The S&P 500 Index hit another 52 week high as the current market melt up continued to push riskier assets higher. Crude Oil gain some ground increasing $1.12 to $82.82, moving $1 away from a 52 week high, despite negative fundamental news from the Department of Energy. The Dow Industrials, the last of the major indexes to make a 52 week high, finally did today.
In Economic News, The Bank of Japan left the key target rate unchanged at 10 basis points, but appeared to bow to government pressure and increased the size of the three-month loan facility arranged last December to JPY20 trillion from JPY10 trillion. Tweaking this facility was widely tipped as a likely compromise formation between the BOJ who has argued that monetary policy was already extraordinarily easy and interest rates were extremely low, while the government wants more efforts to combat deflation. Nevertheless, the compromise was not satisfactory and two BOJ members (Noda and Suda) dissented. The Yen decreased slightly, but is unlikely to be affected in the long run.
Sterling was already leading the foreign currencies higher against the US dollar in early European trading and the less dovish MPC minutes and firm employment figures have given the pound an extra boost. The March 4th meeting minutes showed the MPC voted unanimously to keep policy unchanged. Importantly for those looking for bullish sterling news, the case for fresh QE was not really debated as the MPC thought that there was ‘little evidence to suggest’ a change in the UK economic outlook since the prior meeting. Policy makers confirmed they stand ready to expand purchases of gilts or tighten monetary policy if needed, with a ‘bumpy’ path ahead for the economy. Meanwhile, UK unemployment fell by 32.3k in Feb (vs. a 6k rise expected and vs. a 5.3k Jan gain.) Jobless claims fell at their fastest pace since 1997, which is a very encouraging sign for growth prospects. January average earnings were up by just 0.9% y/y (from 0.7% and versus 1.7% expected) but the ex-bonus y/y rate firmed to 1.4% y/y from 1.2%.
U.S. wholesale prices in February posted their biggest drop in seven months as gasoline costs fell sharply, leaving scope for the Federal Reserve to keep short-term interest rates at a record low.
The producer price index for finished goods dropped by a seasonally adjusted 0.6% on the month in February, according to the Labor Department, following an unrevised 1.4% increase in January. The core PPI, which excludes volatile energy and food prices and is more closely watched by the Fed, rose 0.1% last month after increasing by 0.3% in January.