March 10, 2010
STOCK INDEX FUTURES
There was support for global equity markets after China reported that their exports increased faster than expected. China's Customs Bureau said exports increased 45.7% in February from the year ago period. The median guess called for a 38.3% advance.
S&P500 and Dow futures are closing in on new highs for the year after yesterday's anniversary of the 2009 bear market low. NASDAQ futures are already at new highs for the year.
Mortgage applications were up .5% in the week ended March 5th.
The March Bloomberg Global Confidence Index was 53.78, which compares to 54.89 in February.
The 9:00 Central Time January wholesale inventories report is expected to show a .2% increase.
Our research continues to tell us that this bull market will continue all through 2010.
CURRENCIES
There is a growing feeling that the worst of the Greek budget problems are over, at least as far as market impact is concerned.
The euro is higher after the European Union promised more support for Greece now that the government is taking substantial steps to reduce their budget deficit.
The strength in the euro was limited by news that German exports unexpectedly dropped in January. The German Federal Statistics Office said exports dropped 6.3%, when a .5% increase had been anticipated.
The British pound is lower after a report showed that U.K. manufacturing unexpectedly contracted in January. The Office for National Statistics said manufacturing output fell .9%, which was the first drop in five months. The median guess for this report called for a .2% advance. In addition, there are lingering concerns surrounding the U.K.'s budget deficit problems.
After recent gains, profit talking came into the Canadian dollar. However, in the long term, the Canadian dollar is likely to trade higher due to favorable interest rate differential expectations, along with prospects of higher commodity prices.
The Australian dollar was supported by news that China's exports were substantially more than expected. However, gains were limited by news that home loan approvals unexpectedly fell 7.9% in January.
In the longer term, the Australian currency is likely to be the strongest currency this year, followed by the Canadian dollar.
INTEREST RATES
The large amount of Treasury offerings this week is taking its toll on the market.
Prices are mostly lower in advance of today's Treasury offering of $21 billion in ten year notes. The Treasury will auction $13 billion in thirty year bonds tomorrow.
At 1:00 Treasury Secretary Geithner will testify before a House panel on the budget.
The 1:00 February Treasury budget statement is anticipated to show a $222 billion deficit.
The probability that the Federal Open Market Committee will increase their fed funds target by 25 basis points to 50 basis points at or before their November 3 meeting is 79%, according to the financial futures markets.
In an effort not to appear political, the FOMC in the past has shown a tendency not to change interest rate policies just ahead of national elections. This is one of the reasons why we believe that the U.S. central bank will not raise interest rates until next year.
We also believe that we are in the early stages of a new bear market for Treasury futures.
If you would like more information about the financials market, please contact us at 1.877.690.7303 or send an email to alan.bush@archerfinancials.com. Additional research can be found at www.archerfinancials.com/research.aspx.
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