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Reports US

US stock market, economy and companies update (March 20, 2014)

March 20, 2014, Thursday, 16:51 GMT | 13:51 EST | 22:21 IST | 00:51 SGT
Contributed by Trade The News

- US equities are doing much better than equity indices in Asia and Europe, which have seen steep declines after the FOMC decision. Decent weekly claims data and the very good Philly Fed data are helping US indices. As of writing, the DJIA is up 0.29%, the S&P500 is up 0.24% and the Nasdaq is up 0.14%.

- Analysts have been discussing the FOMC decision relentlessly since 14:00ET yesterday afternoon. In the post-FOMC press conference, Chair Yellen suggested the Fed would consider hiking rates as soon as six months after the end of QE3. Under a strict interpretation, if asset purchases end in November of this year as expected, the first rate hike would arrive in the second quarter of 2015. However, many are strongly highlighting that Yellen was emphatic markets should not make strict interpretations. Yellen reiterated what all of her colleagues and former chair Bernanke repeated again and again: the first rate hike is highly data-dependent, and will reflect a balanced judgment about prospects both for labor market slack and inflation pressure.

- Treasury yields are sustaining the losses seen yesterday in the wake of the FOMC decision. The yield of the 10-year UST rose as high as 2.77% this morning - well off Tuesday's 2.670% level - before consolidating slightly. The sell-off was even more pronounced at the short end: the two-year jumped to 0.43% from 0.35% on Tuesday and the five-year rose to 1.71% from 1.54%. Spot gold lost 1.3% yesterday and is down another 1% this morning.

- The dollar has strengthened considerably post-FOMC. EUR/USD tested as low as 1.3750 before consolidating a bit, compared to 1.3920 before the decision. The yen is a bit firmer compared to yesterday - when USD/JPY topped out around 102.68 - and the pair is around 102.35 currently. Focus is also on the yuan, with USD/CNY hitting the critical 6.20 handle that analysts say trigger rafts of target redemption forward (TRF) contracts.

- The February existing home sales came in at their lowest level since mid 2012, right in line with consensus expectations. The factors behind the weak housing data are well known at this point, and the NAR highlighted restrictive mortgage lending standards and lower housing affordability. Distressed and all-cash sales both saw a slight increase.

- Shares of financial names saw volatile trading yesterday afternoon during and after the press conference. Traders see the prospect of higher short-term rates as a boon for the banks. This morning bank shares are seeing sustained gains in heavy volume. JPMorgan is up 2.5%, Citi and Morgan Stanley are up 2%. Regional banks saw big gains after the press conference and are seeing another 1-2% gain this morning. Note that the results of the 2014 Fed bank stress tests will be released today after the close.

- Coal names are down sharply this morning, with metallurgical coal producer Walter Coal down 13% and other names down in the low single digits. Bank of America/Merrill Lynch warned that met coal prices are struggling to find a floor as firms keep resisting output cuts, leading to industry oversupply.

***Looking Ahead***
- 12:00 (CO) Colombia Q4 GDP Q/Q: 1.3%e v 1.1% prior; Y/Y: 4.7%e v 5.1% prior; Full year 2013 GDP: 4.1%e v 4.2% prior (revised from 4.2%)
- 12:00 (UK) BOE announcement on nest week APF operations
- 13:00 (US) Treasury to sell $13B in 10-Year TIPS Reopening
- 13:00 (BR) Brazil to sell 2014, 2016, 2018 Bills
- 13:00 (BR) Brazil to sell Fixed-rate 2021 and 2025 bonds
- 13:30 (SE) Sweden Central bank (Riksbank) Dep Gov Skingley
- 15:00 (US) API Monthly Statistical Report
- 15:00 (AR) Argentina Feb Trade Balance: $350Me v $35M prior
- 16:00 (US) Fed releases Dodd-Frank Act Supervisory Stress Test Results

***Economic Data***
- (IT) Italy Current Account Balance: -€1.3B v +€1.9B prior
- (UK) Mar CBI Industrial Trends Total Orders: 6 v 5e; Selling Prices: 12 v 17 prior
- (IL) Israel Jan Manufacturing Production M/M: -1.4 v +1.8% prior
- (IE) Ireland Feb PPI M/M: -0.2 v 0.4% prior; Y/Y: -1.4 v -1.5% prior
- (RU) Russia Feb Unemployment Rate: 5.6% v 5.7%e
- (RU) Russia Feb Real Retail Sales M/M: -0.1% v -1.5%e; Y/Y: 4.1% v 2.6%e
- (RU) Russia Feb Real Disposable Income: +1.0% v -1.0%e
- (US) Initial Jobless Claims: 320K v 322Ke; Continuing Claims: 2.889M v 2.88Me
- (US) Mar Philadelphia Fed Business Outlook: +9.0 v +3.2e
- (US) Feb Existing Home Sales: 4.6M v 4.60Me
- (US) Feb Leading Index: 0.5% v 0.2%e
- (BE) Belgium Mar Consumer Confidence Index: -8 v -4 prior
- (MX) Mexico Q4 Aggregate Supply and Demand: 0.4% v 0.5%e
- (US) Weekly EIA Natural Gas Inventories: -48 bcf v -57 to -61 bcf expected