Overnight Points of Interest
# NZ Business Manufacturing Index
# China Industrial Production
# China Fixed Asset Investment
# China Retail Sales
# Eurozone Industrial Production
# U.S. Producer Prices
# University of Michigan Consumer Sentiment
# The pan-European Stoxx600 index oscillated around par throughout the day to end exactly unchanged. The stable performance came despite Greek shares sliding for a 3rd day, now down an incredible, a truly incredible, 20% on the week. European stocks traded close to a 7 year high on Dec 5 so the decline for the Stoxx of 1.6% so far this week should be see in a reasonable light. The volatile trading conditions of the last few days continued in stateside trade. Early in the session better than expected U.S. economic data buoyed proceedings with the main indexes up well in excess of 1% but those gains are leaking away in late trade. Going to press the S&P500 is up 0.78%.
# The threat of a U.S. government shutdown has increased sharply with news late in the U.S. session that Democrats have balked at the US$1.1trln spending bill because of controversial financial and political campaign provisions tucked into the legislation. The previous ‘stopgap’ funding bill runs out in a few hours (midnight NY time) but congress is likely to pass another one to cover a few more days. Recall the ructions caused by this event last time.
# U.S. consumer spending jumped in November with retail sales data climbing the most in 8 months. Sales jumped 0.7% against expectations of a 0.4% rise. It would appear that lower prices at gasoline pumps across the states has buoyed consumer spirits going into the holiday shopping season.
# U.S. weekly jobless claims improved by 3k to the best in 3 weeks. Despite a flattening off in gains lately the series is still historically very good with claims staying under the 300k mark for 12 of the last 13 weeks.
# The benchmark WTI Crude contract settled below US$60 for the first time since 2009. The recent weakness drew a surprise 0.25% cut form the Norges Bank as Norway looks to precautionary measures to offset the negative impacts to the significant oil producer.
# RBA Gov. Stevens put the cat amongst the pigeons saying that the AUD/USD should be trading closer to 0.75. In the same breath he pushed back against the market pricing near term interest rate cuts, opining that the economy, jobs and inflation were roughly where the central bank expected them to be. He also rallied against the government’s fiscal record warning Australia’s AAA rating could be threatened if longer-term tax and spending issues weren’t fixed. The speech enforces our view that interest rates cuts aren’t the RBA preferred means of helping the economy (particularly with house prices). The AUD/USD fell 0.0160 points in response.
# The ECB undertook its second round of lending under the TLTRO (targeted longer-term refinancing operation). Banks borrowed just €130b of a possible €317b. The limited uptake (though widely expected) adds strength to the calls for the ECB to undertake full-blow QE.
# "Why should I cut production?" was the comment from Saudi Arabia’s oil minister Ali Al-Naimi in response to questions over whether he thought it would be necessary to reduce output prior to OPEC's next meeting in June. While oil prices have fallen more than $10 a barrel since OPEC's Vienna meeting, Naimi showed no greater concern, saying that the market would be left to balance itself without the Kingdom's intervention. Are the Saudi’s intent on putting to the word the highest cost producers ?