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The Day Ahead: Risk Aversion Back on Before Durable Goods, Jobless Claims Data
Investors are once again concerned about risk as Greece continues to make headlines. Equity futures are sharply lower and appear likely to erase a good bit of yesterday’s gains. Meantime, the dollar is pushing higher.
“The centre of controversy or uncertainty lies in Europe, and it all began early yesterday evening after Standard & Poor’s issued a report warning that it may cut Greece’s sovereign debt rating in the next month,” said Jennifer Lee from BMO Capital Markets.
S&P wrote: “Greece's large budgetary and external imbalances, combined with a continued weak external economic environment, suggest that deflationary pressures are likely to compound the country's economic travails.”
One hour before the open, Dow futures are off 55 points to 10,300 while S&P 500 futures are down 7.10 points to 1,096.50. Yesterday the Dow climbed 92 points and the S&P jumped 10.64 points.
WTI crude oil is 45 cents lower to $79.55 per barrel and Spot Gold is down $1.86 to $1,095.89.
Key Events Today:
8:30 ― Durable Goods are expected to thrive in January. The consensus is to see a 1.5% advance, compared to just 0.3% in December, as aircraft orders from Boeing were strong. The “core index” ― non-defense capital goods orders excluding aircraft ― will give a better indication of where things are at. Last month the component climbed 2.2%.
“About 40% of the projected increase will come from a rebound in aircraft,” estimate economists from IHS Global Insight. “Most durables orders should show respectable gains of about 1%, but get an additional kick upwards from defense orders. There is strong underlying after-tax earnings momentum, and that should continue to provide solid momentum for orders in early 2010.”
8:30 ― Initial Jobless Claims were on a fairly steady downtrend in the final months of last year but recently volatility has set in. The four-week average rose by 2k to 462k in January, and things weren’t looking any better as weekly claims rose by 31k to 473k in the week ending February 13.
This week the expectation is to see 460k claims, but as Ian Shepherdson from High Frequency Economics notes, “uncertainty is huge because of the weather.”
Analysts from Nomura added: “The abrupt turn in initial jobless claims adds to concerns that the labor picture may not be improving as quickly as anticipated. If claims remain at the current level for the remainder of February we would likely forecast negative nonfarm payroll employment growth for the month.”
8:35 ― Sandra Pianalto, president of the Cleveland Fed, speaks at the Dayton Area Chamber of Commerce Government Affairs Breakfast.
9:00 ― Ben Bernanke repeats his testimony from Wednesday, so the Q&A session will be the focus.
“The Q/A session will provide an opportunity to clarify issues that may have been misinterpreted by market participants,” said analysts from BMO. “But really, the Chairman couldn’t have been any clearer in saying that the Fed has no intention of raising policy rates for an ‘extended period’. And, given the sickening 11.2% plunge in new home sales to record lows in January, he’s unlikely to stray from that message today.”
12:35 ― James Bullard, speaks to the St. Louis Fed, speaks to an economic forecast luncheon at Texas A&M University-Texarkana.
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The Day Ahead: Risk Aversion Back on Before Durable Goods, Jobless Claims Data
Investors are once again concerned about risk as Greece continues to make headlines. Equity futures are sharply lower and appear likely to erase a good bit of yesterday’s gains. Meantime, the dollar is pushing higher.
“The centre of controversy or uncertainty lies in Europe, and it all began early yesterday evening after Standard & Poor’s issued a report warning that it may cut Greece’s sovereign debt rating in the next month,” said Jennifer Lee from BMO Capital Markets.
S&P wrote: “Greece's large budgetary and external imbalances, combined with a continued weak external economic environment, suggest that deflationary pressures are likely to compound the country's economic travails.”
One hour before the open, Dow futures are off 55 points to 10,300 while S&P 500 futures are down 7.10 points to 1,096.50. Yesterday the Dow climbed 92 points and the S&P jumped 10.64 points.
WTI crude oil is 45 cents lower to $79.55 per barrel and Spot Gold is down $1.86 to $1,095.89.
Key Events Today:
8:30 ― Durable Goods are expected to thrive in January. The consensus is to see a 1.5% advance, compared to just 0.3% in December, as aircraft orders from Boeing were strong. The “core index” ― non-defense capital goods orders excluding aircraft ― will give a better indication of where things are at. Last month the component climbed 2.2%.
“About 40% of the projected increase will come from a rebound in aircraft,” estimate economists from IHS Global Insight. “Most durables orders should show respectable gains of about 1%, but get an additional kick upwards from defense orders. There is strong underlying after-tax earnings momentum, and that should continue to provide solid momentum for orders in early 2010.”
8:30 ― Initial Jobless Claims were on a fairly steady downtrend in the final months of last year but recently volatility has set in. The four-week average rose by 2k to 462k in January, and things weren’t looking any better as weekly claims rose by 31k to 473k in the week ending February 13.
This week the expectation is to see 460k claims, but as Ian Shepherdson from High Frequency Economics notes, “uncertainty is huge because of the weather.”
Analysts from Nomura added: “The abrupt turn in initial jobless claims adds to concerns that the labor picture may not be improving as quickly as anticipated. If claims remain at the current level for the remainder of February we would likely forecast negative nonfarm payroll employment growth for the month.”
8:35 ― Sandra Pianalto, president of the Cleveland Fed, speaks at the Dayton Area Chamber of Commerce Government Affairs Breakfast.
9:00 ― Ben Bernanke repeats his testimony from Wednesday, so the Q&A session will be the focus.
“The Q/A session will provide an opportunity to clarify issues that may have been misinterpreted by market participants,” said analysts from BMO. “But really, the Chairman couldn’t have been any clearer in saying that the Fed has no intention of raising policy rates for an ‘extended period’. And, given the sickening 11.2% plunge in new home sales to record lows in January, he’s unlikely to stray from that message today.”
12:35 ― James Bullard, speaks to the St. Louis Fed, speaks to an economic forecast luncheon at Texas A&M University-Texarkana.
Treasury Auctions:
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