630 yesterday. Volumes were about 15 per cent below average; the 10-yr yield was unchanged at 3.57 per cent, the 5-yr down 2bps to 2.45 per cent and the 2-yr basically unchanged at 0.98 per cent. The 2s and 5s were most active and $-flows were mostly negative, particularly in 5s.

Aussie futures did zip, finishing unchanged and trading within a 6-7bps range. 3s are at 95.41 and 10s 94.57. Can't say there was much happening on currencies either, with the USD weakening against risk and European currencies. AUD is at 0.8069 from 0.7997, EUR at 1.4152 from 1.4079, GBP is at 1.6438 from 1.6401 and JPY 93.9 from 94.0. Gold was down a touch ($937) while oil rose 0.8 per cent ($62).

Some of the good vibes data included the NAHB housing market index which rose to 17 from 15 and is now it's highest since September 2008. The index has risen sharply since a low in January and points to still subdued, but rising housing starts.

The Philly Fed index dipped – can't lie, wish I could – but it's had such a strong run going from -40 off in February to -2 in June that a slip to -7 in July doesn't seem inconsistent with recovery (the average is 5 and it's not inconsistent with other key surveys). Perhaps most important, jobless claims fell 47k to 522K, well below what the market was looking for (553k). It's also significant that continuing claims fell by a record 642K in the week to July 4, but we'll have to wait until next week to find out whether this reflects seasonal distortions or something else.

The Australian terms of trade (out at 11.30am today) is expected to show another decline. Export prices will likely show a significant fall given the drop in commodity prices, import prices being hit by a stronger currency. The only other event in Australia is the AOFM tender of April 2012s – $700m.

Not much elsewhere, with housing starts in the US probably being the most important. There's also CPI in Canada with core inflation not expected to come down too much – 1.9 per cent year-on-year from 2.0 per cent.

Adam Carr is senior economist at ICAP Australia. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.