No real noteworthy economic news today.
Stocks push higher yet again on no substantial economic news. It’s possible additional news of M&A out of the tech sector (IBM) is providing positive sentiment.
Treasuries, commodities and gold all higher as well. Bunds flat to slightly lower. USD seems to be only asset down today perhaps the market is putting a lot of faith that FOMC would announce more QE measures tomorrow.
Fears that the US economy is headed into a “double dip” have eased a bit as data surprises have swung to the upside. September has been dominated by upside surprises on data ranging from the ISM manufacturing index to payrolls and from the trade balance to retail sales. This stands in sharp contrast to the experience of July and August. No doubt this has led to a huge rally we have seen in August.
The BoJ intervention appears to be working so far – JPY hovering right around 85.5- 85.9 level yet. I still believe BoJ’s effort to push down yen would be successful in the longer run due to : (1) persistent trade surplus (2) lack of carry trade around the world (3) speculators’ desire to test BoJ (4) lingering possibility of deteriorating US and European economies. However, I would wait longer before jumping to go long yen. The intervention has just begun and it could last months (last time BoJ tried to intervene it was from around March 2003 – March 2004).
Tomorrow:
Australia RBA minutes – I think going long AUD might be a good trade their economy is doing well and Asia continues to power ahead. This could increase pressure to raise rates and give some boost to AUD. If I were to go long AUD I would probably do it against NZD rather than USD as to reduce exposure to investor sentiment swings.
US housing starts – probably bad. But I do not think the US housing news impacts the markets any more. Everyone knows this market is dead.
US FOMC meeting – everyone seems to expect news of further QE. I think this expectation is too high given the upside surprise we have seen this month but QE is probably very likely coming sometime this year.
Global stainless steel output jumps 44 pct in H1 2010
• Global stainless steel production rose more than 40 percent in the first half of this year on the back of strong restocking as the global economy slowly recovered after 2009's recession. This can explain nickel’s huge outperformance (+25% ytd) over other metals (copper +5% ally -2%)
• Total stainless steel crude production rose to 15.6 million tonnes, rising 44.3 percent compared with the first half of 2009, preliminary figures from the Brussels-based International Stainless Steel Forum (ISSF) showed on Monday.
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