China reduced its investments in U.S. Treasury bonds in December, marking the third straight month of declines, according to Treasury International Capital data, released on Wednesday. Data had China cutting its holdings by $31.9 billion to $1.1 trillion, the Treasury Department said. China accounts for around 9% of U.S. foreign debt holdings and is the largest foreign holder of U.S. government securities, followed by Japan with around $1.04 trillion and then the U.K. with around $414 billion as of December 2011.
Saturday, February 18, 2012
Bonds Flat As China Reduces U.S. Debt Holdings Again
China reduced its investments in U.S. Treasury bonds in December, marking the third straight month of declines, according to Treasury International Capital data, released on Wednesday. Data had China cutting its holdings by $31.9 billion to $1.1 trillion, the Treasury Department said. China accounts for around 9% of U.S. foreign debt holdings and is the largest foreign holder of U.S. government securities, followed by Japan with around $1.04 trillion and then the U.K. with around $414 billion as of December 2011.
Who needs to eat or drive? WE DO!
On Friday the U.S. Bureau of Labor Statistics reported that the Consumer Price Index rose by a seasonally adjusted 0.2% in January. That was less than the 0.3% rise expected by economists. The 2.9% increase in the CPI from January of 2011 was the smallest 12-month move since last March.
Does This Headline Scare You?
I don’t know how many of you saw last week’s cover of Barron’s and its headline, “Dow 15,000”, but it certainly got my attention. Sensational headlines like this can sometimes reveal extremes in market sentiment and easily lead casual investors astray—anyone who doesn’t read Barron’s on a regular basis, for example, may have gotten the wrong idea. (As I have noted previously, I do find Barron’s to be a valuable resource, and it should be read by all serious investors.)
Grains Outlook
Corn prices are consolidating in the upper half of their 4-month-long $1 per bushel range. Bullish factors include (1) USDA’s Feb 9 cut in its 2012 global corn production estimate to 864.11 MMT along with a cut in its 2012 global ending stocks estimate to a 5-yr low of 125.35 MMT from a Jan estimate of 128.14 and the hike in its 2012 U.S. corn export estimate to 1.7 billion bu. from last month’s estimate of 1.65 billion.,(2) tight supplies after the USDA’s Feb 9 cut in its 2012 U.S corn ending stocks estimate to 801 million bu. from last month’s estimate of 846 million, which cut the U.S. stocks/use ratio down to a 16-yr low of 6.3%, and (3) record U.S. ethanol production of 963,000 barrels a day in the week ending Dec 30. Bearish factors include (1) USDA projections for U.S. farmers to plant corn on 94 mln acres this year, up +2.3% y/y and the most corn acres planted since 1944, (2) corn harvest pressures after researcher Celeres reported that corn farmers in Brazil harvested 10.2% of this year's corn crop as of Feb 10, up from 6.6% a year ago, and (3) the +8.2% y/y increase in the 2011 China corn harvest to a record 192 MMT, which may reduce Chinese demand for U.S. corn.
Food and Softs Outlook
Cotton prices are trading well below $1 a pound and just above their 1-1/3 yr low. Bearish factors include (1) weakened Chinese demand after Jan China cotton imports fell -16.6% y/y, (2) USDA’s Feb 9 hike in its 2012 U.S. ending stocks estimate to 3.80 mln bales along with a hike in its 2012 global production estimate to 123.34 mln bales and the hike in its 2012 global ending stocks estimate to a 3-yr high of 60.77 mln bales, and (3) global demand concerns after the World Bank cut its 2012 global growth forecast to +2.5% from June’s +3.6%. Bullish factors include (1) the action by Australia, the third-biggest cotton exporter, to cut its 2011/12 cotton crop to 1.080 MMT from a Dec estimate of 1.144 MMT because of floods, (2) India’s cut in its 2011/12 cotton output estimate to 34.5 mln bales from a Nov estimate of 35.6 mln, (3) overall strong Chinese demand with 2011 China cotton imports up +18.6% y/y to 3.36 MMT.
E-Mini S&P 500: Bullish but cautious!
The E-Mini S&P 500 has grinded higher in light volume as the E-Mini S&P 500 puts in a short-term top! Investors may look at the moderate growth in the US with optimism, but the Greek bailout still holds the undercurrent of a possible default. The markets are closed Monday for a President's Day observed often contributing to pre and/or post-holiday exhilaration. Today, the sentiment was that a deal may be completed at the Euro summit Monday to shore up any potential Greek default and contagion effects. The US Consumer Price Index today increased 0.2 % from December to January, just under the forecasted 0.3 %. Gas prices at the pump had increased 0.9 % during the month perhaps contributing the measure of inflation. Real Earnings for the average hourly wages stayed unchanged from December to January at 0.2%. The Leading Economic Index had increased 0.4 % to 94.9 while economists had anticipated a 0.5 % gain. The data suggests that the economy is growing and may continue to pick-up in the spring and summer. Often the month of January is viewed as setting the tone of the economic outlook for the year. With a solid first quarter, optimism should follow through the year. Thomson Reuters states that 404 of the S&P 500 companies have reported earnings and 64 % have exceeded expectations. The S&P 500 has risen 8.2 % so far this year on a positive US outlook, but the earnings season ending may cause the market to pause.
Take a look at the monthly corn chart
Historically speaking, corn prices are high. If you look at the monthly corn chart, going back perhaps 10 years, you'll quickly notice that most of the time corn prices trade between $2.00/bushel to $4.00/bushel. The exceptions to that occurred in 2008 and again in 2011/12. In fact, corn prices remain much closer to the all-time high than to the upper end of the long-term range (say $3.50-$4.00).
Loonies Rises On Risk Demand
Feb. 18 (Bloomberg) -- Canada’s dollar rose against most of its major counterparts, trading at almost a three-month high versus the U.S. currency, as speculation Greece will win its second bailout next week fueled demand for higher-risk assets.
Bank of Japan Eases - Yen Tumbles
Feb. 18 (Bloomberg) -- The yen fell against all its most- traded counterparts after the Bank of Japan said it would increase the size of its asset-purchase fund. Japan’s currency fell to a six-month low versus the dollar in its biggest weekly loss against the dollar since November as better-than-expected economic data damped expectations of further monetary easing in the U.S. The euro fell versus the dollar after Moody’s downgraded the debt ratings of six European nations and said more may follow. Euro-area finance ministers meet Feb. 20 meeting to decide the fate of a Greek financial bailout.
New Leg Down For The Euro Currency
After the euro registered a 16-month low against the U.S. dollar on January 13 at 1.2627, prices rallied to the 1.3325 mark on February 9. Formidable chart resistance was taken out above the series of highs and lows that came in at the 1.3224 to the 1.3237 range. Above this range is probably where the last of the stubborn shorts finally covered their positions. More recently, the technical aspects of this chart are starting to break down again. A major uptrend line on the daily chart was penetrated on the downside on Tuesday.
$460,000 of copper wire stolen
FREMONT -- Thieves have stolen copper wire worth up to $460,000 from city street lights in the past seven months, and police are asking the public for help in preventing future thefts. The stolen wire has left many city streets darkened recently, as city crews repairing the lights struggle to keep pace with the criminals. Copper thieves have hit nearly every city around the Bay Area in recent years, including wire worth $90,000 stolen from BART property last year, Fremont police said.
$6 trillion in counterfeit treasuries possibly to be used to purchase plutonium
ROME, Feb. 18 (UPI) -- Italian police said they had seized $6 trillion in counterfeit U.S. bonds stored in Switzerland that were "possibly" to be used to purchase plutonium. Police said eight persons were arrested on charges of international finance fraud, the Italian news agency ANSA reported Saturday.
How big are the losses on Greek bonds held by EU national banks?
(Reuters) - The European Central Bank is weighing up whether to allow the Greek bonds held in national euro zone central banks' investment portfolios to be subjected to the same writedowns private investors are set to take, central bank sources told Reuters.
Value of South Dakota corn crop up $1 billion
A banner year for agriculture last year included South Dakota’s most widely planted field crop, corn. A trend of escalating prices and crop values extended to three years. The crop’s worth grew by $1 billion. That allows the state’s farmers to go into 2012 with cash in their pockets and options what to do with it.“It has given people the opportunity to pay off debt, to reinvest in their operations with equipment, machinery, new facilities. It might also have given some operations an opportunity to bring some kids back into the operation,” according to South Dakota Agriculture Secretary Walt Bones.
Corn by the numbers - $3.23 Average corn price in S.D. in 2009. $5.09 Average corn price in 2010. $6.05 Average corn price in 2011. $2.282 billion Value of S.D. corn production in 2009. $2.899 billion Value of S.D. corn production in 2010. $3.953 billion Value of S.D. corn production in 2011
Subscribe to:
Posts (Atom)