ANZ Morning Note / 29 March 2010 / 1 of 6 ECONOMICS & MARKETS RESEARCH ANZ MORNING NOTE 29 MARCH 2010 OVERNIGHT MARKETS UPDATE • US bond yields declined marginally on Friday on higher demand as investors ANZ AUSTRALIAN found treasuries attractive following three straight days of rise in yields. Month- MACROECONOMICS, end buying, negative revision to US GDP growth and no scheduled bond auction FX & COMMODITIES for the following week also supported the demand. The yield on 2-year notes RESEARCH decreased 4bps to 1.040%, whilst the 10-year yield declined 3bps to 3.847%. CONTRIBUTORS • Australian bond futures traded inline but underperformed the rebound for US Treasuries at the shorter end of the curve. The implied yield on 3-year bond Warren Hogan Chief Economist, Australia futures was down 1bp to 5.360% (price up 1bp to 94.640) and the implied yield +61 2 9227 1562 on the 10-year bond futures closed flat at 5.770% (price flat at 94.230). Warren.Hogan@anz.com • US equities posted a mixed performance on Friday. The decision of the eurozone Amy Auster Head of FX Research countries to support Greece if needed was a positive, while a downward revision +61 3 9273 5417 to fourth quarter US GDP growth proved a dampener. The DJIA was up 0.1% to Amy.Auster@anz.com 10850, the S&P 500 rose 0.1% to 1167 and the Nasdaq declined 0.1% to 2395. Mark Pervan Head of Commodity • European equities declined on Friday on the back of broker downgrades in the Research utility sector, while energy stocks weakened on lower crude oil prices. Pharma +61 3 9273 3716 stocks too edged lower after Germany announced plans to cut patented drug Mark.Pervan@anz.com prices. The DJ Euro Stoxx 50 lost 0.2% to 2941, the German DAX declined 0.2% Tony Morriss to 6120 and the FTSE was 0.4% lower at 5703. Senior Rates Strategist, Tony.Morriss@anz.com • The Australian SPI 200 Mar 10 futures contract was unchanged at 4924. Shane Lee • The USD weakened overnight as risk apetite improved after the release of a draft Senior Economist, +61 2 92264632 proposal to address Greece’s financial problems. EUR/USD opens stronger Shane.Lee@anz.com around 1.3480, rising sharply on Friday night. GBP/USD gained 0.8% and starts Julie Toth this week stronger around 1.4960. USD/JPY traded range-bound overnight and Senior Economist, opens this morning slightly weaker at 92.50. +61 3 9273 6252 Julie.Toth@anz.com • The AUD weakened against major crosses overnight. AUD/USD dropped sharply Dr. Alex Joiner early in the session, managing to recoup some losses and opens the week around Economist, 0.9055. AUD/EUR dropped sharply and trades at 0.6720. AUD/JPY opens lower +61 3 9273 6123 Alex.Joiner@anz.com at 83.70, falling steadily throughout the session and the AUD/NZD trades around 1.2830 after trading relatively range bound on Friday. Amber Rabinov Economist • Crude oil fell on Friday as reports showed US GDP increased by less than +61 3 9273 4853 Amber.Rabinov@anz.com expected, raising concerns that demand for fuel might decline. WTI futures contract for May 10 fell 0.7% to US$80.00 a barrel. Melissa Fenech Research Analyst • Spot gold was up on speculation that demand for the precious metal would +61 3 9273 1590 increase on rising debt concerns in Europe. The metal was also supported by a Melissa.Fenech@anz.com weaker USD. Spot gold rose 1.6% to US$1,107.50 an ounce. Natalie Robertson Commodity Research • LME copper increased 1.1% to US$7,515 after reports showed that inventories Analyst on the LME dropped to a two-month low. Other base metals traded mixed with +61 3 9273 3415 Natalie.Robertson@anz.com lead and nickel increasing 2.3% and 3.4%, respectively. Aluminium remained unchanged, while zinc declined 0.7%. ANZ Morning Note / 29 March 2010 / 2 of 6 ECONOMICS & MARKETS RESEARCH ANZ MORNING NOTE 29 MARCH 2010 • US corn and soybeans rose 0.4% and 1.0%, respectively, as a weaker USD increased the demand for commodities as an alternative investment. Wheat declined 0.4%, to its five-month low, on speculation that global production would ANZ AUSTRALIAN MACROECONOMICS, increase. Sugar fell 0.3% as countries delayed purchases on expectations that FX & COMMODITIES prices would continue to fall. Palm oil futures were 1.6% lower. RESEARCH Please note that the prices/rates have been updated at 0700 AEST CONTRIBUTORS Warren Hogan Chief Economist, Australia +61 2 9227 1562 Warren.Hogan@anz.com Amy Auster Head of FX Research +61 3 9273 5417 Amy.Auster@anz.com Mark Pervan Head of Commodity Research +61 3 9273 3716 Mark.Pervan@anz.com Tony Morriss Senior Rates Strategist, Tony.Morriss@anz.com Shane Lee Senior Economist, +61 2 92264632 Shane.Lee@anz.com Julie Toth Senior Economist, +61 3 9273 6252 Julie.Toth@anz.com Dr. Alex Joiner Economist, +61 3 9273 6123 Alex.Joiner@anz.com Amber Rabinov Economist +61 3 9273 4853 Amber.Rabinov@anz.com Melissa Fenech Research Analyst +61 3 9273 1590 Melissa.Fenech@anz.com Natalie Robertson Commodity Research Analyst +61 3 9273 3415 Natalie.Robertson@anz.com ANZ Morning Note / 29 March 2010 / 3 of 6 ECONOMIC DATA & EVENTS OVERNIGHT DATA AND EVENTS (MARKET EXPECTATIONS, LAST OBSERVATION) • US GDP Annualised q/q (4Q T) was revised marginally downwards to 5.6% (5.9%, 5.9%). This, however, marked the best performance in six years with inventory adjustments accounting for 3.8% of the GDP and business investment growing at 19.0%. Business earnings rose 8.0% while exports surged 22.8%, contributing significantly to the recovery. • US GDP Price Index q/q (4Q T): 0.5% (0.4%, 0.4%) • US GDP Personal Consumption q/q (4Q T): 1.6% (1.7%, 1.7%) • US GDP Personal Consumption Core Price Index q/q (4Q T):1.8% (1.6%, 1.6%) • US Uni. of Michigan Consumer Confidence Survey (Mar F) increased to 73.6 (73.0, 72.5) from the mid-March estimate on lower payroll cuts and an increase in stock prices. The index, however, remained flat compared to February, as a rise in the current conditions sub-index was offset by a fall in the expectation sub-index. • UK Business Investment q/q (4Q F) fell 4.3% (-5.8%, -5.8%), the sharpest drop since 2000, as investments in manufacturing and construction sectors declined to its lowest levels in more than a decade. • UK Business Investment y/y (4Q F): -23.5% (-24.1%) • US Federal Reserve Board Governor Daniel Tarullo commenting on release of bank-supervision data: “Increased transparency could be an important addition to the information available to investors and counterparties of the largest institutions…will be most effective if market participants have adequate information with which to make informed judgments.” • US Federal Reserve Board Governor Kevin Warsh said: “Taking account of the broad range of economic and financial conditions, there is no wonder that the electorate in the United States and abroad is unnerved…Significant economic challenges persist…The Federal Reserve must do its utmost to stay foursquare within its role as liquidity provider.” • EU ECB Executive Board Member Lorenzo Bini Smaghi on IMF involvement in Greece: “It’s not ideal or the best solution…But politically that’s what’s been decided and we will have to make it work.” • EU Luxembourg Prime Minister Jean-Claude Juncker on the decision to support Greece: “I am very satisfied with this decision, though I would have preferred a purely Europe-based solution…The biggest part of the financing will happen through the 16 euro nations…this would also have worked without a participation from the IMF…I completely excluded any measure that would have been based purely on IMF aid…The Greek crisis showed that we don’t have an instrument at our disposal…The idea suggested by Germany for a European Monetary Fund is a good initiative.” • EU ECB Vice President-elect Vitor Constancio on IMF’s aid to Greece: “I said at the European Parliament last Monday that I think the IMF is not necessary and that it should not have a role in dealing with the Greek problem.” • EU ECB Vice President Lucas Papademos on an agreement on Greece: “This is a positive one and it establishes a mechanism for financial support that may be used by Greece if needed but it is not expected that this facility will be activated, taking into account the commitment and determination of the Greek authorities to implement the necessary measures.” • PBoC adviser Fan Gang: “China may resume a managed float of its exchange rate, particularly if the uncertainty of the overall post-crisis economic situation diminishes.” ANZ Morning Note / 29 March 2010 / 4 of 6 ECONOMIC DATA & EVENTS UPCOMING DATA AND EVENTS • JP: Large Retailers' Sales – (Feb): Market: -5.4 Last: -5.7% - 23:50 GMT (10.50 AEST) • JP: Retail Trade y/y – (Feb): Market: 1.7 Last: 2.3% - 23:50 GMT (10.50 AEST) • JP: Retail Trade m/m – (Feb): Market: -1.2 Last: 2.0% - 23:50 GMT (10.50 AEST) • CH: Leading Index – (Feb): Last: 104.80 • EU: Business Climate Indicator – (Mar): Last: -0.98 - 09:00 GMT (20.00 AEST) • EU: Euro-Zone Indust. Confidence – (Mar): Market: -11 Last: -13 - 09:00 GMT (20.00 AEST) • EU: Euro-Zone Consumer Confidence – (Mar F): Market: -17 Last: -17 - 09:00 GMT (20.00 AEST) • EU: Euro-Zone Economic Confidence – (Mar): Market: 97.4 Last: 95.9 - 09:00 GMT (20.00 AEST) • EU: Euro-zone Services Confidence – (Mar): Market: 2 Last: 1 - 09:00 GMT (20.00 AEST) • EU: ECB's Orphanides Speaks in Surrey - 16:45 GMT (03.45 AEST) • GE: Consumer Price Index m/m – (Mar P): Market: 0.3% Last: 0.4% • GE: Consumer Price Index y/y – (Mar P): Market: 0.9% Last: 0.6% • GE: CPI - EU Harmonised m/m – (Mar P): Market: 0.3% Last: 0.4% • GE: CPI - EU Harmonised y/y – (Mar P): Market: 0.9% Last: 0.5% • GE: Import Price Index m/m – (Feb): Market: 0.4% Last: 1.7% • GE: Import Price Index y/y – (Feb): Market: 2.0% Last: 1.4% • UK: Net Consumer Credit – (Feb): Market: 0.4B Last: 0.5B - 08:30 GMT (19.30 AEST) • UK: Net Lending Sec. on Dwellings – (Feb): Last: 1.5B - 08:30 GMT (19.30 AEST) • UK: Mortgage Approvals – (Feb): Market: 48.2K Last: 48.2K - 08:30 GMT (19.30 AEST) • UK: M4 Money Supply m/m – (Feb F): Last: 0.2% - 08:30 GMT (19.30 AEST) • UK: M4 Money Supply y/y – (Feb F): Last: 3.6% - 08:30 GMT (19.30 AEST) • UK: BoE’s Dale speaks in Surrey - 16:45 GMT (03.45 AEST) • UK: Nat'wide House prices m/m – (Mar): Market: 0.2% Last: -1.0% • UK: Nat'wide House prices y/y – (Mar): Market: 8.2% Last: 9.2% • US: Personal Income – (Feb): Market: 0.1% Last: 0.1% - 12:30 GMT (23.30 AEST) • US: Personal Spending – (Feb): Market: 0.3% Last: 0.5% - 12:30 GMT (23.30 AEST) • US: PCE Deflator y/y – (Feb): Market: 1.8% Last: 2.1% - 12:30 GMT (23.30 AEST) • US: PCE Core m/m – (Feb): Market: 0.1% Last: 0.0% - 12:30 GMT (23.30 AEST) • US: PCE Core y/y – (Feb): Market: 1.3% Last: 1.4% - 12:30 GMT (23.30 AEST) • US: Treasury’s Geithner speaks - 14:00 GMT (01.00 AEST) • US: Dallas Fed Manf. Activity – (Mar): Last: -0.1% - 14:30 GMT (01.30 AEST) ANZ Morning Note / 29 March 2010 / 5 of 6 MARKET TABLES TABLE 1: FIXED INCOME* LEVEL CHANGE LEVEL CHANGE US 2y note US 2y swap 1.040 -4.0 1.19 -3.8 US 5y note US 5y swap 2.587 -4.4 2.71 -4.8 US 10y note US 10y swap 3.847 -3.1 3.79 -4.1 US 30y bond AUS 3y swap 4.746 -1.2 5.51 -6.7 US 2y swap spread AUS 5y swap 14.63 2.2 5.85 -4.4 US 5y swap spread AUS 10y swap 11.00 1.9 6.17 0.3 US 10y swap spread NZ 3y swap -5.75 1.5 4.73 0.0 AUS 3y NZ 10y swap 94.640 1.0 5.91 -1.0 AUS 10y AUS 3m bills 94.230 -0.5 4.39 -1.3 US 3m Libor NZ 3m bills 0.289 0.1 2.67 0.0 Source: ANZ and Bloomberg. Change in basis points TABLE 2: FOREIGN EXCHANGE# LAST CHANGE OVERNIGHT RANGE CURRENT VS AUD AUD 0.9062 0.0022 0.9002 - 0.9114 - TWI* 71.4000 - - - NZD 0.7059 0.0019 0.7016 - 0.7092 1.2839 EUR 1.3485 0.0075 1.3325 - 1.3425 0.6720 JPY 92.19 -0.3300 92.31 - 92.9 83.56 GBP 1.4953 0.0056 1.4805 - 1.4893 0.6060 CAD 1.0252 -0.0014 1.0208 - 1.0304 0.9290 CHF 1.0586 -0.0066 1.0637 - 1.0725 0.9593 DXY 81.6090 -0.5610 0.9002 - 0.9114 - Source: ANZ and Bloomberg. * As at 4pm AEST yesterday. Change in pips. #NB. Overnight ranges for European and New York trading sessions (0700-21:00 GMT) TABLE 3: EQUITY MARKETS AND COMMODITIES* LAST CHANGE LAST CHANGE Dow Jones Gold ($US/ounce) 10850 0.1 1107.5 1.6 S&P Copper ($US/tonne) 1167 0.1 7515.0 1.1 Nasdaq Nickel ($US/tonne) 2395 -0.1 23600.0 3.4 FTSE 100 CRB Index 5703 -0.4 267.3 -0.2 DAX Oil ($US/barrel) 6120 -0.2 80.00 -0.7 Source: ANZ and Bloomberg. Change in %. *NB. Indicative levels only. Some base metal prices may not be in real time. Please speak to your ANZ representative if you require the latest market pricing. ANZ Morning Note / 29 March 2010 / 6 of 6 IMPORTANT NOTICE Australia and New Zealand Group Limited is represented in: AUSTRALIA UNITED STATES OF AMERICA Australia and New Zealand Banking Group Limited ANZ Securities, Inc. is a member of FINRA (www.finra.org) and registered with the SEC. ABN 11 005 357 522 277 Park Avenue, 31st Floor, ANZ Centre Melbourne, Level 9, 833 Collins Street, Docklands Victoria 3008, Australia New York, NY 10172, United States of America Telephone +61 2 9226 4647 Fax +61 3 9273 5711 Tel: +1 212 801 9160 Fax: +1 212 801 9163 UNITED KINGDOM BY: NEW ZEALAND BY: Australia and New Zealand Banking Group Limited ANZ National Bank Limited ABN 11 005 357 522 Level 7, 1-9 Victoria Street, Wellington, New Zealand 40 Bank Street, Canary Wharf, London, E14 5EJ, United Kingdom Telephone +64 4 802 2000 Telephone +44 20 3229 2121 Fax +44 20 7378 2378 This document (“document”) is distributed to you in Australia and the United Kingdom by Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (“ANZ”) and in New Zealand by ANZ National Bank Limited (“ANZ NZ”). ANZ holds an Australian Financial Services licence no. 234527 and is authorised in the UK and regulated by the Financial Services Authority (“FSA”). This document is being distributed in the United States by ANZ Securities, Inc. (“ANZ S”) (an affiliated company of ANZ), which accepts responsibility for its content. Further information on any securities referred to herein may be obtained from ANZ S upon request. Any US person(s) receiving this document and wishing to effect transactions in any securities referred to herein should contact ANZ S, not its affiliates. This document is being distributed in the United Kingdom by ANZ solely for the information of its eligible counterparties and professional clients (as defined by the FSA). It is not intended for and must not be distributed to any person who would come within the FSA definition of “retail clients”. Nothing here excludes or restricts any duty or liability to a customer which ANZ may have under the UK Financial Services and Markets Act 2000 or under the regulatory system as defined in the Rules of the FSA. This document is issued on the basis that it is only for the information of the particular person to whom it is provided. This document may not be reproduced, distributed or published by any recipient for any purpose. This document does not take into account your personal needs and financial circumstances. Under no circumstances is this document to be used or considered as an offer to sell, or a solicitation of an offer to buy. In addition, from time to time ANZ, ANZ NZ, ANZ S, their affiliated companies, or their respective associates and employees may have an interest in any financial products (as defined by the Australian Corporations Act 2001), securities or other investments, directly or indirectly the subject of this document (and may receive commissions or other remuneration in relation to the sale of such financial products, securities or other investments), or may perform services for, or solicit business from, any company the subject of this document. If you have been referred to ANZ, ANZ NZ, ANZ S or their affiliated companies by any person, that person may receive a benefit in respect of any transactions effected on your behalf, details of which will be available upon request. The information herein has been obtained from, and any opinions herein are based upon, sources believed reliable. The views expressed in this document accurately reflect the author’s personal views, including those about any and all of the securities and issuers referred to herein. The author however makes no representation as to its accuracy or completeness and the information should not be relied upon as such. All opinions and estimates herein reflect the author’s judgement on the date of this document and are subject to change without notice. No part of the author's compensation was, is or will directly or indirectly relate to specific recommendations or views expressed about any securities or issuers in this document. ANZ, ANZ NZ, ANZ S, their affiliated companies, their respective directors, officers, and employees disclaim any responsibility, and shall not be liable, for any loss, damage, claim, liability, proceedings, cost or expense (“Liability”) arising directly or indirectly (and whether in tort (including negligence), contract, equity or otherwise) out of or in connection with the contents of and/or any omissions from this communication except where a Liability is made non-excludable by legislation. Where the recipient of this publication conducts a business, the provisions of the Consumer Guarantees Act 1993 (NZ) shall not apply.
Pages to are hidden for
"AUSTRALIAN MORNING NOTE"Please download to view full document