Overnight Bounce Refocuses Investors

Steve Kanaval  |

The early year pressures seem to be off and investors can focus on something else other than the Yuan or declining Oil prices. Markets were nearly 1% higher and this weeks action is starting to look like an orderly recovery. Decoupling is much needed as most portfolio managers were forced to contemplate how to roll downside hedges, or buy some downside protection, but clearly the swirling sound of a total flushing seems to have subsided for now. US Markets markets historically rally on State of the Union address's and we expect President Obama's final speech to keep a bullish tone.

China is coming back from a short holiday and shares were mixed in Asian trade. The Nikkei, closed on Monday, fell 2.7%, while the Hang Seng was down 0.9% and Australia slipped a slight fraction, but Shanghai closed up 0.2%. European indexes are well bid, with the DAX up 2.2% and the Footsie better by 1.5%. .

*The PBOC is said to have repeatedly intervened in the off-shore yuan in the Hong Kong FX market on Tuesday. The central bank pushed the currency up by as much as 0.7% on the day, briefly erasing its discount to the on-shore yuan for the first time since October. The PBOC buying in the off-shore yuan reduce the supply of the currency and thus drove up the overnight borrowing rate for yuan in Hong Kong to 66.82%, or more than five times the elevated level seen yesterday. One week HIBOR loans for the currency tripled to 33.79%, says Bloomberg and the one month rate about doubled to 15.74%.

*A large explosion in the historic central Istanbul district of Sultanahmet, near the Blue Mosque, killed ten and wounded fifteen. The area is usually chock-a-block with tourists and among the dead and wounded are Turks, Germans, Norwegians and a Peruvian. No claim of responsibility yet, but President Erdogan suggested that a Syrian suicide bomber is behind the attack.

*The November reading of UK Industrial Production was -0.7% month on month, weaker than the forecast for unchanged from the month before.

*Fed Vice Chair spoke at a Bank of France event earlier today, reiterating the speech he delivered January 3.

*The December reading of the NFIB Small Business Optimism Index is 95.2, up four tenths from the month before; it was expected to be 95.0. Fifteen percent of firms reported they have Plans to Hire, up from 11% in November. But those Expecting a Better Economy fell to -14% from -7% the month before.

*The weekly report on chain store sales from the RetailEconomist showed sales were up 2.3% on a week on week basis for the week ended January 9, but sales were up just 1.4% for the week when compared to the same week from a year ago. The Johnson Redbook report on the same thing is due out at 7:55am CST.

*The Job Openings and Labor Turnover Survey (JOLTS) is due out at 9:00am CST. Among the data in this report is: job openings, hires, separations and the quit rate.

*The Treasury plans to sell $24 billion 3 Year Notes today; the auction results will be announced just after noon CST.

*Richmond Fed boss Lacker is scheduled to talk about his economic outlook at 2:15pm CST.

*CSX Corp. the freight shipping and logistics services company, is among the companies due out with quarterly results today.

*President Obama is set to deliver the State of the Union Address tonight at 8:00pm CST.

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