Although the cash markets for Japan, Shanghai, Hong Kong and Australia were closed some of the exchange traded futures market did open. All were better bid, closing in positive territory but as you would imagine, volumes were extremely thin and even the Indian Sensex closed unchanged. It was the European markets that tended to drive enthusiasm as the DAX led the march led independently by the only economic data release Markit/BME Mfg PMI it came in at 55.6 against a previous 55.5%; we see the UK’s release tomorrow. Also tomorrow we will have German CPI and Unemployment for Decembers activity all looking to support today’s rally.
The German DAX closed the day +1.05% with Spain’s IBEX and French CAC both recording +0.7% and +0.4% respectively. UK’s FTSE (futures) followed the mood with a positive gain of +0.35%.
US saw futures markets also making positive signs registering gains on average of around +0.35%. Trading volumes were typically really low and with no Treasury market volatility was kept at a very moderate level. European bond markets all traded higher (price/lower yield) on the first trading day of the year with BTP’s tending to lead the way. Difficult to compare against a closed US Treasury market but back to full trading tomorrow. In the US we will see the release of the US ISM and followed Wednesday by the ADP Employment report and the all important US Non-Farms number on Friday. Fridays forecasts are for a slightly lower print than the previous 178k with expectations for a +175k number; the rate may increase marginally to 4.7% from 4.6%.
In late US trading the USD continues to recover against a broad range of currencies. One of the largest gains was recorded against the Brazilian Real or the Polish Zlotty but against core the GBP, Euro, JPY and CHF all lost around 0.5% on the day. 10yr Bund closed 0.18%, Italy 1.73%, Greece 6.95%, Turkey 11.19% and Portugal 3.66%