Wall Street ended the day largely flat (DJIA: -0.15%; S&P 500: -0.09%) as early rise eased. Earlier in the day, sentiment was lifted as ECB President Draghi affirmed the central bank is not about to exit its current policy stance and the market expected Italian political leaders would be able to former a government. Yet, whether the government would be an effective one is another issue. In the commodity sector, the benchmark Comex contract for gold plunged to as low as 1574.3 before ending day at 1578.1, down -1.10%.
ECB President Draghi stressed that the "monetary policy remains accommodative" and the central bank is "far from having an exit in mind". In the Q&A session after a speech at the Catholic Academy of Bavaria, Draghi stated that "while sovereign debt markets have improved, bank lending is still very fragmented" across the Eurozone. Moreover, "credit in some countries is still difficult to obtain. The benefits of the painful actions undertaken so far have not yet materialized". In Italy, the centre-left allies were able to win a narrow victory in the lower house of parliament but the Senate was split. Former Prime Minister Silvio Berlusconi stated that his centre-right coalition is willing to alliance with the centre-left rivals. Berlusconi stated that "markets go their own way. They are independent and also a little crazy". The EU has urged the country to form a stable government as soon as possible.
On the dataflow, Eurozone’s CPI eased to +2.0% y/y in January from +2.2% a month ago. Core inflation slowed to +1.6% in January from +1.7% y/y in the previous month. US GDP grew +0.1% in 4Q12, up from a previous estimate of -0.1% drop. The market had anticipated a better gain of +0.6%. Initial jobless claims fell to 344K in the week ended February 24 from 362K in the prior week. The market has anticipated a drop to 361K. In Japan, core CPI dropped -0.2% y/y in January while the leading Tokyo core CPI slipped -0.6% y/y in February.
Today, the University of Michigan confidence probably stayed at 76.3 in February, same as preliminary estimate. Construction spending might have added +0.5% m/m in January, easing from a +0.9% gain a month ago. The ISM manufacturing index probably fell to 52.5 in February from 53.1 in December.
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