GLOBAL NEWS THURSDAY, SEPTEMBER 25, 2014 Unemployment claims expected to show modest gains after last week’s plunges -- The market is expecting today’s weekly initial unemployment claims report to show an increase of +16,000 to 296,000, regaining some ground after last week’s plunge of -36,000 to 280,000. Meanwhile, the market is expecting today’s continuing claims report to show an increase of +11,000 to 2.440 million, reversing part of last week’s sharp decline of -63,000 to 2.429 million. Durable goods orders expected to indicate prog¬ress on manufacturing front -- The market is expecting today’s Aug durable goods orders report to show a decline of -18.0%, reversing most of July’s surge of +22.6% that was tied to a big jump in aircraft orders. Excluding transporta¬tion and the aircraft order spike, the market is expecting today’s Aug durable goods orders report to show an increase of +0.6%, reversing nearly all of July’s -0.7% decline. There is expected to be good news on the corporate capital goods investment front today with an expected +0.4% increase in Aug non-defense ex-aircraft capital goods orders, thus regaining some ground after the -0.7% decline seen in July. 7-year T-note auction to yield near 2.27% -- The Trea¬sury today will sell $29 billion of 7-year T-notes, concluding this week’s $106 billion T-note auction package. Today’s 7-year T-note issue was trading at 2.27% in when-issued trading late yesterday afternoon. Sharp drop in inflation expectations has provided some support for the T-note market -- U.S. inflation ex¬pectations have dropped sharply in the past 1-1/2 months, providing some underlying support for the T-note market. Specifically, the 10-year breakeven inflation expectations rate has dropped by more than 20 bp from 2.25% at the begin¬ning of August to the current level of 2.04%. The 10-year breakeven inflation expectations rate measures the difference between the nominal 10-year T-note yield and the 10-year inflation-adjusted TIPS note yield. Market Recap • U.S. Aug new home sales surged +18.0% to 504,000, much stronger than expectations of +4.4% to 430,000 and the most in 6-1/4 years. • Chicago Fed President Evans said “the biggest risk we face today is prematurely engineering restrictive monetary conditions” and that “we should plan for our path of policy rate increases to be shallow in order to be sure that the economy’s momentum is sustainable in the presence of less accommodative financial conditions.” • Cleveland Fed President Mester said the U.S. economy is making “significant” progress and a faster pace of improvement would argue for earlier liftoff and more rapid interest rate increases. • The German Sep IFO business climate fell -1.6 to 104.7, weaker than expectations of -0.5 to 105.8 and the lowest in 17 months. • Market closes • Stock Market -- The S&P 500 index on Wednesday closed higher: S&P 500 +0.78%, Dow Jones +0.90%, Nasdaq +1.05%. Bullish factors included (1) the +18.0% surge in U.S. Aug new home sales to 504,000, much stronger than market expectations of +4.4% to 430,000 and the most in 6-1/4 years, and (2) reduced geopolitical concerns in Ukraine after NATO said that Russia has embarked on a “significant” withdrawal of forces from Ukraine, which adds to signs that the truce between Ukraine forces and separatists is holding. • Interest Rates -- Closes: TYZ4 -8.00, FVZ4 -5.25. • Forex -- Closes: Dollar index +0.379 (+0.45%), EUR/USD -0.00667 (-0.52%), USD/JPY +0.155 (+0.14%). • Metals -- Closes: GCZ4 -2.5 (-0.20%), SIZ4 -0.077 (-0.43%), HGZ4 +0.0185 (+0.61%). • Energy -- Nov crude and gasoline prices on Wednesday closed higher: CLX4 +1.24 (+1.35%), RBXX4 +0.0083 (+0.33%).
Posted on: Thu, 25 Sep 2014 06:23:45 +0000