Global Markets: Stocks, dollar rise after upbeat US data

NEW YORK - Stocks and the dollar rose on Wednesday after economic data indicated solid momentum, keeping alive the prospect of a US interest rate increase in December.

Gasoline futures surged and crude oil was down, as flooding and damage from Tropical Storm Harvey shut nearly a quarter of US refinery capacity, curbing demand for crude while raising the risk of fuel shortages.

Gross domestic product data on Wednesday showed the US economy grew faster than initially thought in the second quarter, while a separate report showed US private-sector employers added 237,000 jobs in August, the biggest monthly increase in 5 months.

MSCI's world index, which tracks shares in 46 countries, was up 0.13 percent, taking strength from a rally on Wall Street.

"I have doubts how sustainable the macro economy is, but perceived fundamentals are still OK. GDP confirmed that," said John Velis, macro strategist at State Street Global Markets in Boston.

President Donald Trump said he wanted to see the US corporate tax rate to drop to 15 percent, but the White House offered no detailed plan, leaving the proposal in the hands of Congress.

Tax reform was one of Trump's main talking points during his campaign and expectations for its passage have been a main driver of stock gains since he won the presidency.

The Dow Jones Industrial Average rose 27.06 points, or 0.12 percent, to close at 21,892.43, the S&P 500 gained 11.29 points, or 0.46 percent, to finish at 2,457.59 and the Nasdaq Composite added 66.42 points, or 1.05 percent, to end at 6,368.31.

European stocks rose in a relief rally a day after geopolitical concerns caused a sharp dip across equity markets. The pan-European STOXX 600 closed 0.7 percent higher.

The US dollar rose broadly on speculation the European Central Bank could step in to weaken the euro and after the strong data boosted expectations for a solid US jobs report on Friday.

The euro was down 0.73 percent, on track for its biggest daily percentage drop against the dollar in nearly four weeks.

Analysts said traders were starting to suspect that ECB President Mario Draghi could be growing more concerned about the euro's rise, despite making no mention of the currency's strength at a central bank gathering in Jackson Hole, Wyoming last Friday.

"We've come a long way rather quickly," said Dean Popplewell, chief currency strategist at Oanda in Toronto, in reference to the euro's gains this year. He said European economic data had not justified the euro's appreciation.

The ECB is set to hold a policy meeting next week.

US Treasury yields held near 9-month lows as concerns about rising tensions with North Korea offset the robust data.

The 10-year notes were last down 3/32 in price to yield 2.145 percent, up from 2.136 percent on Tuesday.

With Tropical Storm Harvey shutting over a fifth of U.S. refining capacity, U.S. gasoline futures were up 6.8 percent at $1.9045 a gallon, having hit $1.9231, the highest since July 2015.

Brent oil, the international benchmark for crude trading, settled down $1.14, or 2.19 percent, at $50.86 a barrel. US crude settled down 48 cents, or 1.03 percent, at $45.96.

Gold steadied as a stronger dollar pushed the metal off Tuesday's 9-1/2-month high, but the precious metal remained above $1,300 on renewed tensions between Washington and North Korea.

source: news.abs-cbn.com

US dollar, yields climb on retail data, North Korea lull

NEW YORK - The US dollar and US Treasury yields climbed on Tuesday after solid US retail data and an easing in US-North Korean rhetoric, but Wall Street was held down by weakness in retail stocks.

After last week's market jitters from escalating US-North Korea tensions, investors were relieved to be able to look beyond geopolitics at least temporarily after North Korean leader Kim Jong Un said he would watch the United States' actions for a while longer before deciding whether to fire missiles toward the US island territory of Guam.

Data for July showed the biggest increase in US retail sales in 7 months as consumers ramped up discretionary spending and boosted purchases of motor vehicles, suggesting the economy continued to gain momentum.

While the data was strong, however, worries about retailers' earnings and the outlook for home improvement stores dragged on the S&P, with Home Depot and Lowes Companies representing the biggest drags on the benchmark.

"Retail's the interesting sector, starting out with the economic retail numbers, which were much better than expected. But then this morning we'd some pretty bad retail company reports," said Janna Sampson, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

Wall Street's gains from the first apparent relaxation of tensions with North Korea in some time were limited as the benchmark S&P 500 index had already rallied on Monday, when it achieved its third 1 percent gain for 2017 after a weekend without military action or escalating rhetoric.

The Dow Jones Industrial Average rose 5.28 points, or 0.02 percent, to 21,998.99, the S&P 500 lost 1.23 points, or 0.05 percent, to 2,464.61 and the Nasdaq Composite dropped 7.22 points, or 0.11 percent, to 6,333.01.

MSCI's gauge of stocks across the globe shed 0.16 percent.

Benchmark US Treasury yields hit one-week highs as investors pared low-risk holdings in reaction to the comments from North Korea and the US retail sales and regional factory activity data.

Benchmark 10-year notes last fell 15/32 in price to yield 2.2693 percent, from 2.218 percent late on Monday.

GREENBACK GAINS

The US dollar rose to its highest in nearly three weeks against a basket of major currencies for two main reasons, according to Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, DC.

"One was that the consumer had been a no-show in recent months," said Manimbo, adding that "the specter of cooler heads prevailing on the geopolitical front is dollar positive, particularly against safe-haven rivals."

The dollar index rose 0.45 percent, with the euro down 0.36 percent to $1.1736.

The Japanese yen weakened 0.84 percent versus the greenback at 110.57 per dollar, while sterling was last trading at $1.2865, down 0.76 percent on the day.

Spot gold dropped 0.7 percent to $1,272.46 an ounce.

Oil prices held steady after Monday's heavy sell-off, weighed by the strong US dollar - which makes oil more expensive for overseas buyers - and signs of weaker demand in China, the world's second-largest consumer.

US crude settled down 0.08 percent, though in late trade it rose 0.02 percent to $47.60 per barrel. Brent settled up 0.14 percent at $50.80 and was last at $50.83, up 0.2 percent on the day.

source: news.abs-cbn.com

World stocks rise; dollar dips on US labor data, yuan surge

NEW YORK - Global equity prices shrugged off weakness on Wall Street to cling to gains after hitting their highest level since mid-2015 on Thursday, bolstered by strong Chinese data that added to optimism about global growth and inflation.

The dollar slipped against a basket of major currencies after US inflation and unemployment data failed to reverse a downtrend that followed some of the biggest gains on record for China's yuan. US Treasury debt yields slipped as investors grew risk-averse amid uncertainty about the incoming Trump administration.

MSCI's world index, which tracks shares in 46 countries, rose 0.55 percent for a third straight day of gains.

The index has been riding a wave of upbeat factory and service sector surveys out of the United States, Europe and Asia this week.

Growth in China's services sector accelerated to a 17-month high in December, a private sector survey showed.

The index, however, got little support from Wall Street as the S&P 500 closed slightly lower, weighed by financial shares and as investors dumped traditional retailers Macy's and Kohl's on dismal holiday sales numbers.

Amazon powered the Nasdaq Composite to a record closing high.

The S&P 500 financial index fell 1.02 percent due to declines in JPMorgan, Wells Fargo and Bank of America.

"Financials coming down probably had something to do with bond yields coming down. A lot of the post-election rally was predicated on yields moving higher," said Jimmy Chang, chief investment strategist at Rockefeller & Co.

Adding to the downbeat sentiment was a report by a payrolls processor which showed that US private employers added fewer jobs than expected in December even as the US labor market remained solid.

Thursday's ADP report precedes Friday's non-farm payrolls data, which includes hiring in both private and public sectors.

"Overall it looks like investors will be in a wait-and-see mode ahead of the Labor Department report tomorrow," said Aaron Clark, portfolio manager at GW&K Investment Management.

The Dow Jones Industrial Average fell 42.87 points, or 0.21 percent, to close at 19,899.29, the S&P 500 lost 1.75 points, or 0.08 percent, to finish at 2,269 and the Nasdaq Composite added 10.93 points, or 0.2 percent, to finish at 5,487.94.

Europe's broad FTSEurofirst 300 index closed up 0.12 percent at 1,445.57.

US Treasury debt yields dropped broadly, falling for a third straight session.

Yields should rise again despite weakness early in the year, although for the next few weeks they likely will be range-bound as investors wait to see results from the incoming Trump administration, said Justin Lederer, interest rate strategist at Cantor Fitzgerald in New York.

"There's a lot of uncertainty until the next administration takes place," Lederer said. "We'll be in ranges until we know more about the Trump presidency."

Buying in Treasuries also accelerated after the disappointing private sector payrolls data.

The US 10-year note was up 29/32 in price to yield 2.348 percent, compared with 2.452 percent late on Wednesday.

The dollar slipped to a three-week low against a basket of currencies. China stepped into both its onshore and offshore yuan markets to shore up the faltering yuan, sparking speculation that it wants a firm grip on the currency ahead of Donald Trump's inauguration on Jan. 20.

The dollar index, which measures the greenback against a basket of six major rivals, was down 1.26 percent to 101.41.

The dollar's retreat helped push gold to its highest in a month. Spot gold rose 1.43 percent to $1,180.01 an ounce.

Oil prices rose in a choppy session, lifted by news that Saudi Arabia had cut production to meet OPEC's agreement to cut output. Prices had fallen earlier on data showing a surprisingly large increase in U.S. gasoline and distillate inventories.

Brent crude settled up 43 cents, or 0.76 percent, at $56.89 a barrel, and U.S. crude settled up 50 cents, or 0.94 percent, at $53.76.

source: news.abs-cbn.com

Wall Street rises, euro down ahead of ECB meeting

NEW YORK - Oil futures snapped a four-day rally on Tuesday on signs of higher output while the euro slipped from a three-week high ahead of a Thursday meeting of the European Central Bank.

Wall Street was boosted by financial and telecom stocks while US Treasury yields held in narrow ranges ahead of the ECB meeting. Italian banks rebounded.

The euro fell 0.4 percent to $1.072 after rising sharply in the previous session as currency investors focused on the possibility the ECB may take a hawkish turn, even as it is widely expected to extend bond purchases.

The S&P 500 index closed higher helped by continued strength in financials and telecommunications stocks. The S&P energy sector ended down slightly.

Oil prices fell sharply after data showed crude output rose in virtually every major export region and on news that Saudi Aramco had cut prices to big Asian customers.

The data followed last week's first OPEC output cut agreement since 2008 and sent Brent oil futures down 2.3 percent, to $53.66 a barrel after settling at $53.93. It had risen rising 18.5 percent in the previous four sessions. US West Texas Intermediate crude futures fell $1.03, or 2 percent, to $50.69 after settling at $50.93. WTI had risen 14.5 percent in the last 4 days.

"OPEC's probably taken the price up as much as it can. Now markets will look back to fundamentals - supply and weekly inventory reports," said John Augustine, chief investment officer at Huntington National Bank in Columbus, Ohio.

The Dow Jones industrial average rose 35.54 points, or 0.18 percent, to 19,251.78, the S&P 500 gained 7.52 points, or 0.34 percent, to 2,212.23 and the Nasdaq Composite added 24.11 points, or 0.45 percent, to 5,333.00.

The FTSEurofirst 300 index had risen 1 percent after data showed German industrial orders rose at their fastest pace in more than two years, stoking hopes that Europe's largest economy is set to accelerate.

In Europe, Italy's weekend referendum result was still in focus, with sources telling Reuters state aid had been prepared for the world's oldest bank, Banca Monte dei Paschi di Siena .

Italy's FTSE MIB jumped 4.2 percent, more than erasing the previous day's losses, helped by a 9 percent rebound in Italian banking stocks as investors covered short positions ahead of the ECB meeting and some bet on a restructuring of the sector.

Longer-dated yields edged up partly after the report on Monte dei Paschi di Siena.

"That helped reverse some of the risk-off sentiment at the longer end of the yield curve," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.

The benchmark 10-year US Treasury yield was 2.394 percent, up 0.7 basis point from Monday, while the 30-year bond yield was 3.080 percent, up 2.5 basis points. .

The US dollar rose 0.4 percent after dipping to a near three-week low against a basket of major currencies the previous day.

Gold was down 0.04 percent after hitting a 10-month intraday low on Monday.

source: news.abs-cbn.com

Asia extends losses as China woes spread, yen shoots up

TOKYO - Asian equities extended losses on Thursday as concerns over China's market turmoil spread, while the safe-haven yen shot to a seven-week high as global risk appetite ebbed.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.2 percent, hovering near a 17-month low struck the previous day.

Japan's Nikkei dropped 1.8 percent, Australian shares lost 0.3 percent and South Korea's Kospi fell 0.9 percent.

The focus in Asia again turned towards how Chinese stocks would fare later in the session, with a series of increasingly aggressive attempts by authorities so far having failed to stem the massive exodus from a once booming market.

The country's stock markets have plunged nearly 30 percent over the last three weeks.

"Fundamentally, China is coming back to a point of attraction –the monstrous P/E ratios have come back to more realistic levels. However, the bursting bubble means value is unlikely to factor into thinking in the interim. The repercussions haven't completely played out yet," Evan Lucas, market strategist at IG in Melbourne, wrote.

China's securities regulator took the drastic step late on Wednesday of ordering shareholders with stakes of more than 5 percent from selling shares for the next six months in a bid to halt a plunge in stock prices.

U.S. shares slid sharply overnight on growing fears that nose-diving Chinese shares could destabilize the world's second- largest economy and have global implications.

The doom-and-gloom mood - already heightened earlier in the month by prospects of Greece leaving the euro - benefited the yen, often sought in times of economic uncertainty.

The dollar stood little changed at 120.815 yen, within reach of a seven-week low of 120.41 touched overnight when it suffered a bruising 1.5 percent fall.

The greenback was weighed down further as U.S. Treasury yields continued falling on flight-to-safety bids and new signs that the Federal Reserve may be hesitant about raising interest rates, as shown by their policy meeting minutes.

The dollar's tumble against the yen helped the euro, which climbed to $1.1075, pulling further away from a one-month trough of $1.0916 plumbed on Tuesday.

Commodities, far from immune to the slide in global equities, remained subdued. U.S. crude CLc1 nudged up 0.4 percent to $51.86 early on Thursday but has shed nearly nine percent so far this week.

Copper received a reprieve overnight thanks to the dollar's plunge, but the metal still remained within reach of a six-year low. Copper on the London Metal Exchange was down 0.4 percent at $5,495 a tonne after hitting the six-year trough of $5,240 a tonne on Wednesday.

source: www.abs-cbnnews.com

Mortgage Rate News for Friday, October 31, 2014 – Halloween Edition

Mortgage rates ticked back up over the past week, according to Freddie Mac’s Primary Mortgage Market Survey.  The average rate on a 30-year fixed-rate mortgage rose 6 basis points to 3.98%. Rates remain just above the lows of the year.  This is a minor fluctuation, and endeavoring to determine the root causes of the fluctuation is most likely a fool’s errand (one of my favorite type of errands).  We’re seeing some rate deterioration this morning (more on that below the fold), but fundamentally, very little has changed from an economic perspective over the past few months, and I would be surprised if we see mortgage rates deviate much from their current range in the near future.
 
Today’s Economic Data:

Before we get to today’s domestic data, it’s worth noting that the Bank of Japan unexpectedly announced additional stimulus measures last night, which put pressure on U.S. Treasuries in overnight trading.  It appears that we’ve recovered a lot of the ground that was lost, but this is one of the reasons that mortgage bonds have sold off this morning.  If you really want to get into the weeds on this one, I’d recommend starting with this Bloomberg article.  If you want to delve further, here’s some insightful commentary from Across the Curve – warning: it gets technical.

Beyond that, the most influential numbers of the day are within the Personal Income and Outlays report.  Everything came in more or less in line with expectations, and the main takeaway is that – and this will shock you – inflation is low, and not showing any real signs of picking up in the near future.  The Fed is under no real pressure to act anytime soon.

Chicago PMI came in above expectations, as did Consumer Sentiment.  Bonds appear to be losing some ground in the wake of these numbers, but again, I don’t anticipate that we’ll see much change in rates over the next few days.  The next real risk to rates is likely next Friday’s employment report.

Today’s Idle Fed Speculation:

I think we’ve spilled enough virtual ink on the Fed, and honestly, I’m finding it difficult to gin up the enthusiasm to repeat myself over and over this morning.  As expected, the Fed announced the end of the QE program, but retained forward guidance language saying that policy will remain accomodative for a “considerable time.”  If you want to read more, I’d highly suggest reading Tim Duy’s recap of the Fed statement from earlier in the week.


For the purposes of mortgage rates, it’s pretty much the status quo for right now, and there is no real clarity on the timing of a rate hike in 2015.  The Fed is keeping its options open.  Everything is data dependent*.

*Saying that something is data dependent strikes me as very much in the same vein as saying a given athlete is day-to-day. Almost everything in life is data dependent.  What I have for lunch is data-dependent.  My route home is data dependent.  The pair of pants I chose to wore this morning – yup, that choice was data dependent.  /end rant. 

Events that May Impact Rates This Week:

Monday:

    Pending Home Sales: Pending homes sales were up 0.3% from August to September.

Tuesday:

    Durable Goods Orders: Headline anticipated: +0.9%, headline actual: -1.3%.  Core anticipated: +0.5%, core actual: -0.2%.
    S&P Case-Shiller Home Price Index: 20-city, seasonally adjusted anticipated: +0.1%, actual: -0.1%.  20-city not seasonally adjusted anticipated: +0.4%, actual: +0.2%.
    Consumer Confidence: expected: 86.8, actual: 94.5.

Wednesday:

    FOMC Meeting

Thursday:
    GDP: Expected: 3.0%, actual: 3.5%.
    Weekly Jobless Claims: Expected: 280k, actual, 287k

Friday:

    PCE Price Index: Expected: +0.1%, actual: +0.1%.
    Core PCE Price Index: Expected: +0.1%, actual: +0.1%
    Chicago PMI
    Consumer Sentiment

source: totalmortgage.com

Bloomberg questioned over reporters' access to client data

Bloomberg LP customers, including the U.S. Federal Reserve and the U.S. Treasury, were examining on Saturday whether there could have been leaks of confidential information, even as the media company restricted its reporters' access to client data and created a position to oversee compliance in a bid to assuage privacy concerns.

The financial data and news company, whose computer terminals are widely used on Wall Street, had allowed journalists to see some information about terminal usage, including when customers had last logged in, and how often they used messaging or looked up data on broad categories, such as equities or bonds.

Bloomberg CEO Daniel Doctoroff said in a statement on Friday that the firm restricted reporters' access last month after a client complained.

The client, Goldman Sachs Group Inc, flagged the matter to Bloomberg after a news service reporter in Hong Kong asked the bank about a partner's employment status, noting the person had not logged on in some time. Goldman found that journalists had access to far more information than the bank had known, and argued the information was sensitive and should not be seen by reporters.

"Having recognized this mistake, we took immediate action," Doctoroff said in the statement posted on Bloomberg's blog. He said the company had created a position of client data compliance officer to ensure its news operations never have access to confidential customer data. He added that even under the previous policy, Bloomberg reporters could not see which particular news stories clients read, or the specific securities they viewed. Bloomberg has about 2,400 journalists worldwide.

While some said the concerns were overstated, the news triggered fears about privacy of sensitive data at Wall Street firms such as Goldman Sachs and JPMorgan Chase & Co as well as at the Fed and some U.S. government departments that use Bloomberg terminals.

A Fed spokeswoman said on Saturday that "we are looking into this situation and have been in touch with Bloomberg to learn more." A source briefed on the situation said the Treasury Department was looking into the question as well.

Senior Goldman executives argued that while the information Bloomberg reporters had was limited, a trader could easily make money just by knowing what type of securities some high-profile users were looking at, or what questions a government official raised with Bloomberg's help desk, people with direct knowledge of their views said.

They also began to worry about who else had access to such information. The issue made people inside the bank uncomfortable even with Bloomberg's marketing and sales team's access to information, they said.

For instance, if a trader pulls up quotes for a certain type of security several times, sometimes a message pops up from Bloomberg customer support staff offering other products and functions that might be useful. While this was once seen as a common practice, it has started to make traders uncomfortable about who has access to their personal information, the sources said.

Bloomberg pointed to Doctoroff's statement on Friday and declined to comment further.

Privately held Bloomberg gets the bulk of its revenue from terminal sales to financial institutions. The company has more than 315,000 terminal subscribers globally, with each Bloomberg terminal costing more than $20,000 a year. Last year, it posted revenue of $7.9 billion.

A person briefed on the situation at Bloomberg said on Friday that no Bloomberg clients had so far canceled their subscriptions because of the issue.

John Brynjolfsson, chief investment officer of hedge fund Armored Wolf, said the concerns were overblown.

"Everyone, with a single brain cell, personally assesses the tension between their privacy and their productivity," Brynjolfsson said. "Some I know keep their Bloomberg - and life more generally - locked down, so people can't even find their name to message them. They give their ID to those they want."

Thomson Reuters , the parent of Reuters News, competes with Bloomberg. In a statement, Thomson Reuters said its news division operates "completely independently with reporters having no access to non-public data on its customers, especially any data relating to its customers' use of its products or services.

"Thomson Reuters collects and analyses customer data to improve product functionality and customer experience. No Reuters news staff have access to any of this data. There are strict controls in place that limit the access of this information amongst other Thomson Reuters staff," the company said.

DEEPLY TROUBLED

At Goldman Sachs and other big clients including JPMorgan, the level of information Bloomberg reporters had access to deeply troubled executives, who were stunned to learn that what they considered sensitive financial information could become public, sources with direct knowledge of discussions inside the firms said.

After the Bloomberg reporter in Hong Kong approached the bank in April, Goldman representatives took up the issue with Bloomberg editors and executives of the company, including Doctoroff. Goldman staff also called former Bloomberg journalists to find out whether the practice of using clients' login information was common, and to find out precisely what journalists could see, these sources said.

At JPMorgan, the bank's public relations staffers also fumed to one another last year that reporters called repeatedly to inquire whether Bruno Iskil, the "London Whale" trader who was part of a team that lost more than $6 billion in losses, had left the bank because he had not logged onto his terminal in several days, a source with direct knowledge of these discussions said.

JPMorgan did not formally bring the matter to Bloomberg's attention, the source said. Bloomberg said it had no record of a complaint.

Bloomberg's terminal has various command codes that with the click of a few buttons allow users to look up news about specific companies or topics, and data on specific securities or broader markets. Subscribers can also see information on fellow Bloomberg users, such as phone numbers, work titles, email and Bloomberg messaging addresses. Inside Bloomberg, some employees have access to much more detailed and current user data, for sales and marketing purposes.

Journalists had access to some of that information, but not all of it.

source: www.abs-cbnnews.com