Financial markets remained firm as driven by encouraging US economic data. Dow Jones Industrial Average rose for a 10 consecutive day, the longest string since 1996, and ended the day +0.58% higher. The S&P 500 index also soared to a record high, adding +0.56% at close. In the commodity sector, the front-month contract for WTI crude oil gained +0.55%. Brent crude rebounded for the first time in 5 days with the front-month contract climbed +0.83% during the day. Gold continued to trade below 1660.
US initial jobless claims surprisingly fell to 332K in the week ended March 10, down from a upwardly revised 342K in the prior month. The 4-week average, therefore, reached a new, post-recession low of 347K last week. Continuous claims slipped -89K in the week ended March 9. PPI surprisingly gained +0.7% m/m in February, up from +0.2% a month ago as driven by sharp +3.0% increase in energy price. Food inflation, however, eased and indeed dropped -0.5% during the month. Core PPI climbed another +0.2%, same as in January. On annual basis, both headline and core PPI added +1.7% last month.
In the Eurozone, Spain successfully issued 803M euro of long-term bonds in a special auction. Yet, 10-year yields still closed up +9 bps. President of the European Council Herman Van Rompuy stated after the first day of EU meeting that “the situation across Europe is of great concern” but policymakers have pursued “clear and consistent” objectives such as restoring financial stability, reducing the unemployment rate and improving long-term growth prospects. Meanwhile, news reported that the ECB was discussing how to ease funding costs for SMEs in debt-ridden countries. Regarding this, ECB governing council member Erkki Liikanen stated that “this is a difficult question but I can say it is on our table, under consideration”. Yet, President Draghi Mario denied, saying that the central bank is “not at this point in time ... committing or planning anything special".
Today, US headline CPI probably gained +0.4% m/m in February, up from the flat reading a month ago. On annual basis, inflation added +1.8% in February, compared with a +1.6% gain a month ago. Core inflation is expected to have risen +2.0% y/y last month. University of Michigan confidence probably edged up +0.4 point to 78 in March while industrial production in the world’s largest economy climbed +0.3% in February, following a -0.1% drop a month ago.
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