The start of the new month and the focus shifts to the array of PMI data from across the globe. Yesterday, the Chicago PMI set the tone with a strong reading of 64.0 from 60.2 (61.0 expected) but Asia was not quite able to match this stellar reading. Australia’s manufacturing PMI slid slightly to 51.3 from 51.6 (third month above the 50 mark and the first time since August 2010 it has managed that). Notes accompanying the report suggested that the Australian manufacturing side was showing some resilience despite the strong AUD, though dips were seen in wages, inventories, supplier deliveries and employment components.
China’s official manufacturing PMI posted further gains to 51.0 from 50.5 and also showed improvement for the third straight month. The separate HSBC report too showed improvement for the third month in a row, albeit at lower levels. The index rose to 49.6 in February to mark its highest levels since October. The sub-index of new export orders rose to 51.1, its highest since May however there may be an inflation signs as the sub-index on input prices jumped 4 points to 54 from 50.
In other data releases, Australia’s private capital expenditure was a mild disappointment on the headline with an unexpected decline of 0.3 percent q/q, with consensus forecasts looking for +3.2 percent. However, this was tempered somewhat by an upward revision to last quarter’s hefty 12.3 percent increase to 14.6 percent (the biggest gain in 15 years).
The market reaction to the data overall was quite muted though we appeared to put a base under risk currencies after an early sell-off.
Overnight, any kind of currency volatility in the aftermath of the second ECB 3-year LTRO were dispensed with very quickly as the allotment came in almost bang in line with expectations at €529 bln. It was Fed Chairman Bernanke’s semi-annual testimony however that proved to be more of a market mover.
In his prepared statements for Congress, Mr. Bernanke noted some small improvement in the US economy, particularly in the labour market, but the pace of expansion was still “uneven and modest by historical standards”. However, there was no mention of further easing measures and markets took this as a sign to reduce risk and, as our Chief Economist Steen Jakobsen pointed out, gives an indication of how dependent on “cheap money forever” investors have become. The big hit was in gold which gave back almost $80 worth of recent gains as the USD rallied almost 0.9 percent on the index versus the day’s lows. GBP performed well, managing to hold above the recent breakout above the 200-day MA, as BOE’s Weale questioned the need for more QE after the current programme has been completed.
Data Highlights
US Q4 GDP Revision out at +3.0% q/q vs. 2.8% expected and 2.8% prior
CA Dec. Teranet/National Bank House Price Index out at -0.2% m/m, as expected and unchanged from prior
US Feb. Chicago PMI out at 64.0 vs. 61.0 expected and 60.2 prior
US Feb. NAPM – Milwaukee out at 58.6 vs. 58.8 expected and 58.4 prior
NZ Q4 Terms of Trade out at -1.4% q/q vs. -1.9% expected and revised -0.6% prior
AU Feb. AiG Performance of Manufacturing Index out at 51.3 vs. 51.6 prior
JP Q4 Capital Spending out at +7.6% y/y vs. -6.5% expected and -9.8% prior
AU Jan. Building Approvals out at +0.9% m/m, -14.6% y/y vs. 2.0%/-13.7% expected and revised -0.8%/-23.9% prior resp.
AU Q4 Private Capital Expenditure out at -0.3% q/q vs. +3.8% expected and revised +14.6% prior
China Feb. PMI Manufacturing out at 51.0 vs. 50.9 expected and 50.5 prior
China Feb. HSBC PMI Manufacturing out at 49.6 vs. 48.8 prior
Upcoming Economic Calendar Highlights (All Times GMT)
Swiss Q4 GDP (0645)
UK Nationwide House Prices (0700)
Sweden Swedbank PMI (0730)
Norway PMI (0800)
Sweden C/A Balance (0830)
Swiss PMI Manufacturing (0830)
GE PMI Manufacturing (0855)
Norway Unemployment (0900)
EU PMI Manufacturing (0900)
UK PMI Manufacturing (0930)
EU Euro-zone CPI Estimate (1000)
EU Euro-zone Unemployment Rate (1000)
CA Industrial Product/Raw Material Prices (1330)
US Personal Income/Spending (1330)
US Initial Jobless Claims (1330)
US Bloomberg Consumer Comfort Index (1445)
US Fed’s Bernanke to testify (1500)
US Construction Spending (1500)
US ISM Manufacturing (1500)
US ISM Prices Paid (1500)
US Fed’s Raskin to speak (1530)
Andrew Robinson,
SAXO BANK