Equity rally stalls on fresh QE concerns

Wednesday, December 11, 2013

US markets consolidated yesterday on budget concerns and tapering expectations as both the S&P 500 and DJIA closed 0.3% lower. Yields on three year treasury notes climbed to their highest level since mid-October as speculation that the Fed will keep rates low while paring bond buying saw demand for the debt rise significantly.

Asian markets extended losses during overnight trading, following the European and US sessions lower as the recent budget deal shifted focus back to stimulus concerns which weighed heavy on investor sentiment. Both the Nikkei and TOPIX opened lower, spending the entire day in negative territory, losing 0.62% and 0.47% respectively.

Three month LME copper prices rose for the third consecutive session yesterday, climbing above $7,150 as investors considered the recent Chinese data releases. The release of industrial production and retail sales figures yesterday indicated growth in November came in largely as expected, with industrial production accelerating 10% y/y in November and retail sales increasing 13.7% in the same month against Bloomberg forecasts of 10.1% and 13.2% respectively. Prices met with significant resistance in the form of both the 50 day and 100 day MA, however the recent surge in upward momentum, supported by both the RSI and slow stochastics approaching the upper signal line, suggests the possibility for further gains towards the 200 day MA around $7,200/tonne.

Iron ore prices gained further support from recent encouraging data, with the TSI 62% Fe index rising to $139.40/tonne from $135.90/tonne four weeks ago. The surge in prices at the start of the month came about as official customs statistics indicated a surge in imports in November, rising to a record 77.84m tonnes. Output from the big four miners has increased this on the back of higher crude steel production, currently 608.8m tonnes ytd. 


3 year T-note yields increase to 0.624% on demand surge

CT03 Govt US TREASURY N B 2013 12 11 08 06 24

LME 3-month copper prices extend gains for a third straigh session

LMCADS03 Comdty LME COPPER 3 2013 12 11 08 26 16

Iron ore prices increase as Chinese imports jump in November

TSIPIO62 Index China Import Iro 2013 12 11 08 35 34

Events for today: Wednesday, 11 December 2013

0700

DE

Nov

CPI

1530

US

w/e

EIA Energy Stocks

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