SCOREBOARD: Greek yawn

Most of the headlines are concerned with Greece again, about some European nations wanting to kick them out of the eurozone and so on – will they or won't they, etc. Increasingly this kind of news flow is being met with a yawn and looking at the price action that was certainly the case last night. European stocks for instance actually ended higher – the Dax and CaC up 0.4 per cent, although the FTSE was down 0.1 per cent – and that's with growth data showing European GDP fell 0.3 per cent in the fourth quarter. Within that, German GDP wasn't quite as bad as feared (-0.2 per cent) after a 0.5 per cent gain in Q3. French GDP actually rose 0.2 per cent.

Not great news flow obviously, but the resilience of the market is impressive and worth noting. Talk in Europe is that further bailout funds may be delayed till after the Greek elections in April and that bridging loans will be made in the interim.

Across the Atlantic, US equities aren't having the best of sessions and are down smalls as I write. The session started off well enough and appeared to follow European trends initially, the S&P up 0.4 per cent at the high. From about 4am the offer was put on though, and with about an hour left to trade the index is down 0.3 per cent (1346). All sectors are weaker at the moment although industrials, utilities and telecommunications are the key deadweights. The Dow for its part is off almost 85 points (12794), the Nasdaq is 0.2 per cent weaker (2924), while the SPI is down 0.8 per cent (4186).

The thing is, US economic data was actually pretty decent again – indeed some of the lower tier indicators spiked. So for instance the NAHB housing market index shot up to 29 from 25 which is the highest since 2007. Similarly, the Empire manufacturing survey rose to 19.5 from 13.5 (average 11) which is the highest since June 2010. The headline on industrial production wasn't so flash, being flat in January when a rise of 0.7 per cent was expected. The thing is, December's number was revised to a rise of 1 per cent from 0.4 per cent and November's print was revised up to 0 from -0.3 per cent. So overall expectations for production have been met.

On the treasury front, the yield on the 10-year dipped a few basis points from 1630, to be at 1.926 per cent (low of 1.893 per cent). The 5-year in turn was down almost 5 basis points to 0.786 per cent while the 2-year was off almost a basis point to 0.274 per cent. Aussie futures were then up about 4 ticks on the 3s and 10s to 96.46 and 95.96.

Finally for the FX and commodity space, we saw the Australian dollar off about 30 pips or so to 1.0688 on a big figure range (almost) while Euro was off 120 pips to 1.3061. Sterling then fell 40 pips to 1.5691, while Yen is at 78.38 (little changed). Gold is then little changed from 1630 AEDT at $1725, silver is down smalls, while copper is down almost 2 per cent. WTI and Brent are up over 1 per cent each to $101.8 and $118.9.

Bits and pieces otherwise. The FOMC minutes revealed a Fed toying with QE3. It is basically done as far as many in the market are concerned. The Fed are following the usual pattern of softening the market up for it despite the lift in economic momentum. So a few members noted the need for more, while others sensibly noted that growth or inflation would have to decline first. The best timing for QE3 appears to be after Operation Twist ends mid-year – almost regardless of what the data shows by then. In the UK, the BoE inflation report shows the bank expects growth to be around 3 per cent by 2013 and then 3-4 per cent in two years. Growth for 2012 is likely to be sluggish. The bank also revised up their inflation forecast to just under 2 per cent in two years' time with a good probability (40 per cent) that it will be above that. Despite this, they left the door open to print more. Still in the UK, the unemployment rate was steady at 8.4 per cent over the three months to December.

Data kicks off today with ANZ job ads for NZ at 0800 AEDT followed soon after by the Kiwi business PMI at 0830 AEDT. For Australia, the labour force numbers are out at 1130 AEDT and despite some Australian business people doing their best to boost confidence by mega-phoning an intention to sack zillions, economists look for a 10,000 rise in January employment with the unemployment rate forecast to rise to 5.3 per cent. I'm pretty much the same although expect the unemployment rate to remain steady at 5.2 per cent. As for the rhetoric? I'm not sure at this stage. My initial thoughts are that it's more about pressuring the government for handouts or legislative changes, etc. Creating a sense of crisis helps in that regard. Or, it's just a hysterical media doing what they do worst. We'll see, but current growth momentum suggests little need for massive job shedding – or any really. It would be unprecedented if we actually did see it. Money is still being made and the Aussie outlook is very good – something the IMF pointed out just yesterday.

Outside of that, it's worth watching out for US producer prices (January), initial jobless claims and mortgage delinquencies (Q4). The February Philly Fed index is also out.

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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