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Overnight Sentiment: Risk On
Following a busy overnight session, which saw a surprise announcement out of the Brazilian Central Bank cutting rates more than expected, and confirmation of the deterioration in the Japanese economy where January saw a record current account deficit, today we have already seen the Bank of England proceed as expected keeping its key interest rate unchanged (at 0.50%) and QE fixed at GBP325 billion. The ECB is next with its rate announcement, expected to keep things on hold. Yet the mood of the morning is set by speculation that the Greek debt swap may see a sufficient participation rate for the PSI to go through, even if that means CAC activation, as somehow a Greek default is good, and only an "out of control" bankruptcy would be bad. That coupled with renewed expectations of more QE, sterilized or not, and hopes that tomorrow's NFP will be better than expected, as somehow the Fed will pump money even if the economy is "improving", is all that is needed to send the post-roll ES contract to session highs nearly 1% higher than yesterday's close.
Bank of America has a more detailed summary of events:
Asian equity markets ended a three-day losing streak by finishing up sharply higher after growing optimism over Greece's debt restructuring plans. In addition, the strong ADP private employment report out of the US yesterday boosted risk appetite. The best-performing market was the Japanese Nikkei, up 2.0%. Japan's equity market was also lifted by the final release of Japan's fourth quarter GDP, which showed that the economy only contracted 0.2% qoq, much less than the originally reported 0.6% contraction. The Hang Seng finished 1.3% higher, while the Shanghai Composite rose 1.1%. The Korean Kospi was lifted 0.9%, while the Indian Sensex was closed today.
In Europe, equities are enjoying a similarly strong rally due to the optimism over the Greek debt swap and EADS, the parent company of Airbus, doubling its dividend. In the aggregate, European shares are trading 1.2% higher. The French CAC is outperforming, up 1.8%, and the German DAX is 1.7% higher. Shares on London's FTSE are underperforming the broader market, up only 1.1%. At home, futures are pointing to a strong rally as well. The S&P 500 is set to open 0.8% higher.
In the bond markets, US Treasuries are higher across the curve. Both the five- and ten-year notes are 1bp higher, at 0.86% and 1.99%, respectively. The long bond is up 2bp, at 3.14%. In Europe, the UK gilt is 3bp higher, at 2.16%, and the German bund is 4bp higher, at 1.81%. Meanwhile, yields on Italian and Spanish debt continue to drop as investors regain confidence in the country's sovereign debt. The Italian 10-year yield is 15bp lower, at 4.76%, and the Spanish 10-year is 5bp lower, at 4.99%.
The dollar is weakening against a basket of other major currencies, such as the Japanese yen, euro, and British pound. The DXY index is down 0.4%. Commodities are getting a lift from the weaker dollar. WTI crude oil is 80 cents higher, at $106.95, and gold has gained $16.40 an ounce, to $1,701.60.
As was widely expected, the Bank of Korea left its key interest rate unchanged, at 3.25%. Today marks the ninth consecutive month that the Bank of Korea has left its benchmark interest rate on hold. The central bank has left rates on hold as it is very worried about the downside risks to the growth outlook caused by the general slowing in global economic demand and the sovereign debt crisis in Europe. In our view, easing inflation pressures along with the previously mentioned factors persisting for the next several months should keep the Bank of Korea on hold until the second half of the year, when we have penciled in two 25bp cuts.
Late yesterday, the Brazilian central bank cut interest rates more than expected. The market was looking for interest rates to be cut 50bp from the prior rate of 10.50%, but the central bank surprised the markets by cutting their benchmark interest rate by 75bp. Emerging market central banks across the globe have been preemptively cutting interest rates to counter slowing global economic demand, as well as the sovereign debt crisis in Europe.
Japan's economy shrunk less than originally reported in the fourth quarter. The country's economy contracted 0.2% qoq, according to the final fourth quarter report. In the prior report, it showed that the country's economy shrank 0.6%. Looking at the details of the report, we find that there were revisions across the board.
EU-harmonized consumer prices in the Netherlands rose 1.0% mom in February: slightly more than the 0.9% mom gain penciled in by the consensus. On a YoY basis, consumer prices were up 2.9%, unchanged from January. In the short term, consumer prices will likely remain sticky, as higher oil prices keep upward pressure on inflation. In the longer term, the impact of rising oil prices should fade, with the weak economic backdrop and high unemployment restraining consumer prices. For the euro area as a whole, we see consumer price inflation slowing to 1.5% by the end of this year.
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BTFD's!!!
Who says nuclear accidents are bad for the economy?
My friend in Tokyo says he's developing a new market in six fingered gloves!
In theory you could flip somone off double......in theory.
yes, with all three hands and my middle foot...
Jobs data leaked?
I am almost certain that it was!
Yep, all excellent news.
Hoorraayyy!! Hyperinflation is priced in!!!
Wait a second...
In essence this was driven by this statement in the Wall Street Journal by its mouthpiece Jon Hilsenrath.
However there are many flaws in this. Here is an example of a big one.
However there are many flaws in this. Here is an example of a big one.
'Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates.' - OK, why bother printing the money? Why not just ask everyone to 'give' you their mortgage bonds for free?
That would be a more accurate endorsement of what they're actually worth...
I am sorry, but there are no flaws in any plan when at any point in the execution you are free to LIE WITH IMPUNITY whenever you need to.
Buy now, worry later
For 30 years it's been working. Debt to pay off debt to pay off debt to pay off derivative chains for the miniscule interest that is set in place.
Stupid thing is we are so well and beyond the point of return now mathmatically. We literally have a name for the varibles that can throw it over the rails, aka Black swan which represents X, the unknown varible. But that doesn't matter anymore, all varibles good or bad are now considered fantastic market omens by the HFT/ALGO's
You won't see ANY black swan, ANYTIME soon, as long as the FEDsters can print, the swan is locked up!
they dyed the pernicious Black Swan with white color ...
"money printing" with the twist of "keeping interest rates at or near zero." Of course the entire planet is inflating away their money. Gold, silver...at some point "mining stocks." Transportation stocks--especially shipping. I'm a big believer in Minnesota because they have the mining, they have the mfg and the have the transportation. if i could i would be shorting Chicago as that city is for all intents and purposes "the greatest Potemkin village in history." Small is beautiful...and States that can "expand out" have smaller and more manageable governments and smaller and more manageable expenses. Oklahoma, South Carolina, Upstate New York, Montana--provided of course there's a tax base left that hasn't been sucked dry by "Big City Man." The cornerstone of the whole boondoggle is of course "the real estate lobby." well...that last batch of real estate you want to own is anything with anything other than what God put there.
Delay today until tomorrow. Over and over and over again.
Or in others words....on and on and on again.
Delay = lie. Lie = delay.
We live in sick times that will become even sicker, being "lead", ahm..more like fleeched by sick people, who would have thought that on the day Greece defaults "markets" would rally :))?! I guess the next WW III will FIX that, it's about friggin' time for a cleanse! :))
Hard to believe everything is better after being so bleak on Tuesday. This market has lit the crack pipe once again. Oh well.
All the while Crude is back over 107 wti and 125 brent respectively.
"who would have thought that on the day Greece defaults "markets" would rally :"
I am amazed too...this is good investment news..so when it rolls to Portugal, Italy, Spain, Ireland, France..and everyone is losing their bond values....this will make the market skyrocket....and of course more people will jump in and keep buying these bonds because they will be defaulted on.....I am so confused....
Thats because it's not real, it's all pretend!
They have no choice. They have no other card to play at this point. Give it a different name and a different spin each time.
Just remember to include the keywords for the AlgoBots.
Solar Flare hits today. Is that bullish or bearish?
There is a large cache of news out of China later. Maybe they will piss on the parade. CPI , PPI, FAI and IP.
Found this gem over at Seeking Alpha in Wall Street Breakfast:
"Markets are buying into Greek optimism it will receive approval of over 75% even though Athens needs 95% to avoid default. At 66%, Greece will be able to trigger its CACs and so enable the deal to proceed."
So...66% = 95%?
Bend over bond holders!
Whoever is still holding the bag after 2 years of this Greek song and dance deserves to get bent over.
How can today be bullish, i'm i fucking retarded ???????
I have never been hamered so much on investments. My VXX options will go to 0 next week after a 90% gain just the other day.... boooo.. should of sold instead of hanging out at this wine tasting event, what good does buying 20k for a 10 year investment in wines , when i lost that much in 1 month on my option . I need to be drunk now, not then!!!
The more i learn , the more i lose. yea yea i bought gold but not enough.
I have never been short for 15 years, i was in cash in 2008. But this time i got ambicious,, VERY bad idea.
THE BIG QUESTION, who would buy a VXX option next week ?
Should i be stubborn or just give up , open up a farm and pick up pig shit all day?
This sight is pretty awsome with some very smart people, shame my english sucks and my add didn't let me see the fine print of all of this.I thought this would help me with my trading but so far,...i read agree with some doomers sometimes i have a laugh, meanwhile i lose my hard earned money. FUCK!!! MERDE! PUTAIN!
excuse my typos/bad english.
Let me blow some steam one more time
PUTAIN DE MERDE ...... AGAIN , what an embecile i am.
Obama to Bernanke- just pump it a little more til' November Ben. Ben to Obama- Yes Massah
Euro just popped 40 pips. I am going short right here. I see it leaking lower over the next week.