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Pivotfarm Daily News Harvest 10th August 2010
Markets in
a Flash
·
Strength
in the USD across the board today, most notable against the GBP which is off
over 1% after the RICS report data.
·
The UK housing
market is showing signs of weakness, with the first drop in prices in a year according
to the RICS report. Fears of a housing led double dip recession have been
heightened.
·
Over
14 million people are likely to be effected by the floods in Pakistan which many experts say will have a more
devastating human cost than the Haiti
earthquake and the 2004 Asian Tsunami
·
Stock
index futures are weaker ahead of the Federal Reserve’s meeting on monetary policy,
this weakness in the futures has been heightened by weaker than expected import
data from China.
·
Weaker
than expected import data out of China led to a -1.5% sell off in
the Hang Seng Index.
·
Commodities
are taking a hit today with Brent crude down 1.9%, Cocoa futures the big loser
thus far off -3.85%. Natural Gas showing the only gains in the energy sector up
0.4%
News focus
FOMC Announcement
The FOMC policy meeting is expected to leave the fed
funds target unchanged at a range of zero to 0.25%. With fears of a double dip
recession on the horizon traders will be looking for hints of additional quantitative
easing and for changes in the Fed’s view of the economic environment.
Just Released
0830ET – Productivity and Costs
Nonfarm productivity – Q/Q change - SAAR
Previous 2.8% Consensus
Range -0.8% to 2.5%
Consensus -0.0% Actual -0.9%
Unit Labor Costs
– Q/Q change SAAR
Previous -1.3% Consensus
Range -1.0% to 2.0%
Consensus 1.5% Actual 0.2%
Productivity measures the growth of labor
efficiency in producing the economy's goods and services. Unit labor costs
reflect the labor costs of producing each unit of output. Both are followed as
indicators of future inflationary trend. Productivity growth is
critical because it allows for higher wages and faster economic growth without
inflationary consequences. In periods of robust economic growth, productivity
ensures that inflation will remain well behaved despite tight labor markets.
Productivity growth is also a key factor in helping to increase the overall
wealth of an economy since real wage gains can be made when workers are more
productive per hour.
0855ET – Redbook
Store Sales Y/Y Change
Previous 3.0% Actual 3.0%
A weekly measure of sales at chain
stores, discounters, and department stores. It is a less consistent indicator
of retail sales than the weekly ICSC index.
Coming up Today
1000ET – Wholesale Trade
Previous 0.5% Consensus 0.5%
Wholesale trade measures the dollar value
of sales made and inventories held by merchant wholesalers. It is a component
of business sales and inventories.
14:15ET – FOMC Meeting Announcement
Federal Funds
Rate
Previous 0
to 0.25% Consensus 0 to 0.25%
The Federal Open Market Committee (FOMC)
is the policy-making arm of the Federal Reserve. It determines short-term
interest rates in the U.S.
when it decides the overnight rate that banks pay each other for borrowing
reserves when a bank has a shortfall in required reserves. This rate is the fed
funds rate. The FOMC also determines whether the Fed should add or subtract
liquidity in credit markets separately from that related to changes in the fed
funds rate.
The Fed determines interest rate policy
at FOMC meetings. These occur roughly every six weeks and are the single most
influential event for the markets. For weeks in advance, market participants
speculate about the possibility of an interest rate change at these meetings.
If the outcome is different from expectations, the impact on the markets can be
dramatic and far-reaching.
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