Wednesday, February 22, 2012
Precious metals staged an impressive midday rally to end the day in the green.
Gold managed to make a push above technical resistance to post a new high for 2012
with spot up $20.75 at $1,780.35 per troy ounce. Silver's gains were less
impressive with spot silver up $0.10 at $34.43 per troy ounce. Stocks meanwhile
languished in unispired trade, hurt by some worrying economic data from Europe and
China, and despite the the long awaited approval of Greece's second bailout.
As usual, the Greek situation isn't completely resolved as few believe that Greece
will be able to meet debt-to-GDP targets as its economy continues to spiral down.
Furthermore, the question of whether the private sector debt writedown will result
in the triggering of credit default swaps remains unanswered.
As expected, flash Purchasing Manger Index (PMI) readings for Europe and China impacted
trade as both showed weakness. Notably, China's flash PMI fell for the fourth
consecutive month. Share prices in China have been supported nonethless of
late as China eases monetary conditions to combat a slowdown in its export-driven
economy, and the clear downturn in its property market. In Germany, the PMI
index fell to 50.1 from 51, and well below the consensus forecast of 51.6.
January existing home sales for the U.S. advanced 4.3% to a 4.57 million annual
rate. However, this follows a drastic reduction in December's numbers from
4.61 to 4.38 million. December's 5.0% gain was changed to a 0.5% drop.
The size of this adjustment raises questions on how the National Association of
Realtors is coming out with its monthly figures.
Spot gold prices were up $20.75 at $1,780.35 per troy ounce. Silver's gains
were less impressive with spot silver up $0.10 at $34.43 per troy ounce. The
gold-silver ratio is at 51.76.
Commodities outside precious metals were mostly lower, though losses are modest.
WTI crude futures were down $0.28 at $105.97. Tensions with Iran continue
to be a support for energy prices. As has been widely reported, January U.S.
gasoline prices were the highest on record. Over the weekend, Iran said it
would stop shipping oil to France and Britian in retaliation for a planned oil embargo
this summer. Copper futures were essentially unchanged at $3.842 per
pound.
Treasuries posted gains with the yield on the 10-year Treasury falling
to 2.0%. The USD was mostly higher. The EUR-USD is essentially
unchanged at 1.3245.
Other News
Fitch Ratings downgraded Greece's credit rating to C from CCC, signaling that it
expects an imminent default.
Dell (DELL) is sharply lower in the pre-market after the personal computer market
forecast revenues that were below analyst expectations. Shares of DELL were
down $1.06 at $17.15, off over 6%.
The minutes to the BoE monetary policy meeting showed that several members wanted
a larger 75 billion bound stimulus than the 50 billion pounds that was agreed.
Iran's Froeign Ministry said inspectors from the IEAE won't be able to inspect the
country's nuclear facilities, heightening already high tensions with the West.
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