Overview: Mildly risk on day with stocks, commodities, and some risk fx higher. Major news has been the weak US and ECB bond auctions and a Moody’s warning that austerity may not be enough to save the PIIGS from default – a restatement of the obvious (indeed austerity hasn’t really even helped them thus far) but nonetheless another burden on the EU and EUR.
The only remaining scheduled calendar reports of note come Thursday: China HSBC Mfg PMI, US first time jobless claims, pending home sales, for the few traders still on hand.
STOCKS: US: Mixed/Flat – For the second straight day, the major US indices close just above or below their starting point on very low volume as snow, holidays, and mixed data suppress volatility. Tepid reports on consumer confidence and housing were balanced by strong December consumer spending. Still, given the weak Asian close,
With such quiet trade, it’s time to look ahead to 2011. See our special report: Summary 2011 Outlook And Selections For Prosperity And Protection. For our outlook on the week see: Key Market Movers Dec 27 - 31: Will Low Liquidity, Stimulus, Render News Irrelevant Yet Again?
US Bonds: Down- 10 Year Treasury Note dives along with other Treasuries in reaction to a poor 5-year Note auction raising the yield from 3.3510% Monday to 3.4810% at the close of the US session. This may just be an aberration from low volume trade, however it could also be a red flag for markets. For must read details see our special report out today: Weak US Note Auction: Thin Volume Aberration Or Ominous Warning?
Asia Stock Outlook: Up –Most major Asian stock markets closed higher on bargain hunting after 2 days of declines following news of China’s rate hike and rare earth element export cuts.
European Stock Outlook: Up – With UK markets back European markets were mostly higher following through on the Asian upbeat Asian close.
Commodities Outlook Tuesday To Midday GMT Wednesday: Commodities Overall Following Risk Appetite Up Over The Past 24 Hours, Multiday Up Trends All Intact.
Gold, silver: Up: Both solidly higher over the past 24 hours, especially silver (breaking decisively over $30 to $30.33/oz. Silver is holding those gains and is flat thus far today, gold slightly lower but still holding onto $1400 support at the upper end of its December range
Crude oil: Down – Futures falling despite rising equities thus far today and has given back all of yesterday’s gains and then some, still struggling to hold the $91 level.
Copper: Up over the past 24 hours, flat thus far today, holding yesterday’s gains.
Grains & Softs: Wheat, coffee, sugar up over the past 24 hours and mostly moving higher thus far today, soybeans, cotton down.
FOREX Daily Outlook Tuesday To Midday GMT Wednesday: Strongest over the past 24 hours: NZD, JPY, AUD in that order. Weakest over the past 24 hours: EUR, GBP, USD.
US Dollar Daily Outlook: Up vs. the EUR, GBP, down vs. CHF, JPY, commodity dollars
Euro Daily Outlook: Down vs. all due mostly to:
Yesterday’s ECB failure to sell its portfolio of bonds in order to reduce the money supply and thus ‘sterilize’ PIIGS bond purchases by removing the same quantity of Euros from the markets that it pumped in via PIIGS bonds purchases. That suggests coming inflation for the Euro should this trend continue. For must read details on the ramifications, see our special report out today: Weak US Note Auction: Thin Volume Aberration Or Ominous Warning?
A Moody’s warning that austerity alone may not save the weakest economies (duuuuh! – it hasn’t even helped them thus far) from default
Downbeat reports about the UK’s economic outlook
Yen Daily Outlook: Up vs. all over the past 24 hours except down vs. the NZD on technical and portfolio adjustments.
British Pound Daily Outlook: Down vs. all except up vs. the EUR over the past 24 hours, steady or recovering vs. the all but the commodity dollars thus far today.
Australian Dollar Daily Outlook: Up vs. all except down vs. the NZD and JPY.
New Zealand Dollar Daily Outlook: Up vs. all aided by a risk rally in stocks, commodities.
Canadian Dollar Daily Outlook: Up vs. all except down vs. the NZD, JPY, AUD, and CHF, the fifth strongest over the past 24 hours
Swiss Franc Daily Outlook: Down vs. the NZD, JPY, CAD, up vs. all others, the fourth strongest over the past 24 hours.
DISCLOSURE & DISCLAIMER: AUTHOR SHORT EUR FOR PERSONAL PORTFOLIO, THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER