10 Things You Need To Know This Morning (SPX, SPY, DIA, DJI, QQQ, TLT, GLD)
Good morning. Here's what you need to know.
More weak China data. Three Chinese economic data releases on Thursday provided more signs of a slowdown in the world's third-largest economy. Fixed asset investment in the year through February rose 17.9% from the same period a year earlier, slowing from January's 19.6% year-over-year growth rate and missing consensus estimates for a 19.4% rise. Industrial production in the year through February rose 8.6% from the same period a year earlier, slowing from January's 9.7% year-over-year growth rate and missing consensus estimates for a 9.5% rise. Finally, retail sales in the year through February rose 11.8% from the same period a year earlier, marking an unexpected slowdown from January's 13.1% year-over-year growth rate and missing consensus estimates for a 13.5% rise.
U.S. retail sales in focus. The first big economic data release of the week in the United States is February retail sales data, due out at 8:30 AM ET. The consensus forecast of market economists predicts total sales rose 0.2% in February from the previous month after falling 0.4% in January. Excluding autos, sales are expected to have risen 0.1% in February after remaining unchanged in January. Excluding both autos and gasoline, sales are expected to have advanced 0.1% in February following January's 0.2% decline.
RBNZ hikes. The Reserve Bank of New Zealand elected to hike its benchmark policy interest rates by 25 basis points to 2.75%, becoming the first of the central banks in advanced economies to hike rates in the post-crisis era. "The Bank retained language suggesting that New Zealand dollar remains undervalued and Governor Wheeler later reiterated that further appreciation would be a concern," says Todd Elmer, a currency strategist at Citi. "However, the changes to underlying policy limit the degree to which the verbal intervention should be viewed as credible. Since the steps the RBNZ has taken actually increase the ‘intrinsic’ attractiveness of the New Zealand dollar, and have done so well ahead of the turn in the interest rate cycle by other major global central banks, it should come as no surprise that the market has largely ignored the currency comments."
Good Australia employment numbers. The change in the number of employed Australians more than tripled estimates in February as 47,300 workers were hired to new jobs, above estimates for a 15,000 rise and January's 18,000 gain. The unemployment rate remained unchanged at 6.0%, as the labor force participation rate unexpectedly rose to 64.8% from 64.6%.
Japanese investors shed foreign assets. In the week ended March 7, Japanese investors sold ¥618.5 billion of foreign bonds after unloading ¥759 billion in the previous week, and sold ¥92.2 billion of foreign stocks, up from ¥5.4 billion a week earlier. Foreign investors were sellers of Japanese bonds to the tune of ¥267.1 billion (down from sales of ¥320.6 billion in the previous week), while foreign investors bought ¥383.8 billion of Japanese stocks after selling ¥4.1 billion the week before.
Japanese machine orders surge. Japanese machine orders rose 13.4% in in January from the previous month after falling 15.7% in December. Economists had predicted a much smaller, 7.1% advance. The January data brought the year-over-year growth rate in machine orders to 23.6% from 6.7% — handily surpassing expectations for a rise to 18.9%.
Markets are quiet. S&P 500 futures are in the green and U.S. Treasury futures are in the red this morning, marking a reversal of the risk-off sentiment that has gripped markets in recent days. The dollar is weaker against both the euro and the yen. Asian indices turned in a mixed performance overnight, and Europe is following suit — London and France are down slightly while Germany, Italy, and Spain are higher.
Weekly jobless claims. In addition to retail sales data, weekly U.S. jobless claims figures are also released at 8:30 AM. Economists predict 330,000 people filed new unemployment insurance claims in the week ended March 7, up from 323,000 the week before. Continuing claims are expected to have ticked down to 2.903 million in the week ended February 28 from 2.907 million in the previous week.
Second-tier data. U.S. import and export price data round out the trio of 8:30 AM economic data releases. Economists predict import prices rose 0.5% in January from the previous month, accelerating from December's 0.1% advance. Export prices are expected to have risen 0.2% in January, matching December's pace. Out at 10 AM are January business inventories data, which are expected to reveal that inventories rose 0.4% from the previous month after advancing 0.5% in December.
Last auction this week. The U.S. Treasury will auction $13 billion of 30-year notes this afternoon at 1 PM ET. Yesterday's auction of 10-year notes was met with robust demand. "The current valuation of the 30-year does not look cheap — either outright or on the curve," say Nomura interest rate strategists. "In addition, any flight-to-quality flows from recent political tensions and China concerns may draw investors away from the long end and into the belly of the curve. However, we still expect a decent bond auction as the bullish momentum around the 10-year auction and any further short covering ahead of next week's Fed meeting could lead to outperformance."