CURRENCY MARKET WRAP
As of Thu 16 Jan, Singapore Time zone UTC+8
U.S. Dollar Index, -0.17%, 97.21
USDJPY, +0.08%, $109.89
EURUSD, +0.20%, $1.1150
GBPUSD, +0.18%, $1.3041
USDCAD, -0.15%, $1.3043
AUDUSD, +0.04%, $0.6904
NZDUSD, +0.02%, $0.6617
U.S. PPI for final demand increased 0.1% (consensus +0.2%) and so did the PPI for final demand, excluding food and energy (consensus +0.2%). Those changes left the yr/yr increases at 1.3% and 1.1%, respectively, versus 1.1% and 1.3% in November. The Empire State Manufacturing Survey for January increased to 4.8 (consensus 2.8) from the prior month’s reading of 3.5.
U.S. and China signed Phase One of Trade Deal. The pause in the trade war gives Trump something concrete to offer farmers, a crucial element of his Midwestern firewall, heading into the 2020 election. Under the agreement, China has promised to buy an additional $12.5 billion in US agricultural products in year one, and then $19.5 billion in year two. Those commitments come atop roughly $24 billion in farm purchases that China made in 2017, before the trade war started. In exchange, the United States agreed to reduce tariffs on $120 billion in Chinese products from 15% to 7.5%. The lack of new details wasn’t supportive for further risk appetite, as the news was mostly priced in.
U.S. Treasuries ended the session on a higher note as part of a defensive-oriented trade. The 2-yr yield and the 10-yr yield declined three basis points each to 1.55% and 1.79%, respectively. The U.S. Dollar Index declined 0.2% to 97.21. WTI crude declined 0.8%, or $0.44, to $57.86/bbl.
STOCK MARKET WRAP
S&P500, +0.19%, 3,289.30
Nasdaq, +0.08%, 9,258.70
Nikkei Futures, +0.18%, 23,957.5
The defensive-oriented S&P 500 utilities (+1.4%), health care (+0.9%), real estate (+0.8%), and consumer staples (+0.7%) sectors were the best-performing sectors. Conversely, the energy (-0.7%), financials (-0.6%), and consumer discretionary (-0.3%) sectors finished in the red.
The financials sector was pressured by a modest decline in Treasury yields and by the negative reactions to earnings results from Bank of America (BAC 34.67, -0.65, -1.8%), U.S. Bancorp (USB 54.97, -1.62, -2.9%), and Goldman Sachs (GS 245.21, -0.45, -0.2%). BlackRock (BLK 530.26, +11.94, +2.3%) pleased investors with its results.
Target (TGT 117.00, -8.26, -6.6%) reported relatively disappointing holiday sales results due to softer-than-expected performance in categories such as electronics, toys, and portions of its home businesses.
The Philadelphia Semiconductor Index fell 1.2% amid some profit-taking interest, with shares of Taiwan Semi (TSM 58.39, -1.93, -3.2%) pulling back from record territory in front of its earnings report tomorrow morning.