Daily Comments

Japan December PPI rose less than expected. Comments about yen strength by the Japan Finance Minister sent the yen lower and the Nikkei 225 up to a 26-year high, +1.00%. Meanwhile the Shanghai Composite added +0.79%. The German December wholesale price index also rose less than expected. For the two-day period, European equities finished higher. Today, the DAX was up +0.35% Yields on 10-yr. Bunds rose yet again, now at 0.562%. The January Empire State Manufacturing Survey slipped to 17.7 although the December number was revised higher, from 18.0 to 19.6. Yields on 10-Year Notes were mostly flat at 2.543%. The US$ Index continues to trade lower. February gold rose again, up +0.2% to $1,337.10, the highest close since September 8. February crude fell -0.9% to $63.73. Equities jumped out of the gate and soared to another round of new all-time highs. By mid morning, though, some of the enthusiasm had waned and markets began to drift down, with all the major averages except the DJIA turning lower, but that index eventually followed as well. Despite today’s mostly lower closes, markets are still trending higher.

The China December trade balance widened more than expected on strong exports, but new yuan loans rose less than expected. Asian markets closed mostly higher. The Nikkei 225 slipped -0.24% while the Shanghai Composite added +0.12%. German Chancellor Merkel appears to have an agreement on the outline of a possible alliance to form a government. European equities closed with modest gains. The DAX was up +0.32% Yields on 10-yr. Bunds edged still higher to 0.528%. November Business Inventories rose +0.4%. December Retail Sales were up +0.4% (ex-autos and gas +0.4%). December CPI rose +0.1% (ex-food and energy +0.3%.) Baker-Hughes reported that the U.S. oil rig count jumped by 10 to 752. Yields on 10-Year Notes are up at 2.552%, but the US$ Index was weak. February gold climbed another +0.9% to $1,334.90. February crude was also higher, up +0.8% at $64.30. Earnings from banks this morning got equities off to another solid start and markets continued to levitate from there. Bulls remained in control throughout the day, pouncing quickly on any small pull backs. Once again, at the close, markets were broadly higher.

The Japan November leading index implied further growth. China’s State Administration of Foreign Exchange refuted a report that they had recommended slowing or halting purchase of U.S. Treasuries. Asian markets closed mixed. The Nikkei fell -0.33% while the Shanghai Composite added +0.11%. November Eurozone industrial production was strong. European equities finished mostly lower. The DAX fell -0.59% Yields on 10-yr. Bunds jumped higher to 0.525%. Initial Claims for the week of 01/05 rose to 261K. December PPI surprised by falling -0.1% (ex-food and energy also -0.1%.) The December Treasury Budget had a smaller deficit than expected at -$23.2B. Yields on 10-Year Notes edged lower, closing at 2.540%. The US$ Index is back near 3-month lows. February gold was up another +0.2% to $1,322.50. Still rising, February crude closed up +0.4% at $63.80. Equities got off to a solid start shaking off concerns about Treasury yields, and quickly moved back into record territory. They then added to gains throughout the day, led by the small-cap Russell 2000. Markets finished broadly higher.