If there is a bellweather for global growth, it’s copper and its reached a crucial technical level, that being its 200 day moving average of $3.99. Negatively impacting all commodities again today were more interest rate hikes out of Asia, this time from Malaysia and the Philippines (and another margin requirement hike for silver). Malaysia was unexpected and they also raised reserve requirements for their banks as they said “global commodity and energy prices are projected to remain elevated during the year, with inflation in major trading partners also expected to rise further.” The Indian Sensex index fell for a 9th straight day. The yen is back above the initial selloff after the March intervention but this time its more the weak US$ than the repatriation back then. Trichet at 8:30am will likely tip his hat to whether rates move higher again over the summer after they and the BoE left rates unch today. Spain sold 5 yr paper at a yield 100 bps above a 3 yr auction last month. AAII: Bulls 35.5 v 37.9 Bears 31.9 v 30.7
According to the Labor Dept, a spring break holiday in NY, a new emergency benefit program in Oregon and auto related disruptions because of the supply issues out of Japan all combined for the spike in Initial Jobless Claims. They totaled 474k vs expectations of 410k and up from 431k last week. The analyst at the Labor Dept is saying that the one time factors were solely responsible for the 474k print and said “I don’t think it’s economic factors.” Hopefully they are right but claims are above 400k for a 4th straight week. Because of a one week delay and not influenced by the above, Continuing Claims rose by 74k but Extended Benefits fell by 41k.
On the issue of whether another ECB rate hike is coming soon, Trichet in is press conference is leaving out the magic code word, “vigilance.” He instead is closely monitoring all developments while he still sees “upward pressure” on inflation. Thus, the lack of “vigilance” for now means no imminent rate hike and a lower euro in response.