Feb CPI Points To Weak Consumption
Source Monday March 24, 3:45 PM Contact Us: Singapore 65-6415-4150
0745 GMT [Dow Jones] "Paltry" 0.4% on-year rise in February CPI reflects post-Lunar New Year adjustment in food prices, says JPMorgan Chase Bank. Seasonally-adjusted, CPI down 0.4% on-month, first fall in 6 months, with little apparent impact from 1 percentage point rise in GST (started January 1), underscoring weak household consumption trend. Looking ahead, JPMorgan expects inflation environment to stay benign. (NIA)
0616 GMT [Dow Jones] "Euphoria phenomenon" that's lifted USD since start of offensive vs Iraq unlikely to last long even if U.S. wins decisively, says head trader at foreign brokerage in Tokyo; "People think a quick U.S. victory is somehow going to rescue the (U.S.) economy, but we don't believe that story." Looks for USD to fall back to early March levels vs JPY and EUR in medium term as markets refocus on shaky U.S. fundamentals. (JOS)
0540 GMT [Dow Jones] Singapore IRS curve steepens mildly as long end rises amid continued sell-off in local government bonds; 2- to 10-year spread now at 146 bps vs 144 Friday. But traders caution scope for further steepening may be limited as Iraq war appears more difficult than earlier thought; a prolonged war likely to spark return of risk-aversion, favoring safe-haven instruments. Spread could be capped below 150 bps for time being. (SHG)
0533 GMT [Dow Jones] SGD IRS up across board tracking fall in local bonds, lower U.S. Treasurys Friday; paying focused on long end, with gains in short end limited due to lingering concerns over weak global economy. Traders say long end also soon could be under pressure if Iraq war gets tougher, as investors may resume bond-buying after recent liquidation of war premiums. 2-year offer up 1 bp at 1.09%, 5-year up 3 bps at 1.81%, 10-year up 3 bps at 2.55%. (SHG)
0510 GMT [Dow Jones] Singapore inflation still benign, but February data also show evidence of lackluster domestic consumption: CPI +0.4% on-year after 0.9% rise in January, but down 0.2% on-month. Decline mainly due to cheaper prices for food and clothes after spike ahead of Feb. 1-2 Lunar New Year holiday. Data secondary in nature and not moving markets. (SHG)
0453 GMT [Dow Jones] STI snaps four-day run-up, down 1.2% at 1310.16 midday near 1308.41 intraday low. Trader says investors shrugging off Wall Street's strong close Friday, taking profit on fears of drawn-out war in Iraq; "from the looks of it, the easy wins have been collected under the U.S.'s belt. Going forward, it's going to be difficult." Volume unusually high with 244 million shares traded. Banks all hit, while SIA down 2%, NOL off 1% on worries oil prices will renew gains. New listing Ocean Sky (O05) one of few bright sparks, up 19.6% at 27.50 Singapore cents. (ALP)
0433 GMT [Dow Jones] SGX futures falling in tandem with spot market, as going gets rougher in Iraq; SiMSCI March futures down 4 points at 160.9 on 1658 contracts, while STI March futures down 20 points at 1310 on 4 contracts. Any weakness in European markets later today may hurt sentiment further. Redeeming feature is high volume of contracts traded, suggesting traders prefer to use futures to trade market, as blue chips turn volatile. (EYG)
0413 GMT [Dow Jones] Despite fall in oil prices on hopes of quick end to war, Goldman Sachs believes prices will remain high in medium term as Iraq wasn't only reason for prices running up ahead of start of war last week. Disruptions in Venezuelan oil production, cold winter in northern hemisphere and low inventories of oil products globally are also contributing factors; "Hence, oil prices should remain a tangible source of downside risk (for) Asia," GS says. (NIM)
0331 GMT [Dow Jones] May Nymex crude may have been oversold on speculation of quick U.S.-led victory in Iraq, says HSBC oil and gas analyst Gordon Kwan; "prices could retest $30 a barrel again this week unless the military operations were extremely smooth going into Baghdad." Deteriorating situation in Nigeria, off-peak production in Venezuela and some lost output in Iraq, Kuwait to help prop up prices. (ILK)
0155 GMT [Dow Jones] MSNBC TV quotes unnamed U.S. military officials as saying special operations teams and units of CIA are in Baghdad; officials hint recent explosions there (with no air raid sirens or indications of U.S. aircraft overhead) may have been work of Iraqi resistance groups, possibly working with U.S. forces. Unclear if this is just U.S. disinformation, but it may help sustain markets' hopes for quick U.S. victory. (AXT)
0144 GMT [Dow Jones] USD/SGD drops back below 1.7700, now at 1.7697 after players take profit at early high of 1.7720, dealers say; USD/SGD likely to stay heavy, but selling momentum in local trade not consistent, or strong, as players continue to watch developments on war front, dealers say. 1.7680-1.7720 range to hold for now. (NIA)
0141 GMT [Dow Jones] U.S. officials say U.S. troops have found suspected "chemical factory" in south Iraq, but don't confirm whether it's actually believed to be chemical weapons facility as Fox TV reported earlier. If U.S. can prove Iraq had major WMD projects, it will greatly help to justify U.S. decision to go to war in court of world opinion, and reduce negative geopolitical fallout from war - so positive for USD and equities. (AXT)
0123 GMT [Dow Jones] Fund managers yet to increase risk-taking, with net USD, EUR portfolio flows confirming recent USD recovery driven more by unwinding of speculative positions than by active investor buying, says JP Morgan. Absence of investor buying in USD-rally due to uncertainty over aftermath of war, U.S. economic fundamentals; "this lack of investor follow-through is another reason to assume that the pace of dollar gains will slow." (MXT)
0119 GMT [Dow Jones] Singapore government bonds slipping in early trade, following fall in U.S. Treasurys Friday, but concerns Iraq war may not end as soon as earlier hoped for may stem falls, dealers say; 15-year yield now at 2.76%, 10-year yield at 2.36%, each up 2 bps. Interest rate swaps also up, with 10-year offer +2 bps at 2.54%, 5-year +2 bps at 1.80%. (NIA)
0044 GMT [Dow Jones] USD/SGD up at 1.7708 vs 1.7655 late Friday in Asia, carried higher by broad USD gains; but while pair expected to rise as far as 1.7720, it's looking heavy now and may well come off around that level. Players still watching Iraq war progress, market liquidity still tight, likely to result in erratic moves, dealers say; tip 1.7680-1.7720 range. (NIA)
0039 GMT [Dow Jones] STI expected to extend rally after Wall Street's surge Friday, led by banks and blue chips on hopes Iraq war will soon be over as allied troops continue advance to Baghdad; but sliding U.S. stock futures on concerns of drawn-out war may damp sentiment for techs like Chartered and ST Assembly. "How long the rally lasts will depend on how much people believe what they're seeing on TV," says trader, noting both U.S. and Iraqi propaganda in full gear. Resistance may be at 1350. (EYG)
0019 GMT [Dow Jones] TECHNICAL ANALYSIS: At 1.7705, USD/SGD's hourly oscillators have just sent sell signal implying pullback in next couple of days (bearish crossover by MACD, negative momentum divergence); USD/SGD will retest minor underlying support at 1.7680, and likely test strong underlying support at 1.7614 (February peak). Note any drop below 1.7631 would trigger double top targeting 1.7531. Immediate, minor underlying resistance at 1.7720; good underlying resistance at 1.7781 (mid-October trough). (AXT)