Morning Forex Fundamental
'The crisis has arrived in Germany' - Nick Kounis, head of macro research at ABN Amro
German industrial production contracts 0.9%
German industrial production contracted in June amid a slump in the construction sector. Production retreated 0.9 per cent, after rising 1.7 per cent the previous month, said the Berlin-based Economy Ministry on Wednesday.
'The crisis has arrived in Germany,' said Nick Kounis, head of macro research at ABN Amro in Amsterdam.
'While the economy will continue to outperform the euro area, the crisis will continue to restrain business and household spending across Europe and the global economy is stop-and-go as well.'
European stocks closed mixed the same day. The Stoxx Europe 600 Index added 0.15 per cent to 269.20. Germany’s DAX Index lost 0.03 per cent and France’s CAC 40 Index erased 0.43 per cent
'The fear of things collapsing is going away' - Tom Wirth, a senior investment officer for Chemung Canal Trust Co.
U.S. 10-year bond yields rise on weak demand
The U.S. Treasury Department placed $24 billion of 10-year debt on Wednesday at an average yield of 1.68 per cent, well above previous month’s yield of 1.46. The auction drew tepid demand with a bid to cover ratio of 2.5 as investors turned to riskier assets amid signs of stabilization in the Eurozone.
'Weak stats across the board for the 10-year auction … bear a sharp contrast to last month's monster 10-year auction,' said George Goncalves, head of U.S. interest rates strategy at Nomura Securities International in New York.
'We attribute the weak demand to investors looking to lock in a higher coupon, as well as an element of a buyers' strike taking place more so than a short base starting to form in earnest in the market,' Goncalves said.
The Standard & Poor's 500 gained 0.06% to 1,402.22. The Dow Jones Industrial Average edged higher 0.05%, or 7.04 points, to 13,175.64. The Nasdaq Composite slid 0.15% to 3,011.25.
'The outlook for U.K. growth remains unusually uncertain' - Bank of England
U.K. stocks gained on Wednesday
U.K. stocks closed slightly higher on Wednesday as shares from Rio Tinto Group to Standard Chartered Plc advanced.
The FTSE 100 Index gained 0.08 per cent, or 4.68 points to 5,845.92. The broader FTSE All-Share Index rose 0.05 per cent.
'The outlook for U.K. growth remains unusually uncertain', the BOE said in a statement on Wednesday.
'The greatest threat to the recovery stems from the risk that an effective policy response is not implemented sufficiently promptly in the euro area.'
'The recent rise in the markets is most surely down to expectations of more central bank stimulus; however, this can’t be guaranteed' - Jeremy Batstone-Carr, head of research at Charles Stanley Group Plc
Swiss stocks moved sideways on Wednesday
Swiss stocks traded flat on Wednesday.
The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies was little changed to 6,458.00. The broader Swiss Performance Index gained 0.04%, or 2.16 points, to 5,974.20.
'We’ve had a fairly anodyne and disappointing earnings season, which will downgrade earnings expectations for 2013,' said Jeremy Batstone-Carr, head of research at Charles Stanley Group Plc.
'The recent rise in the markets is most surely down to expectations of more central bank stimulus; however, this can’t be guaranteed.'
'Investors have expectations for stimulus globally. Such expectations bolster markets, and the economy will accelerate' - Koichi Kurose, chief economist at Resona Bank Ltd.
Japanese stocks advanced on Thursday
Japanese stocks preserved bullish momentum on Thursday after a report showed China’s inflation eased, giving more room for stimulus.
Topix Index advanced 0.83 per cent, or 6.20, to 751.84.
'China’s slowing inflation will make it easier for the country to relax policy, which will have a good impact on exporters to China,' said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd.
'Investors have expectations for stimulus globally. Such expectations bolster markets, and the economy will accelerate.'
The European Central Bank said they may 'undertake outright market operations', as soon as European governments will activate the region’s rescue funds to buy government bonds. The ECB kept its key lending rate at 0.75%.
Spanish and Italian bonds jumped, pushing Spain’s benchmark 10-year yield down to 6.82%, and Italy’s 10-year debt yields to 6.06%.
British MPs accuse U.S. of anti-City agenda
Several senior British MPs accused US regulators of pursuing an anti-City of London agenda in its assault on Standard Chartered, suggesting it was part of an apparent campaign to weaken a rival financial centre.
Bank of England cuts growth forecast
The Bank of England signalled that economic recovery will be slower and weaker than it has believed at any point since the financial crisis ignited in 2008, and left the door open for further easing of monetary policy in the autumn.
The U.S. July jobs data came in better-than-expected; nonfarm payrolls rose to 163,000 in July, from 64,000 in June. In the meantime, the unemployment rate rose to 8.3 per cent in July, from the previous 8.2 per cent in June. Additionally, treasury yields hit record lows of 1.379% on 10-year notes and 0.535% on 5-year notes.
The Fed claimed its ready to act and introduce another quantitative easing if the economy does not start to recover.
Long Road to US Housing Recovery Despite Tighter Supply
U.S. home prices are inching up as an ebbing tide of foreclosures creates a shortage of properties at a time of pent-up demand, but do not expect the housing market recovery to shift into higher gear.
Standard Chartered CEO Says ‘No Grounds’ to Revoke License
Standard Chartered Plc (STAN) Chief Executive Officer Peter Sands hit back at a New York regulator’s claims the bank broke U.S. sanctions, and said he saw 'no grounds' for revoking the lender’s license
Asia & Pacific
The Chinese top officials work on a new set of measures to address the slowdown in the economy and sustain macroeconomic growth. Previously, the People’s Bank of China cut the benchmark interest rate by 0.31%.
China is suffering a major economic slowdown, as growth flags in the country's real estate, construction, steel, and other sectors. As a part of fiscal opening policy, China will allow direct Yen-Yuan trades.
China inflation rate dips to a 30-month low in July
China's inflation dipped to a 30-month low in July, giving policymakers a bigger cushion to boost stimulus measures to spur economic growth.
Asian stocks advance after China data
Asian shares traded higher Thursday, as cooling Chinese consumer price data kept hopes alive for more monetary easing to support the Chinese economy