- Thailand's baht today fell by sharply -1.6% and is now down by about 4% since the Thai government this past Monday announced currency controls on short-term investments. The Thai government was forced to rescind its order for stocks because the Thai stock market on Tuesday plunged 15% on the news.
The Thai stock market today closed -2.2%, giving back some of Wednesday's 11% recovery which followed the news that the government was exempting stocks from its currency control order. The Thai fiasco highlights the pressure that some Asian countries are under to keep their currencies low in order to support exporters.
- UK Q3 GDP was revised higher to +2.9% from +2.7%.
The stronger GDP growth rate, combined with the current high inflation rate of +2.7%, increases the chances for a BOE rate hike in Q1. The market is currently expecting a 25 bp rate hike by the end of Q1, which would take the base rate to 5.
25% from its current level of 5.00% Overnight U.S.
Stock News
- March S Ps this morning are trading +1.50 points. The US stock market yesterday closed slightly lower on some long liquidation pressure and on the 26-cent rally in crude oil prices (Dow -0.
06%, S P 500 -0.14%, Nasdaq Composite -0.08%).
In addition, FedEx fell after reporting weaker than expected earnings.
- Spectra Energy will join the S P 500 index after Duke Energy spins off the gas-transportation unit.
- Jabil Circuit is up +0.
7% in European trading this morning after the company reported quarterly revenue at +34% to $3.2 bln, which was above the analyst consensus of $3.1 bln.
- Sky Financial (SKYF) rallied 18% in after-hours trading yesterday after Huntington Bancshares (HBAN), which is Ohio's fourth-largest bank, offered to buy Ohio-based Sky Financial for $3.6 billion in stock and cash. Today's U.
S. Market Focus
- Claims ? Today's weekly unemployment claims report is expected to show relatively small changes with a +11,000 rise in initial claims (following last week's -20,000 decline to 304,000) and a -2,000 decline in continuing claims (following last week's -33,000 decline).
The claims series is settling down after showing some volatility due to the Thanksgiving holiday. In general, the unemployment claims series continue to show little change in the US job layoff situation or in the US labor market. Payrolls have shown average monthly growth of a solid +150,000 over the past 6 months, and the current Nov US unemployment rate of 4.
5% is just 0.1 point above the 5-1/2 year low of 4.4% posted in Oct.
- GDP revision ? Today's Q3 GDP report is not expected to show any revisions from the last report of +2.2% for GDP, +2.
9% for personal consumption, and +1.8% for the GDP price index. The Commerce Department last month raised its GDP estimate of +2.
2% from +1.6%. The market consensus is that US GDP will remain weak at +2.
0% in Q4, and then slowly improve in 2007 from +2.4% in Q1 to +2.9% by Q4.
The US economy is expected to be weighed down in early 2007 by the housing market and lower auto production, but is then expected to slowly improve during the year as the housing market bottoms and as overseas growth underpins US and global growth.
- Philadelphia Fed ? Today's Dec Philadelphia Fed manufacturing index is expected to show a -1.
1 point decline to 4.0, reversing part of November's increase of +5.8 to 5.
1. The markets remain nervous about the US manufacturing sector given lower auto production and given that the Nov ISM manufacturing index fell below 50 to 49.5 for the first time in 3-1/2 years.
Today's Philadelphia Fed report will provide the first data on the manufacturing sector for December.
- March 10-year T-note prices this morning are trading +2 ticks. T-note prices yesterday traded sideways in a narrow range and closed little changed.
The T-note market is awaiting any fresh perspectives from today's economic reports (claims, GDP revision, LEI, Philadelphia) or tomorrow's reports which include the core PCE deflator (expected +2.3% vs +2.4% in Oct), Nov durable goods orders (expected +1.
3% overall and +1.0% ex-transportation), and US consumer confidence (expected unch from early-Dec at 90.2).
- The dollar/yen is down -0.23 yen this morning while the euro/dollar is little changed. The dollar index yesterday closed slightly higher in technical trading.
The euro saw some underlying support yesterday from ECB President Trichet's comments that he believes inflation will rise in 2007, which is likely to provoke further ECB tightening.
- Feb crude oil prices this morning are trading -32 cents. Feb crude oil prices yesterday closed +26 cents on support from the news in the weekly DOE report that crude oil inventories fell sharply by -6.
3 mln bbl (versus expectations of -2 mln bbl). However, that was at least partially offset by increases in product inventories (gasoline +1.1 mln bbl; distillate +1.
2 mln bbl). The refinery operating rate rose to a 3-month high of 90.7% as refineries crank production back up in response to improved refining margins.
- Claims ? Today's weekly unemployment claims report is expected to show relatively small changes with a +11,000 rise in initial claims (following last week's -20,000 decline to 304,000) and a -2,000 decline in continuing claims (following last week's -33,000 decline).
- March S Ps this morning are trading +1.50 points. The US stock market yesterday closed slightly lower on some long liquidation pressure and on the 26-cent rally in crude oil prices (Dow -0.
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