SCOREBOARD: Greek hiatus

It was a very quiet night last night as far as markets were concerned. Moves across the spectrum have been comparatively small and, in the absence of any other major news or data, it just looks like most are waiting for a resolution on Greece. Euro for instance traded on a 60-70 pip range and is broadly unchanged from yesterday afternoon (1.3259). Australian dollar and sterling saw a little more action, both weakening with Australian dollar off 20 pips or so to 1.0797 and Sterling down about 80 pips to 1.5823.

Nothing yet on the Greek front by the way – Greek leaders are still discussing the bailout terms, while euro-group chair Jean-Claude Junker has called a meeting of euro-group ministers for Thursday night. The IMF will also attend. But there does seem to be a sense that a deal will be reached, especially after news that the ECB has agreed to take some losses on their holdings of Greek debt.

Equities then bounced around zero, but moves have been small. So shortly after the open, the S&P hit a high of 1351 (rising 0.3 per cent), went offered, was down 0.4 per cent at the low, but seems to be recovering from that at the moment. On Wall Street, the S&P is up 0.2 per cent (1348) as I write (about an hour left to trade) with tech, financials and basic materials the key outperformers. Energy stocks are the key laggard and that's despite healthy gains on crude – WTI up 0.4 per cent to $98.8 and Brent up 1 per cent to $117.4. Oil punters seem to have ignored a report showing fuel inventories rose in the US, perhaps focusing instead on Greece and the situation in Iran. Elsewhere though, the Dow was 3 points higher (12881), the Nasdaq rose 0.3 per cent (2913), while the SPI was 0.1 per cent higher (4261).

As for Treasuries, US 10-year traded on a 5bp range and are down about 1bp as I write to 1.975 per cent. The $24 billion 10-year auction went well enough, going out at 2.02 per cent with cover at 3.05 compared to 3.29 last month and 2.64 in November (3.14 average). The 5-year yield is unchanged at 0.818 per cent (2bp range) while the 2-year pretty much flat-lined and sits at 0.25 per cent. From 1630 AEDT, our futures are a tick or two higher, with 3s at 96.49 and 10s at 95.98.

Otherwise news and data was light. We saw German exports fall over 4 per cent in December, after a 2.6 per cent rise in November, while imports fell 3.9 per cent (after a fall of 0.4 per cent). Exports for the year were at a new record so some decline should be expected, but it is a little bit concerning for the market following the big drop in industrial production. German business surveys continue to show that industry is upbeat about growth prospects, so we'll see what happens.

There really wasn't much else. We heard some comments from San Fran Fed President Williams who said that the economy may need more stimulus if inflation dips or if the economy loses momentum. He suggested the best way to do this was to buy MBS. In his view, unemployment would remain high and inflation below 2 per cent for years to come. Then we saw US mortgage applications rise 7.5 per cent in the week to February 3, with purchases up 0.1 per cent and refis up 9.4 per cent. Finally, S&P have said they will downgrade the US if a plan to reduce the deficit doesn't materialise after the elections.

As for the news and data flow today – it kicks off with Kiwi employment at 0845 AEDT, with Japanese machine orders following at 1050. At 1230, Chinese inflation data is due and then tonight, watch out for BoE and ECB meetings. Only the BoE is expected to act with a further £50 billion expected from the printing press. Other than that we get US initial jobless claims and wholesale inventories.

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

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