20130104 0933 Global Markets Related News.

Asia FX By Cornelius Luca - Thu 03 Jan 2013 16:50:19 CT (www.lucafxta.com/CME)
The appetite for risk declined further on Thursday in the wake of the temporary solution of the "fiscal cliff" crisis and after the latest Fed Minutes showed disagreement over the duration of bond buying. FX traders quickly curbed their enthusiasm because the next two months will see more negotiations over the debt ceiling. The European and commodity currencies fell, while the yen consolidated near new lows for the downtrend. The US stock markets slipped. Gold, oil and silver declined as well. The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on European currencies and long on commodity currencies. Good luck!

Overnight
US: The jobless claims increased 10,000 to 372,000 in the week ended December 29th from the previous week's revised figure of 362,000 (from the 350,000 originally reported).
US: ADP said private sector employment increased by 215,000 jobs in December following an upwardly revised increase of 148,000 jobs in November (from 118,000 jobs originally reported).

Today's economic calendar
Australia: AiG performance of services index for December
China: HSBC China services PMI for December

Asian Stocks Outside Japan Decline on Fed Minutes; Nikkei Jumps (Bloomberg)
Asian stocks outside Japan fell after Federal Reserve policy makers said they will probably end their $85 billion monthly bond-purchase program sometime this year. Japanese equities rose as markets reopened today.
BHP Billiton Ltd., the world’s largest mining company, dropped 1.2 percent, as metals prices fell. Toyota Motor Corp. surged 4.1 percent as the yen weakened to the lowest level against the dollar since July 2010, boosting the earnings outlook for exporters. Japan Exchange Group began trading after the merger between Osaka Securities Exchange Co. and Tokyo Stock Exchange Group.
The MSCI Asia Pacific Excluding Japan Index (MXAPJ) declined 0.4 percent to 476.50 as of 9:21 a.m. in Tokyo. Japan’s Nikkei 225 Stock Average (NKY) gained 2.9 percent on its first trading day of 2013 after U.S. lawmakers passed a bill averting spending cuts and tax increases scheduled to come into effect this year. It is headed for its highest closing level since March 2011. Markets also reopen later today in China.
“The work that we’ve done shows often what has caused previous recessions was pulling stimulus off too early before growth started to build on itself,” James Lindsay, Auckland- based equity fund manager at Tyndall Investment Management Ltd., which oversees about $23 billion, said in a phone interview. “This has been more of a relief rally than anything else. The hard yards are still to come. U.S. economic data remains pretty mixed.”

Japan Stocks Jump as Market Reopens, Yen Lifts Exporters (Bloomberg)
Japanese stocks advanced, chasing gains among Asian markets following a four-day holiday, as the yen weakened to the lowest level since 2010, boost the earnings outlook for exporters including Toyota Motor Corp. (7203)
Toyota jumped 4.4 percent. Japan Exchange Group, created by the merger of the country’s two biggest bourses, plunged in its Tokyo trading debut. Sharp Corp. dropped 3 percent after the Yomiuri newspaper reported the loss-making television maker may raise 100 billion yen ($1.1 billion).
The Nikkei 225 Stock Average (NKY) jumped 2.9 percent to 10,696.23 as of 9:49 a.m. in Tokyo, heading for its highest close since March 2011. The broader Topix Index climbed 2.9 percent to 885.04. The Japanese market is trading for the first time this year and is catching up with other Asian markets, which rallied this week after the U.S. Congress passed legislation averting more than $600 billion in automatic tax increases and spending cuts.
“We’ve averted a worst-case scenario on the fiscal cliff and the market is breathing a sigh of relief,” said Juichi Wako, senior strategist at Nomura Securities Co. in Tokyo. “Companies have already settled their exchange rates for this quarter, so we shouldn’t too much upward movement in earnings from the yen’s weakness right away. But investors expect next quarter to look pretty good.”
The Japanese yen fell to a two-and-half year low against the dollar, heading for a 1.9 percent decline this week and extending losses for an eighth week. The yen fell before Bank of Japan Deputy Governor Kiyohiko Nishimura speaks today amid bets the BOJ will boost money supply to end deflation.

U.S. Stocks Fall as Fed Sees Bond Buying Ending in 2013 (Bloomberg)
U.S. stocks fell, following the biggest rally in a year for the Standard & Poor’s 500 Index, as Federal Reserve policy makers said they will probably end their $85 billion monthly bond-purchase program sometime in 2013.
Family Dollar Stores Inc. (FDO) tumbled 13 percent after forecasting second-quarter earnings that missed estimates. UnitedHealth Group Inc. (UNH) sank 4.7 percent after the biggest U.S. health insurer was cut to hold from buy at Deutsche Bank AG. Ross Stores Inc. and TJX Cos. jumped at least 3.3 percent as consumer-discretionary companies rallied amid same-store sales that topped estimates.
The Standard & Poor’s 500 Index fell 0.2 percent to 1,459.37 in New York. The benchmark index yesterday reached its highest level since September after lawmakers passed a budget bill, avoiding the so-called fiscal cliff. The Dow Jones Industrial Average lost 21.19 points, or 0.2 percent, to 13,391.36 today. About 6.7 billion shares traded hands on U.S. exchanges today, or 10 percent above the three-month average.
“Concern that they’re taking the punch bowl away could certainly cause some jitters in the market,” James Gaul, a portfolio manager at Boston Advisors LLC which oversees about $2.3 billion in assets, said in a telephone interview. “The sell-off sits with what we’ve been thinking, which is that this has been a Fed-supported rally. The liquidity the Fed has been providing to generate financial asset inflation has been driving the market.”
Four years after cutting the main interest rate to near zero, policy makers are expanding their third round of so-called quantitative easing to boost economic growth and cut the jobless rate, now at 7.7 percent. Minutes from the latest Federal Open Market Committee meeting show policy makers are likely to end their $85 billion monthly bond purchases sometime in 2013.

Euro-Area Stocks Retreat Amid Concern on U.S. Deficit (Bloomberg)
Euro-area stocks declined from a 17- month high amid concern a budget deal will fail to reduce the U.S. government’s fiscal deficit. Swiss shares rallied after the New Year holiday.
K+S AG (SDF) retreated 3.5 percent after Exane BNP Paribas lowered its price forecast for the potash maker’s shares. UBS AG (UBSN) and Cie. Financiere Richemont SA each rallied more than 4 percent, leading Swiss stocks higher. Alcatel-Lucent SA (ALU) climbed 9.8 percent as Credit Suisse Group AG raised its recommendation on the maker of telecommunication equipment.
The Euro Stoxx 50 Index of the euro area’s biggest companies fell 0.4 percent to 2,701.22 at the close of trading. The broader Stoxx Europe 600 Index added 0.5 percent to its highest since February 2011 as the Swiss Market Index jumped 2.9 percent after opening for the first time since Dec. 28.
“We’re not over all of the problems with the fiscal cliff,” Jane Coffey, who manages $19 billion as head of U.K. equities at Royal London Asset Management Ltd., said in a Bloomberg Television interview. “We still have to get through March. We have to look at the spending cuts they are going to put in this package.”
The Stoxx 600 (SXXP) rallied 2 percent yesterday after U.S. lawmakers passed a budget bill that avoided most scheduled tax increases. The so-called fiscal cliff of sweeping spending cuts and revenue raising had threatened to push the world’s largest economy into a recession.

Emerging Stocks Post Longest Rally in 14 Months After China Data (Bloomberg)
Emerging-market stocks rose for a ninth day, the longest stretch of gains in more than 14 months, as data showing expansion in Chinese service industries and U.S. consumer sentiment bolstered confidence in the global economy.
China International Marine Containers Group Co. Ltd. (2039), the world’s biggest container maker, surged 15 percent, while Shimao Property Holdings Ltd. (813) jumped the most in 13 months in Hong Kong as financial companies led gains on the MSCI Emerging Markets Index. Banco Bradesco SA (BBDC4) climbed to a record in Sao Paulo as Brazil’s Bovespa (IBOV) Index entered a bull market. Hyundai Motor Co. (005380) fell in Seoul on bets a stronger won may weigh on profits.
The developing-nations gauge added 0.4 percent to 1,082.68 in New York after rising to a 10-month high yesterday and entering a bull market. China’s services industries grew at the fastest pace in four months in December, boosting prospects the nation’s CSI 300 Index will also rally to a bull market when it resumes trading tomorrow. In the U.S., improving consumer sentiment and data showing companies added more workers than projected signaled the world’s largest economy picked up.
“There’s been an incredible turnaround in China sentiment and this data helps that,” John-Paul Smith, an emerging market strategist at Deutsche Bank AG, said by phone from London today. “People’s confidence toward the Chinese economy is almost as high as its ever been.”

Treasuries Are World’s Worst-Performing Bonds Before Jobs (Bloomberg)
Treasuries were the world’s worst performing bonds as economists said a report today will show the U.S. unemployment rate held at the lowest level since 2008.
Government securities maturing in 10 years and longer handed investors a 3.34 percent loss in the past month, the biggest decline of 144 bond indexes tracked by Bloomberg and the Federation of Financial Analysts Societies. Treasuries tumbled this week as lawmakers passed a budget to avert taxes and spending cuts that threatened to throw the economy into a recession, while Federal Reserve policy makers said they will probably end their monthly debt purchases in 2013.
“I’m bearish on Treasuries,” said Hajime Nagata, who helps oversee the equivalent of $117.7 billion as an investor in Tokyo at Diam Co., a unit of Dai-ichi Life Insurance Co. “The economy looks like it’s getting better. Stocks will probably outperform bonds.”
Benchmark 10-year yields were little changed today at 1.91 percent as of 9:08 a.m. in Tokyo, based on Bloomberg Bond Trader prices. The 1.625 percent note maturing in November 2022 changed hands at 97 13/32. The rate climbed 21 basis points, or 0.21 percentage point, this week, the most since March.
Diam trimmed its holdings in December when the 10-year yield fell to 1.6 percent, Nagata said. At the time, he said he’d consider buying 10-year Treasuries if the yield climbed to 1.9 percent. Even though the rate rose to that level yesterday, Nagata said he’s still not ready to purchase the securities given the outlook for the economy and the Fed.

Dollar Advances to 2010 High Versus Yen Before U.S. Jobs (Bloomberg)
The dollar climbed to a 2 1/2-year high against the yen before U.S. data today forecast to show employers added jobs last month, fanning speculation the Federal Reserve will cut cash infusions.
The greenback extended its gain to a third day versus the euro after minutes of the Fed’s last meeting showed policy makers said they’ll probably end their $85 billion monthly bond purchases this year. The yen fell against major peers before Bank of Japan (8301) Deputy Governor Kiyohiko Nishimura speaks today amid bets the BOJ will boost money supply to end deflation.
“Expectations are rising for better U.S. job numbers, which are supportive for the dollar,” said Yasuhiro Kaizaki, vice president of global markets in New York at Sumitomo Mitsui Trust Bank Ltd. “The Fed’s minutes are more hawkish than I thought they’d be.”
The dollar reached 87.78 yen, the highest since July 28, 2010, before trading at 87.65 as of 9:12 a.m. in Tokyo, up 0.5 percent from the close yesterday. It rose 0.1 percent to $1.3039 per euro following a 1.1 percent jump yesterday. The yen fell 0.4 percent to 114.30 per euro.
The U.S. currency climbed as much as 0.2 percent to S$1.2279, the highest against Singapore’s dollar since Nov. 16.
U.S. Labor Department data may show today that nonfarm payrolls rose by 153,000 last month, versus 146,000 in November, according to the median estimate of economists surveyed by Bloomberg News.
A few members of the Federal Open Market Committee “expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013,” minutes of their Dec. 11-12 meeting showed yesterday.
At that meeting, the FOMC announced Treasury purchases of $45 billion a month in addition to $40 billion a month of mortgage-debt purchases begun in September.

Aussie Set for Weekly Gain on Chinese Data; Bonds Fall (Bloomberg)
Australia’s dollar was set to gain for the first week in three before a private report that may add to signs of improvement in China’s economy, the South Pacific nation’s biggest trading partner.
Australian bonds fell, pushing benchmark 10-year yields to the highest in more than four months before HSBC Holdings Plc and Markit Economics report a purchasing managers’ index of Chinese non-manufacturing industries today after a government index yesterday showed expansion in services accelerated in December.
The currencies of “Australia and New Zealand benefit to some extent from better data out of China,” said Callum Henderson, global head of currency research in Singapore at Standard Chartered Plc.
The Australian dollar was little changed at $1.0460 as of 10:46 a.m. in Sydney from $1.0466 yesterday, poised for a 0.8 percent gain this week, the biggest since the five days ended Nov. 23. The so-called Aussie gained 0.4 percent to 91.69 yen from yesterday, when it touched 91.76, the highest since September 2008.
New Zealand’s dollar, known as the kiwi, was little changed at 82.73 U.S. cents, up 0.9 percent since Dec. 28. It added 0.4 percent today to 72.53 yen.
The yield on Australia’s 10-year government bond rose 7.5 basis points, or 0.075 percentage point, to 3.43 percent, after earlier touching 3.44 percent, the highest since Aug. 21.
A purchasing managers’ index of Chinese non-manufacturing rose to 56.1 last month from 55.6 in November, the statistics bureau data said yesterday.
Interest-rate swaps data compiled by Bloomberg show traders see a 44 percent chance the Reserve Bank of Australia will lower its benchmark to 2.75 percent in February, lower than the 59 percent probability indicated at the end of 2012.

Most FOMC Participants Saw QE3 Ending in 2013 (Bloomberg)
Federal Reserve policy makers said they will probably end their $85 billion monthly bond purchases sometime in 2013, with members divided between a mid- or end-of- year finish.
“A few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013” while a few others specified no time frame, according to the record of the Federal Open Market Committee’s Dec. 11-12 gathering released today in Washington. “Several others thought that it would probably be appropriate to slow or stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet.”
Four years after cutting the main interest rate to near zero, policy makers are expanding their third round of so-called quantitative easing to boost economic growth and cut the jobless rate, now at 7.7 percent. In prior rounds of bond purchases, the central bank bought $2.3 trillion in securities.
The minutes show a divide among FOMC participants on how long the purchases should last. Participants who provided estimates were “approximately evenly divided” between those who said it would be appropriate to end the purchases around mid-2013 and those who said they should continue beyond that date.
“They’re willing to do more QE on the premise that the net benefits outweigh the costs,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank AG in New York. “But they’re more willing to entertain the thought that these actions are going to lose a bit of their efficacy.”

Jobless Claims in U.S. Rose More Than Forecast in Holidays (Bloomberg)
More Americans than forecast filed claims for unemployment insurance payments last week, according to government figures that were estimated because some state agencies closed during the holidays.
Applications for jobless benefits increased 10,000 to 372,000 in the week ended Dec. 29, the Labor Department reported today in Washington. Economists forecast 360,000 claims, according to the median estimate in a Bloomberg survey. A report from the ADP Research Institute showed companies added more workers than projected in December.
“The underlying claims trend is still really low,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida. “There’s a lot of volatility this time of year. Job destruction is really not a problem right now, it’s really hiring that’s the issue.”
The four-week average of claims, a less volatile measure, was little changed, indicating employers held on to current staff at the end of 2012 even as Congress made little progress in budget talks. The deal passed by lawmakers this week averted tax increases on about 99 percent of households while failing to reach a bargain on spending and debt.
The data today from the Roseland, New Jersey-based ADP Research Institute indicated the job market finished 2012 with momentum. The 215,000 increase in employment was the group’s largest since February and followed a revised 148,000 gain the prior month that was larger than initially reported.

Job Gains Lure Investors to Employment-Services Stocks (Bloomberg)
Employment-services companies are attracting investors who are betting the U.S. labor market will keep up its steady pace of job creation.
The Standard & Poor’s Supercomposite Human Resources & Employment Services Index -- which includes Robert Half International Inc. (RHI) and Manpower Inc. (MAN) -- has risen 19 percent since Oct. 15, compared with a 1.5 percent increase for the S&P 500 Index. (SPX) The outperformance coincides with nonfarm payroll data for October and November that exceeded economists’ forecasts.
The better-than-projected reports are generating interest in companies that provide services such as recruitment, back- office administration and human-resources management, said Jeff Silber, a senior analyst in New York at BMO Capital Markets. Even though their businesses are tied more to the need for temporary workers, their near-term stock performance is driven by total hiring, he said.
Job growth that’s “not too hot and not too cold is actually great for these stocks,” because demand for temporary positions remains strong enough to drive earnings, Silber said. “We’re in a Goldilocks-type environment.”
Gains of about 100,000 to 150,000 a month will be “pretty good” for companies such as On Assignment Inc. (ASGN) and TrueBlue Inc. (TBI), Silber said. Nonfarm payrolls expanded by 150,000 in December, based on the median estimate of economists surveyed by Bloomberg. That would mark six straight months at more than 100,000, according to data from the Labor Department, which is scheduled to release the figures tomorrow.

Consumer Confidence Improves as Hiring in U.S. Picks Up (Bloomberg)
Consumer sentiment climbed last week and U.S. companies added more workers than projected in December, showing the world’s largest economy picked up even as lawmakers were embroiled in budget disputes.
The Bloomberg Consumer Comfort Index rose to minus 31.8 in the period ended Dec. 30, its highest since April, from minus 32.1 a week earlier, according to a report today. Figures from the ADP Research Institute showed a 215,000 increase in employment, the largest since February, while the Labor Department said more Americans filed claims for jobless benefits last week.
This week’s agreement averting income-tax increases on about 99 percent of households, combined with the pickup in hiring, may give confidence an added lift after spending at stores from Nordstrom Inc. (JWN) to Gap Inc. (GPS) topped analysts’ estimates last month. A strengthening economy lowers the risk that further deliberations on government spending cuts and the debt will derail the expansion.
“The economy is growing quite well,” said David Sloan, a New York-based senior economist at 4Cast Inc., the best ADP forecaster over the past two years, according to data compiled by Bloomberg. “The labor market seems to be expanding at a fairly solid pace. Consumer spending will continue to grow, but slowly.”
General Motors Co., Ford Motor Co. and Chrysler Group LLC posted December vehicle sales gains that exceeded analysts’ estimates in December, industry reports showed today. Auto purchases ran at a 15.3 million annual rate after 15.5 million in November, the best two months since early 2008.

Consumer Comfort in U.S. Climbed to an Eight-Month High (Bloomberg)
Consumer sentiment last week reached an eight-month high, reflecting broad-based gains that indicated even wealthy Americans were less concerned about tax increases and fiscal policy challenges heading into 2013.
The Bloomberg Consumer Comfort Index rose to minus 31.8 in the period ended Dec. 30, its highest since April, from minus 32.1 a week earlier. For the year, the index climbed 12.9 points, the biggest annual improvement since 1998. Americans earning $100,000 or more reported their most optimistic reading in more than two years.
“The rebuilding of wealth and modest income gains permitted consumer sentiment to overcome slow growth and a politically divisive environment in late 2012,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. Rising home values and low interest rates in particular are buoying wealthier households, helping to overcome the threat of higher taxes in 2013, he said.
The index finished the year at its best level since mid- April, less than half a point from the 2012 high it reached twice that month. It has held above its traditional trouble zone, the minus 40s, for 15 straight weeks, a positive run last recorded in early 2008.
For the year, the index averaged minus 38.1, the most since 2007. It remains below its long-term average of minus 15.8.
Stocks fell, pulling the Standard & Poor’s 500 Index down from close to a five-year high. The S&P 500 eased 0.2 percent to 1,459.38 at 9:35 a.m. in New York.
Another report today from the ADP Research Institute showed companies added 215,000 workers in December, the most since February, after a 148,000 gain a month earlier that was larger than initially estimated.

Spain Registered Unemployment Falls for 1st Month in Five (Bloomberg)
Spain’s registered unemployment fell for the first time in five months in December as service industries boosted hiring over the holiday season.
The number of people registering for jobless benefits fell by 59,094 from November to 4.8 million, the Labor Ministry in Madrid said today. That’s the best result on record for December.
The figures suggest an interruption in the retrenchment of the euro area’s fourth-largest economy, which the Organization for Economic Cooperation and Development predicts will shrink for a second straight year in 2013. Economists have forecast an index of service industry activity due to be published tomorrow will show a contraction in December.
“This is quite unique for a December,” Martin Van Vliet, an economist at ING Bank in Amsterdam, said in a telephone interview. “The recession could end in the second half but I’m not holding my breath. With the sheer scale of fiscal tightening in the pipeline I’m still a bit cautious.”
The number of service-sector workers registered as jobless fell by 49,438. At the same time, 4,325 more construction workers and 2,794 more manufacturing workers were unemployed.
Companies are seeking to reduce costs as the deepest austerity measures in the nation’s democratic history undermine domestic demand amid a recession that has spread to the 17- nation euro region. IAG (IAG) is in talks with unions to shrink Spanish airline Iberia’s fleet by 4,500 jobs, while nationalized lender Bankia group pledged to axe 6,000 after securing European aid.
The OECD sees unemployment in Spain, already the highest in the European Union, reaching 27 percent this year.

German Unemployment Rose Less Than Forecast in December (Bloomberg)
German unemployment increased less than economists forecast in December even as Europe’s debt crisis curbed company investment and economic growth.
The number of people out of work rose a seasonally adjusted 3,000 to 2.942 million, the Nuremberg-based Federal Labor Agency said today. Economists predicted an increase of 10,000, the median of 19 estimates in a Bloomberg News survey showed. The adjusted jobless rate held steady at 6.9 percent, close to a two-decade low.
Germany’s economy, Europe’s largest, may have contracted markedly in the fourth quarter after the euro area’s succumbed to recession, the Bundesbank said on Dec. 17. Still, business confidence increased for a second month in December after demand from outside the region boosted factory orders and exports.
“The German labor market is showing signs of cooling, which isn’t that surprising given the economic slowdown in the course of 2012, said Thilo Heidrich, an economist at Deutsche Postbank AG (DPB) in Bonn. ‘‘If the economy stabilizes and recovers in 2013, the labor market could end its weak phase already at the end of the year.’’
The euro was little changed after the report and traded at $1.3139 at 11:04 a.m. in Frankfurt. The benchmark DAX index dropped 0.2 percent to 7760.88, while the Stoxx Europe 600 Index rose 0.2 percent to 286.0.

20130104 0933 Global Commodities Related News.

Calpers Commodity Holdings Fell 55% in October to $1.564 Billion (Bloomberg)
Commodity holdings by the California Public Employees’ Retirement System, the largest U.S. pension fund, tumbled by 55 percent in October, according to the most- recent data available.
The fund held $1.564 billion in commodities as of Oct. 31, or 0.6 percent of the total fund assets listed at $242.749 billion, according to a monthly report released Dec. 10. That’s down from $3.45 billion in raw materials as of Sept. 30, or 1.4 percent of total assets of $243.227 billion, according report released Nov. 13.
The figures for the period through Nov. 30 will be released at the fund board meeting this month, a Calpers press spokesman said today in an e-mail, adding that Calpers doesn’t have any further comment on its commodity holdings. The board meeting will be Jan. 14 through Jan. 16, according to Calpers’ website.

Wheat Rises for First Time This Week on U.S. Plains Dry Weather (Bloomberg)
Wheat rose for the first time this week as drought persists in the U.S. southern Great Plains, where winter varieties have gone dormant.
Snow that fell across the Midwest last week did little to help parched soil recover from the worst drought since the Dust Bowl of the 1930s. Parched conditions grip 61 percent of the 48 contiguous U.S. states, according to the U.S. Drought Monitor in Lincoln, Nebraska. Fund managers in the week through Dec. 25 were net-short 11,899 contracts, the most in seven months, Commodity Futures Trading Commission data show.
“We have some dry conditions out here,” Tom Leffler, the owner of Leffler Commodities LLC in Augusta, Kansas, said by telephone. “And we’re oversold. The funds pushed things up too high and now they’ve pushed too low.”
Wheat futures for March delivery gained 0.7 percent to $7.6075 a bushel at 10:15 a.m. on the Chicago Board of Trade. The price increased 19 percent in 2012, the best performer on the Standard & Poor’s GSCI Index of 24 commodities, partly because of concern about dry weather in the U.S., Russia and Australia, last year’s biggest exporters of the grain.
In the U.S., wheat is the fourth-largest crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.

Wheat Market Recap Report (CME)
March Wheat finished up 1/4 at 755 1/2, 5 3/4 off the high and 5 3/4 up from the low. May Wheat closed down 1 1/4 at 764 3/4. This was 4 up from the low and 6 3/4 off the high.
KC and Chicago wheat saw modest gains for most of the day but sell pressure into the closing bell forced wheat lower on the day. Technical short covering following yesterday's sharp losses was prevalent early on but a sharply higher US Dollar limited gains throughout the day. Bearish demand headlines hit the wheat market this morning with Egypt suggesting that they have enough wheat supplies to last until June 17th. The head buyer expects their local wheat purchases this year to rise to 4 million tonnes vs. 3.7 last year. Wheat imports for this fiscal year in Egypt are expected to decline to 3.8 million tonnes, down 1 million tonnes from earlier estimates. The head buyer was quoted as saying the decline in imports is due to the expected increase in domestic purchases rather than then their currency devaluation which weakens their purchasing power. Furthermore, wires reported that an optional-origin wheat sale to Syria from earlier this year is being switched from a Black Sea origin to France. This will be the first cargo of wheat from France, destined for Syria, this season. Dry conditions in the western plains continue to support Kansas City futures against Chicago but better snowfall over the last couple of weeks has help conditions in some areas.
March Oats closed up 2 1/4 at 337 3/4. This was 7 up from the low and 2 1/2 off the high.

Corn Market Recap for 1/3/2013
March Corn finished down 1 1/2 at 689 1/4, 5 1/2 off the high and 4 1/4 up from the low. May Corn closed down 2 1/2 at 691. This was 3 1/4 up from the low and 6 off the high.
March corn ended lower into the closing bell on technical sell pressure and a stronger US Dollar. Calendar spreads were firm which supported a positive trade early on but losses in the soybean market spilled over to corn. Equity markets turned negative late today after FOMC minutes suggested that Fed officials are skeptical about how long their loose monetary policy would last which sent the US Dollar sharply higher. Argentina crop conditions remain mostly favorable despite an abundance of moisture early in the crop year. A dry period will extend into the end of this week but rainfall is set to return early next week which may slow field work. Brazil conditions remain in good shape with the exception of northeastern Brazil which needs rainfall soon. The trade is looking ahead to next week's USDA report with many expecting bullish implications if harvested acreage is slashed. Offsetting the bullish tilt is thoughts that planted acreage next year could hit record levels which would force corn prices dramatically lower if favorable yields are realized.
January Rice finished up 0.025 at 14.78, equal to the high and equal to the low.

Recap Energy Market Report (CME)
February crude oil prices experienced a choppy trading session and registered an inside day trading range. The market came under selling pressure early in the trading session from a combination of profit-taking and weakness in outside market sentiment. The tone of the market changed in favor of higher prices following US private sector hiring data that came in better than expected. Headlines suggesting that the Seaway pipeline expansion effort was on track for next week helped to pressure Brent crude oil relative to West Texas Intermediate. The market turned lower in late afternoon trade following the latest FOMC meeting minutes that indicated that further Treasury purchases could conclude by the end of the year. Meanwhile, expectations for this week's EIA inventory data call for a draw in crude stocks in the range of 750,000 barrels last week.

Brent Crude Oil Market Report (CME)
February Brent crude oil prices spent the entire session in negative territory but were contained inside of yesterday's trading range. While some of the weakness in Brent crude oil was attributed to a decline in macroeconomic sentiment, it is also possible that reports of the Seaway expansion effort on track for next week was a force pulling some of the demand away from Brent in favor of West Texas Intermediate. Prospects of more crude oil flowing from Cushing Oklahoma to the US gulf coast is also seen as a factor causing Brent crude oil to lose some of its premium relative to WTI. Meanwhile, the cash market trade showed firm demand for Brent forties, with bids at dated Brent plus $1.25, which put it at its highest valuation in ten months.

Oil Slips a Second Day in New York on U.S. Jobless Claims (Bloomberg)
Oil slipped for a second day in New York as more Americans than forecast filed applications for unemployment benefits last week and on concern that new budget legislation won’t reduce the deficit fast enough.
Prices dropped as much as 0.2 percent after the Labor Department yesterday said jobless claims rose 10,000 to 372,000. President Barack Obama signed the budget measure into law yesterday to undo automatic tax increases and spending cuts. Oil supplies fell to a two-month low, a Bloomberg survey of analysts showed before a government report today.
West Texas Intermediate for February delivery fell as much as 18 cents to $92.74 a barrel on the New York Mercantile Exchange and was at $92.79 at 8:02 a.m. in Singapore. Futures closed 20 cents lower yesterday after climbing to $93.12 a barrel Jan. 2, the highest settlement for a contract nearest to expiration since Sept. 18.
Brent for February settlement slid 33 cents, or 0.3 percent, to $112.14 a barrel on the London-based ICE Futures Europe exchange yesterday. The North Sea crude was $19.22 a barrel more than WTI. Trading volume in WTI was 68 percent below the 100-day average, while Brent was 1.1 percent below.
Prices trimmed losses yesterday after the American Petroleum Institute reported inventories dropped 12 million barrels last week to 358.5 million. The Energy Department is scheduled to release its weekly report two days later than usual this week because of the New Year’s holiday.
Oil stockpiles fell by 1 million barrels to 370.1 million in the seven days ended Dec. 28, according to the median of 10 analyst estimates. That would be a third weekly decline and the sixth drop in seven weeks.

Gold Seen Rallying From Worst Streak in Three Years: Commodities (Bloomberg)
Gold traders expect prices to rebound from the longest weekly losing streak in three years as mounting concern that U.S. lawmakers are doing too little to control the budget deficit spurs demand for a protection of wealth.
Twenty analysts surveyed by Bloomberg expect prices to rise next week, five were bearish and a further two were neutral. While hedge funds cut bullish bets to a four-month low last week as prices slid for a fifth week, investors are holding a near- record amount in gold-backed exchange-traded products that are now valued at $141.9 billion, data compiled by Bloomberg show.
Bullion is in its longest run of annual gains in at least nine decades as U.S. lawmakers this week passed legislation that prevented tax increases for most workers and delayed spending cuts by two months. The International Monetary Fund says the country’s debt ceiling ought to be raised “expeditiously.” While Credit Suisse Group AG yesterday said gold will average the most ever this year, it joined Goldman Sachs Group Inc. in predicting the 12-year bull market will probably peak in 2013.
“Euphoria over the fiscal-cliff avoidance could be short lived as all problems are not solved yet,” said Frederique Dubrion, the Geneva-based president and chief investment officer of Blue Star Advisors SA, which manages metals and energy assets. “There’s still a huge amount of debt. Gold is nobody’s liability, it’s the ultimate alternative currency.”

20130104 0932 Soy Oil & Palm Oil Related News.

Soybeans Drop to 6-Week Low as China Cancels Import; Corn Steady (Bloomberg)
Soybean futures tumbled to a six-week low after China, the world’s biggest importer, canceled its third U.S. purchase in two weeks, while prospects improved for Brazil’s crop. Corn was little changed.
China canceled 315,000 million metric tons of previous soybean purchases for delivery before Aug. 31, bringing the total to 1.155 million since Dec. 18, the U.S. Department of Agriculture said in a report today. Yesterday, the USDA’s Foreign Agriculture Service said Brazil’s harvest this year will jump 25 percent to a record 83 million tons, boosting exports 21 percent and overtaking the U.S. as the top shipper.
“The mindset is for bigger crops in Brazil to reduce Chinese demand for U.S. soybeans,” Jerry Gidel, the chief feed- grain analyst for Rice Dairy LLC in Chicago, said in a telephone interview. “The market is adjusting to slowing demand.”
Soybean futures for March delivery dropped 0.5 percent to $13.8475 a bushel at 10:12 a.m. on the Chicago Board of Trade, after touching $13.725, the lowest since Nov. 16. Soybeans rose 17 percent in 2012, after drought cut production to a four-year low in the U.S.
Corn futures for March delivery rose 0.1 percent to $6.9175 bushel in Chicago, after touching $6.85, the lowest for a most- active contract since July 3. Last year, the price gained 8 percent, the fourth straight increase, after a drought cut U.S. production.
Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.

Soybean Complex Market Recap (CME)
January Soybeans finished down 2 1/2 at 1403, 4 1/2 off the high and 16 3/4 up from the low. March Soybeans closed down 4 3/4 at 1387 1/2. This was 15 up from the low and 9 1/4 off the high.
January Soymeal closed down 1.5 at 405.6. This was 5.9 up from the low and 2.3 off the high.
January Soybean Oil finished down 0.31 at 50.21, 0.38 off the high and 0.11 up from the low.
March soybeans are trading 5 cents lower into the closing bell but settled well off the session lows of the day. The sentiment favored the bear camp for most of the day after wires reported that China canceled another 315,000 tonnes of US soybean purchases for the 2012/13 marketing year this morning. Harvest has begun in Brazil and yields so far have been favorable. Some are now even suggesting that demand is slowly being shifted to South America due to cheaper prices and expectations that new crop soybeans will be available for export very soon. A dry period will extend into the end of this week for Argentina but rainfall is set to return early next week. Brazil conditions remain in good shape with the exception of northeastern Brazil but weather maps suggest a slightly better chance of rainfall for the region in the 6-10 day outlook. Early harvest has begun in Mato Grosso and conditions are exceptional at the moment. Additional sell pressure was due to the negative technical outlook for soybeans at the moment.

EDIBLE OIL: Malaysian palm oil futures edged lower after prices climbed to a two-month high the previous day, although hopes of a new export tax structure boosting demand had curbed losses. (Reuters)

20130103 1813 FCPO EOD Daily Chart Study.

FCPO closed : 2475, changed : -26 points, volume : higher.
Bollinger band reading : pullback correction upside biased.
MACD Histogram : turned downward, buyer taking profit.
Support : 2450, 2400, 2350, 2300 level.
Resistance : 2490, 2520, 2550, 2570 level.
Comment :
FCPO closed recorded loss with rising volume transacted. Overnight soy oil closed rallied higher by more than 2% and currently slipping little lower while crude oil price also having pullback correction.
FCPO daily chart reading revised to suggesting a pullback correction upside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20130103 1718 FKLI EOD Daily Chart Study.

FKLI closed : 1697.5 changed : +13.5 points, volume : higher.
Bollinger band reading : upside biased.
MACD Histogram : turned upward, buyer still in control.
Support :  1690, 1680, 1670, 1660 level.
Resistance : 1700, 1710, 1720, 1730 level.
Comment :
FKLI closed rallied higher with improved volume changed hand doing about 5 points premium compare to cash market that also advanced higher. Overnight U.S. markets surged higher while European markets continue to trade firmer while European markets recording small decline.
Daily chart study revised to suggesting an upside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.

20130103 1605 Global Markets & Commodities Related News.

STOCKS: European stock index futures pointed to a slightly lower open a day after hitting 20-month highs, becoming vulnerable to sell-offs in overbought trading conditions as euphoria over the U.S. fiscal deal wanes. Most Asian stock markets edged higher on hopes of a steady economic revival in China. U.S. stocks kicked off the new year with their best day in over a year on Wednesday. (Reuters)

Bigger fights loom after U.S. 'fiscal cliff' deal (Reuters)
President Barack Obama and congressional Republicans face even bigger budget battles in the next two months after a hard-fought "fiscal cliff" deal narrowly averted devastating tax hikes and spending cuts.

China services growth adds to economic revival hopes (Reuters)
Growth in China's increasingly important services sector accelerated in December at its fastest pace in four months, adding to signs of a modest year-end revival in the world's second-largest economy.

FOREX: The yen edged higher but remained near a 29-month low versus the dollar and looked fragile, weighed by expectations of more forceful monetary stimulus by the Bank of Japan.  (Reuters)


FOREX-Dollar rises to 3-week high versus Swiss franc
LONDON, Jan 3 (Reuters) - The dollar rose to a three-week high against the Swiss franc on Thursday as waning euphoria over a U.S. budget deal prompted investors to buy back the more liquid dollar and on talk of weak Swiss data.
The Swiss KOF indictor, due at 0800 GMT, is forecast to fall to 1.35 in December from 1.50 previously.

Good weather seen for last leg of Argentine soy, corn sowing (Reuters)
Dry weather that has allowed Argentine farmers to speed soy and corn planing over recent weeks is expected to last until mid-January, setting the stage for big harvests as early-season flooding gives way to a blazing Southern Hemisphere summer sun.

OIL: Brent crude traded around $112 a barrel after positive data reinforced hopes of an economic recovery in China, but the prospect of more budget battles in the United States and rising oil supply weighed on prices. (Reuters)

POLL-US Crude stocks seen down last week on lower imports (Reuters)
U.S. commercial crude oil stockpiles likely fell last week due to lower imports as refiners drew down for year-end tax purposes, a preliminary Reuters poll of eight analysts showed on Wednesday.

BASE METAS: London copper prices traded around the two-month top hit in the previous session as relief over a last-minute deal to avert a U.S. fiscal disaster continued to underpin prices.  (Reuters)

PRECIOUS METALS: Gold traded around $1687.00 an ounce, holding near its highest level in two weeks hit in the previous session following a last-minute deal to avert a U.S. fiscal disaster, although caution remained over upcoming tough budget negotiations.   (Reuters)

S.Africa's Harmony Gold delays restart of Kusasalethu mine (Reuters)
South African bullion producer Harmony Gold said on Wednesday it would delay the post-holiday restart of its Kusasalethu mine following year-end violence and protests.


METALS-London copper near 2-1/2 month top as US deal underpins
SINGAPORE, Jan 3 (Reuters) - London copper edged up towards the 2-1/2-month high hit in the previous session as relief over a last-minute deal to avert a U.S. fiscal disaster continued to underpin prices.
"The sentiment on base metals is turning more positive, especially now the U.S. fiscal crisis has been kicked down the road," said Nick Trevethan, senior commodity strategist at ANZ in Singapore.

PRECIOUS-Gold holds near 2-week high after U.S. fiscal deal
SINGAPORE, Jan 3 (Reuters) - Gold inched up holding near its highest level in two weeks hit in the previous session following a last-minute deal to avert a U.S. fiscal disaster, although caution remained over upcoming tough budget negotiations.
"Precious metals are currently tracking equities, however they are stuck within the next trading range. For gold, it will need to breach $1,695 before it can actually have another upward trend to break above $1,700," said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore.

20130103 1439 Palm Oil Related News.

VEGOILS-Palm oil inches lower; demand hopes limit losses
Thu Jan 3, 2013 1:19am EST
* Investors focus on impact of zero export tax, Jan export
data eyed
    * Palm oil seen retracing to 2,452 ringgit -technicals
    * Prices should trade in a range of 2,450-2,550 ringgit
-trader

 (Updates prices, adds detail)
    By Chew Yee Kiat
    SINGAPORE, Jan 3 (Reuters) - Malaysian palm oil futures
edged lower on Thursday as traders booked profit after prices
climbed to a two-month high in the previous session, although
losses were limited by hopes that a revised export tax structure
would boost demand.
    The tropical oil started the year strongly by jumping to its
highest since Nov. 2 on Wednesday after the United States
reached a fiscal deal that prevented the world's largest economy
from slipping into recession.
    Market players are now keeping a close eye on Malaysia's
Jan. 1-10 exports data to gauge the impact of the country's zero
export tax on demand.
    "We see a bit of profit-taking coming in. Every time we go
above 2,500 ringgit, there's no strong follow through," said a
trader with a foreign commodities brokerage in Malaysia.
    "The important issue now is with the new export tax
structure and traders want to see how Malaysian exports will be
for the first 10 days. Prices should be trading in a range of
2,450-2,550 ringgit."
    By the midday break, the benchmark March contract
on the Bursa Malaysia Derivatives Exchange had lost 0.6 percent
to 2,486 ringgit ($820) per tonne. Prices touched a two-month
top of 2,524 ringgit on Wednesday.
    Total traded volumes stood at 14,701 lots of 25 tonnes each,
higher than the usual 12,500 lots.  
    Technicals turned bearish as palm oil is expected to retrace
to 2,452 ringgit based on a wave analysis, Reuters market
analyst Wang Tao said.  
    But prices may find support as lower December production and
disruption to supply due to heavy rains could help ease
record-high stocks of 2.56 million tonnes, traders said.
    Industry regulator the Malaysian Palm Oil Board will release
official data on December's stocks and output next week.
    Investors are also watching closely for the impact of
China's stricter quality measures on edible oil imports, as that
could hurt demand for palm oil due to higher refining costs.

    Brent crude pared earlier losses to stay above $112 a barrel
on Thursday as positive data reinforced hopes of an economic
recovery in China, but the prospect of more U.S. budget battles
and rising oil supply weighed on prices.
    In competing vegetable oil market, U.S. soyoil for March
delivery rose 0.1 percent in early Asian trade. China's
Dalian Commodities Exchange is closed for the New Year holiday
and will resume trading on Friday.            

20130103 1128 Global Markets & Energy Related News.

GLOBAL MARKETS-Asia stocks, oil take breather after rally
HONG KONG, Jan 3 (Reuters) - Many Asian stocks were set to start with mild gains while oil eased following the previous session's rally as investors look ahead to negotiations on the U.S. debt limit and spending cuts.

FOREX-Yen edges up after hitting 29-month low vs dollar
SINGAPORE, Jan 3 (Reuters) - The yen bounced after hitting a 29-month low versus the dollar, having come under pressure earlier after U.S. lawmakers forged a deal to avoid huge tax increases and spending cuts, fueling demand for riskier investments.
"Technically dollar/yen looks somewhat overbought here. It's gone a long way in a very short time," said Callum Henderson, global head of FX research for Standard Chartered Bank in Singapore, adding that the dollar could see some consolidation in the near term before heading higher.

United States avoids calamity in 'fiscal cliff' drama
WASHINGTON, Jan 1 (Reuters) - The United States averted economic calamity on Tuesday when lawmakers approved a deal to prevent huge tax hikes and spending cuts that would have pushed the world's largest economy off a "fiscal cliff" and into recession.
The agreement hands a clear victory to President Barack Obama, who won re-election on a promise to address budget woes in part by raising taxes on the wealthiest Americans. His Republican antagonists were forced to vote against a core tenet of their anti-tax conservative faith.

U.S. manufacturing ends 2012 up despite 'cliff' fear
NEW YORK, Jan 2 (Reuters) - U.S. manufacturing ended 2012 on an upswing despite fears about the "fiscal cliff," data showed on Wednesday.
U.S. factories returned to growth in December after contracting the previous month, the Institute for Supply Management said. Its index of national factory activity rose to 50.7 up from 49.5 in November, narrowly beating the consensus forecast in a Reuters poll. The ISM index had fallen to a 40-month low in November.

OIL-Oil rises on US fiscal deal, hits highest since Oct
NEW YORK, Jan 2 (Reuters) - Oil prices rose to 11-week highs on Wednesday as part of a cross-market rally after the U.S. Congress approved a deal to avert tax hikes and spending cuts that threatened economic growth.
"There was the fiscal cliff euphoria, but the markets are a little overdone and people realize you still have the debt ceiling battle, social security taxes going up and dealing with spending sequestration and budget cuts," said Mark Waggoner, president at Excel Futures Inc.

POLL-US Crude stocks seen down last week on lower imports
Jan 2 (Reuters) -  U.S. commercial crude oil stockpiles likely fell last week due to lower imports as refiners drew down for year-end tax purposes, a preliminary Reuters poll of eight analysts showed on Wednesday.  
The survey, taken ahead of weekly inventory reports from industry group the American Petroleum Institute (API) and the U.S. Department of Energy's Energy Information Administration (EIA), forecast that crude stocks had dropped by 600,000 barrels on average for the week ended Dec. 28.

20130103 1110 Malaysia Corporate Related News.

Fire at Notion VTec’s manufacturing plant
Notion VTec announced yesterday that a fire occurred at the rear building of its manufacturing plant in Klang, Selangor, which affected its wholly-owned subsidiaries, Kaiten Precision (M) SB (KPSB) and Notion Venture SB (NVSB). The company said a site examination revealed that a section of the factory premises was gutted by the fire. About 100 computer numeric control (CNC) machines were lost. “There is also substantial damage to goods belonging to KPSB and NVSB that needs to be ascertained. Nonetheless, these assets (CNC machines and goods) are adequately covered by insurance,” said the company. (Financial Daily) Please see accompanying report

Finally, WCE gets the nod
The West Coast Expressway, a project that has been on the drawing board for the last 17 years, will finally take off after the company undertaking the RM7.1bn highway signed a concession agreement (CA) with the government yesterday. In an announcement, West Coast Expressway SB (WCESB), a 80% subsidiary of Kumpulan Europlus (KEuro), yesterday disclosed that it had signed a CA with the government to build the 233km highway that will stretch from Banting in Selangor to Taiping in Perak. Road Builder (M) Holdings, a wholly-owned subsidiary of IJM Corp, holds the remaining 20% equity interest in WCESB. IJM also has a 22.7% interest in KEuro. (Financial Daily) Please see accompanying report

Eversendai to raise stake in Technics to at least 20%
Eversendai Corp is strengthening its position in Singapore-listed Technic Oil & Gas by making the latter an associate company and securing a board position. Eversendai’s head honcho and major shareholder, Datuk A.K. Nathan, said the target was to raise its stake to at least 20% in Technics, which, in turn, would enable the construction and structural steel fabricator to equity account the profits of its Singapore unit. The board seat, he reckoned, should come about by February. (StarBiz)

Maybank gets more time from Bapepam
Maybank has received further time extension from Bapepam, Indonesia’s banking authority, to fulfil the selldown requirement and complete the selldown exercise by 1 Jun 2013 of its Indonesian banking arm. In a filing with Bursa Malaysia, the country’s largest bank said it had received a letter dated 27 Dec granting the group more time to undertake the exercise. (StarBiz)


Capital Markets: Business trust framework launched. The Securities Commission (SC) has released the much-awaited business trust guidelines, a new avenue for stable cash generating companies looking to raise funds and a new asset class to woo investors, as part of the broader Capital Markets and Services (Amendment) Act 2012 (CMSA 2012) which came into force on Dec 28, 2012. (Source: TheEdgeDaily)

Oil & Gas: UOP, Petronas in natural gas processing tech tie-up. UOP LLC, a Honeywell company, will team up with Petroliam Nasional Bhd (Petronas) on natural gas processing technology, particularly to improvefuture floating liquefied natural gas (FLNG) and remove carbon dioxide offshore and onshore. A UOP spokesperson said the two companies signed a joint technology development agreement recently. (Source: Business Times)

Automotive: Automobiles Citroen appoints Naza as distributor. French carmaker Automobiles Citroen has appointed Naza Euro Motors, a subsidiary of the Naza Group, as the official distributor for the Citroen brand in Malaysia. In a statement yesterday, Naza Euro said the appointment was effective Tuesday. (Source: Business Times)

Steel: Indonesia's BAJA to export steel products to Malaysia. Indonesian steel manufacturer, PT Saranacentral Bajatama (BAJA), is planning to market its products in Malaysia, Myanmar and Thailand to take advantage of the low import tariffs established under the Asean Free Trade Agreement (Afta). BAJA president director Handaja Susanto said with the market expansion, he expected exports to account for about 20 per cent of the company's sales. (Source: Business Times)

20130103 1110 Global Economy Related News.

Indonesia: Inflation slowed for a second month in December
Indonesia’s inflation slowed for a second month in December, supporting the central bank’s decision to hold off interest rate increases as exports slump. Consumer prices climbed 4.3% from a year earlier last month, after a previously reported 4.32% gain in November, the statistics bureau said. The median estimate in a Bloomberg News survey of 15 economists was 4.2%. (Bloomberg)

Thailand: Inflation quickens to 13-month high on food prices
Thailand’s inflation accelerated to a 13-month high in December, exceeding economists’ estimates, as subsidies failed to counter rising prices of food and fuel. An index of consumer prices rose 3.63% last month from a year earlier, the Ministry of Commerce said, compared with a 2.74% increase reported earlier for November. The median estimate of 12 economists in a Bloomberg News survey was 3.22%. (Bloomberg)

UK: Manufacturing revives as Euro factories struggle
UK manufacturing unexpectedly expanded at the fastest pace in 15 months in December as domestic demand improved, indicating some strength in the economy at the end of 2012. A gauge of factory activity rose to 51.4 from a revised 49.2 in November, Markit Economics and the Chartered Institute of Purchasing and Supply said. The median forecast of 29 economists in a Bloomberg News survey was for a reading of 49.1, unchanged from November’s initially reported level. (Bloomberg)

EU: December manufacturing shrinks more than estimated
Euro area manufacturing output contracted more than initially estimated in December, adding to signs a recession in the currency bloc may extend into this year as leaders struggle to tackle the sovereign debt crisis. A gauge of manufacturing in the 17-nation euro area fell to 46.1 from 46.2 in November, London-based Markit Economics said. That’s below an initial estimate of 46.3 on 14 Dec. A reading below 50 indicates a contraction. The gauge has been below 50 for 17 months. (Bloomberg)

US: Outlook for 2013 improves as manufacturing climbs
Manufacturing picked up in December, reflecting growth in orders, employment and exports that indicate the US expansion will be sustained in 2013 following the budget deal. The Institute for Supply Management’s manufacturing index climbed to 50.7 from a three-year low of 49.5 in November, the Tempe, Arizona-based group reported. 50 is the dividing line between expansion and contraction. (Bloomberg)

US stock indexes start 2013 with big rally
US stocks surged on Wednesday, with the Dow industrials notching their largest first-session-of-the-year-point rise ever, as Wall Street welcomed an 11th-hour deal to avoid steep spending cuts and tax increases and pondered deficit moves still ahead. The measure approved by the House of Representatives just after 11pm on Tuesday undid tax hikes for all but one to two percent of US households, with the bipartisan vote ending a lengthy standoff over how to avoid more than USD600bn in tax hikes and spending cuts viewed as likely to push the economy back into a recession. The Dow Jones Industrial Average rose 308.41 points, or 2.4%, at 13,412.55 and the S&P 500 climbed 36.2 points, or 2.5%, to 1,462.42. (MarketWatch)

20130103 0934 Global Markets Related News.

Asia FX By Cornelius Luca - Wed 02 Jan 2013 17:23:23 CT (CME/www.lucafxta.com)
The appetite for risk soared only intraday during the first trading day in 2013 because the Congress, in a well timed move, finally approved a deal to avert a "fiscal cliff". However, the next two months will see further negotiations over the debt ceiling, so the mood for risk soured quickly in FX. As I had already warned you, this so-called success will be in reality a mixed success at best because no grand deal was achieved. The European and commodity currencies futures gave up early gains, the commodity currencies ended off their best levels, while the yen dug to new lows (to the happiness of the Japanese exporters). The US stock markets surged. Gold, oil and silver closed up. The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long on European and commodity currencies. Good luck!

Overnight
US: The ISM's purchasing managers index climbed to 50.7 in December from 49.5 in November.
US: Construction spending fell by 0.3% in November after rising 0.7% in October.

Today's economic calendar
China: Non-manufacturing PMI for December

Stocks, Commodities Rally as Treasuries Drop on Budget (Bloomberg)
U.S. stocks surged, sending the Standard & Poor’s 500 Index to its biggest rally in a year, and commodities jumped after Congress passed a bill averting most of the tax increases and spending cuts threatening the recovery in the world’s biggest economy. Treasury yields gained.
The S&P 500 rose 2.5 percent to 1,462.42 at 4 p.m. in New York and has increased 4.3 percent in the past two sessions. The Stoxx Europe 600 Index (SXXP) climbed 2 percent to the highest since February 2011 as equities added to last year’s 13 percent global rally. Industrial metals led commodities up and oil advanced to a three-month high. The Dollar Index (DXY) reversed an early slide, while Treasury 10-year yields climbed eight basis points.
President Barack Obama said he will sign into law the bill undoing tax increases for more than 99 percent of households as Republicans vowed to fight him for spending cuts in exchange for raising the debt ceiling. An industry report today showed American manufacturing expanded in December at a pace that shows the industry is stabilizing after reaching a three-year low a month earlier.
“Short-term, a deal is good for the market,” Thomas Garcia, head of equity trading at Santa Fe, New Mexico-based Thornburg Investment Management Inc., said by telephone. His firm oversees about $80 billion. “Long-term, more has to be done in the way of spending cuts before we can declare victory.”

Most Asian Stocks Rise After U.S. Manufacturing Expands (Bloomberg)
Most Asian stocks rose, pushing a regional equities index to its highest level in 17 months, after a gauge of U.S. manufacturing added to optimism that the outlook for economic growth is improving.
Rio Tinto Group, the world’s second-largest mining company, climbed 1.7 percent in Sydney as metals prices rose. Australian miner Aquarius Platinum Ltd. (AQP) soared 16 percent, the most in four years, amid speculation that South African supply of the metal will be lower during the first quarter. Samsung Electronics Co. fell 1.3 percent in Seoul after being named in a new patent- infringement complaint filed in Washington by InterDigital Inc. over technology related to the latest mobile-phone standards.
The MSCI Asia Pacific Excluding Japan Index (MXAPJ) rose 0.1 percent to 476.55 as of 11:29 a.m. in Sydney, adding to yesterday’s biggest gain in three months. Almost three shares gained for each that fell. A close at this level would be the highest since August 2011. Standard & Poor’s 500 Index futures fell 0.2 percent today after the gauge jumped 2.5 percent yesterday. Markets in mainland China and Japan are closed today for holidays and Hong Kong’s market is yet to open.
“We expect growth to accelerate through 2013,” said Gerard Minack, global strategist at Morgan Stanley in Sydney. Asia’s “recovery isn’t as tethered to policy makers and structural headwinds. Equities look cheap relative to the past 30 years.”
Australia’s S&P/ASX 200 Index gained 0.5 percent, as did New Zealand’s NZX 50 Index. South Korea’s Kospi Index slid 0.1 percent, dragged lower by Samsung, which accounts for 20 percent on the gauge.

S&P 500 Rallies Most in One Year as Lawmakers Pass Budget (Bloomberg)
U.S. stocks rallied, giving the Standard & Poor’s 500 Index its biggest gain in more than a year, as lawmakers passed a bill averting spending cuts and tax increases threatening a recovery in the world’s biggest economy.
All 10 groups in the S&P 500 (SPX) rose at least 1.8 percent and the 30 stocks in the Dow Jones Industrial Average rallied. Apple (AAPL) Inc. and Facebook Inc. (FB) jumped more than 3.2 percent, pacing gains with technology companies. U.S. Steel Corp. climbed 8.6 percent after the shares were upgraded at Credit Suisse Group AG. Zipcar Inc. soared 48 percent after Avis Budget Group Inc. agreed to buy the company.
The S&P 500 jumped 2.5 percent to 1,462.42 at 4 p.m. in New York. The benchmark index is up 4.3 percent over two days, the most since November 2011. The Dow climbed 308.41 points, or 2.4 percent, to 13,412.55 today. The Nasdaq Composite Index soared 3.1 percent to 3,112.26. About 7.9 billion shares traded hands today, or 29 percent above the three-month average. U.S. exchanges were closed yesterday for the New Year’s holiday.
“We sold off on the uncertainty of what it means to go over the fiscal cliff and that’s been removed,” James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $325 billion, said in a telephone interview. “We’re re-valuing the market based on what’s closer to the underlying economy and most of the economic reports have been pretty good.”
The House of Representatives passed a bill just after 11 p.m. in Washington yesterday by a vote of 257-167, undoing income tax increases for more than 99 percent of households. The S&P 500 surged 1.7 percent on Dec. 31, the biggest rally on the final day of a year since 1974, as Republican and Democratic lawmakers made last-minute concessions to finalize the deal.

European Stocks Jump to 22-Month High on U.S. Budget Deal (Bloomberg)
European stocks rallied to the highest in 22 months as U.S. lawmakers passed a budget bill that avoided most scheduled tax increases threatening a recovery in the world’s largest economy.
Rio Tinto Group and Volkswagen AG (VOW) climbed at least 4 percent each to lead mining companies and automakers higher as Chinese manufacturing grew. ArcelorMittal gained the most in 11 weeks after selling a stake in its Canadian unit for $1.1 billion. BAE Systems Plc (BA/) soared 4 percent as the U.S. budget deal delayed defense spending cuts.
The Stoxx Europe 600 Index (SXXP) jumped 2 percent to 285.33 at the close of trading, the highest level since Feb. 28, 2011. The gauge posted the biggest annual rally in three years in 2012, rising 14 percent, as the European Central Bank’s program to purchase bonds of the region’s weakest economies helped ease concern the euro area will fracture.
“It’s good to get the U.S. budget deal resolved and to get the details, as it’s been dragging on for a while,” said Andrea Williams, head of European equities at Royal London Asset Management, which oversees about $1.1 billion. “Politics were a real ball last year; this year started well.”
The number of shares changing hands in Stoxx 600 companies today was 29 percent higher than the 30-day average, according to data compiled by Bloomberg. Germany’s DAX Index advanced 2.2 percent to a five-year high and the U.K.’s FTSE 100 (UKX) climbed above 6,000 for the first time since July 2011. The Swiss market was closed for a holiday.

Emerging Stocks Jump as BRICs Set for Bull Market on U.S. (Bloomberg)
Developing-nation stocks rose to a 10-month high, pushing the MSCI BRIC Index of the largest emerging markets up 22 percent from last year’s low, after U.S. lawmakers passed a bill that averted spending cuts and tax gains that had threatened the world’s largest economy.
Samsung Electronics Co. (005930), the world’s biggest maker of televisions and mobile phones, rallied 3.6 percent to a record, pushing an index of emerging-market technology stocks to the highest in more than 12 years. China Pacific Insurance (Group) Co. (267) jumped to a 17-month high after Credit Suisse Group AG included the stock among its 2013 top picks. Brazil’s Bovespa Index (IBOV) surged to the highest since April, boosted by Vale SA.
The MSCI Emerging Markets Index jumped 2.1 percent to 1,078.16 in New York, the highest since March 2. The MSCI BRIC Index (MXBRIC) rose 2.6 percent to close in a bull market. The House of Representatives voted in favor of budget law as Republicans abandoned efforts to add spending cuts, boosting confidence in the U.S. economy. The 21 nations in the developing-nations gauge send about 17 percent of their exports to the U.S. on average, data compiled by the World Trade Organization show.
“The fiscal cliff was one of the big drags on the market at the end of the last year, so I suspect that for the next few days and weeks we’re going to see markets run up further,” Neil Shearing, the chief emerging markets economist at Capital Economics Ltd., said by phone from London.

Yen Stays Lower Versus Euro Before BOJ’s Nishimura Speaks (Bloomberg)
The yen remained lower following a decline versus the euro yesterday before Bank of Japan Deputy Governor Kiyohiko Nishimura speaks tomorrow amid speculation policy makers will boost cash infusions to end deflation.
The dollar reached the highest in more than two years versus the Japanese currency before data that economists say will signal improvement in the U.S. job market. New Zealand’s currency held a gain after milk powder prices climbed to a six- week high at an auction.
“The Japanese yen is very overvalued still,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk management company. “There’s quite a lot of weakness in the yen to come.”
The yen traded at 115.05 per euro as of 8:49 a.m. in Singapore after losing 0.6 percent to 115.17 yesterday. The dollar touched 87.36 yen, the strongest since July 29, 2010, before trading little changed from yesterday at 87.24 yen. The greenback was at $1.3188 per euro from $1.3186.
Japan’s newly installed Prime Minister Shinzo Abe said in a New Year statement on Jan. 1 that the most urgent issue for his country was to break out of currency appreciation and deflation. “Bold” monetary policy is one of the three prongs of his economic measures, he said.
The nation’s markets are shut today for a holiday.
ADP Research Institute may say today that companies in the U.S. added 140,000 workers in December, up from a 118,000 increase the prior month, according to the median estimate of economists surveyed by Bloomberg News. The data will be followed by a government report tomorrow projected to show payrolls rose 150,000 workers last month, the most since August.

Aussie Near 2-Week High, Bond Yields Rise on U.S. Outlook (Bloomberg)
The Australian dollar was near a two- week high as the passage of U.S. budget legislation improved prospects for the world’s largest economy and supported demand for higher-yielding assets.
Australian bonds fell, pushing the 10-year yield to the highest in more than four months, before a private report that may show gains in U.S. employment. Growing investor appetite for risk also lifted global equities. The New Zealand dollar, also known as the kiwi, was near its strongest level in two weeks after milk powder prices climbed to a six-week high at auction.
The budget agreement “brightens the outlook for the U.S. economy in the first quarter and removes one of the roadblocks to a strong start to the year,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “For the time being, we’re probably running with a pretty positive view on risk appetite that supports the Aussie dollar and the kiwi.”
The Australian dollar bought $1.0496 as of 11:25 a.m. in Sydney from $1.0504 at the close yesterday when the currency touched $1.0524, the strongest since Dec. 19.
The yield on 10-year Australian debt was at 3.39 percent after earlier climbing as much as three basis points, or 0.03 percentage point, to 3.44 percent, the highest since Aug. 21.
The Standard & Poor’s 500 Index (SPX) of U.S. shares surged 2.5 percent yesterday, the biggest advance in a year. The Stoxx Europe 600 Index jumped 2 percent.

Treasury Futures Stay Lower Before Jobs Reports (Bloomberg)
Treasury 10-year futures contracts stayed lower after falling yesterday as economists said reports this week will show hiring picked up.
U.S. government securities fell 0.5 percent in the past month, the biggest loss among 26 debt-market indexes tracked by Bloomberg and the Federation of Financial Analysts Societies. Bonds tumbled yesterday after U.S. lawmakers agreed on a plan to avert most of the tax increases and spending cuts scheduled to start this year that threatened the world’s biggest economy. Treasuries were closed in Japan today for a holiday.
Ten-year futures contracts for March delivery were little changed at 132 1/8 today as of 8:48 a.m. in Singapore. They dropped 5/8 yesterday, the most in 11 weeks. Trading of bonds, notes and bills is scheduled to take place as usual today in the U.K. and the U.S., according to the Securities Industry and Financial Markets Association website.
“Yields will go a little higher,” said Marc Fovinci, the head of fixed income in Portland, Oregon at Ferguson Wellman Capital Management Inc., which has $3.2 billion in assets. “The partial resolution of our fiscal cliff has taken an immediate recession off the table, and that has reduced the flight-to- quality bid in the market.”
Ten-year yields may rise to 2.25 percent in a year from today’s 1.84 percent, he said. Ferguson Wellman is favoring U.S. corporate bonds over Treasuries, he said.

Bipartisan House Backs Tax Deal Vote as Next Fight Looms (Bloomberg)
The fiscal bill passed by Congress solves an immediate dilemma, averting income-tax increases for most Americans while taxing top-earners more, yet leaves unanswered a longer-term question of taming the federal debt.
Republicans have immediately turned to their next battle -- counting on the need to raise the nation’s $16.4 trillion debt ceiling to try to force President Barack Obama to accept cuts in entitlement programs such as Medicare. Congress must act as early as mid-February to prevent a default and the dispute may reprise a similar 2011 episode that led to a downgrade of the U.S. credit rating.
“Without meaningful reform of entitlements, real spending controls, and a fairer, cleaner tax code, our debt will continue to grow, and our economy will continue to stumble,” House Speaker John Boehner said in a statement after the vote.
Obama said he’s “very open to compromise.” Medicare spending can be reduced, he said, yet “we can’t simply cut our way to prosperity.”
The deal that cleared the House and Senate yesterday falls short of any “grand bargain” on fixing the debt that some leaders had hoped to achieve. Former Senator Alan Simpson, a Wyoming Republican, and Erskine Bowles, a chief of staff to former President Bill Clinton, co-chairmen of Obama’s deficit commission that proposed a $4 trillion solution of tax increases and spending cuts, today called the legislation “truly a missed opportunity.

Outlook for 2013 Improves as U.S. Manufacturing Climbs (Bloomberg)
Manufacturing picked up in December, reflecting growth in orders, employment and exports that indicate the U.S. expansion will be sustained in 2013 following the budget deal.
The Institute for Supply Management’s manufacturing index climbed to 50.7 from a three-year low of 49.5 in November, the Tempe, Arizona-based group reported today. Fifty is the dividing line between expansion and contraction. Other data showed fewer outlays for non-residential projects pushed down construction spending in November for the first time in eight months.
A rebound in housing and stabilization in global growth point to a pickup in sales that will boost companies such as General Electric Co. (GE) Stocks surged, sending the Standard & Poor’s 500 Index to its biggest rally in a year, as Congress passed a bill averting spending cuts and tax increases that threatened to push the world’s largest economy into a recession.
“We are starting the new year on at least a fairly firm note,” said Tim Quinlan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who projected the ISM index would climb to 51. While some manufacturers have been holding back because of the budget debate, he said, “there is demand in this economy. As soon as businesses are able to take advantage of this, we’ll see a bigger contribution from manufacturing to overall economic growth.”
The S&P 500 advanced 2.5 percent, the biggest gain since Dec. 20, 2011, to 1,462.42 at the close in New York. Commodities surged and Treasuries fell after Congress passed a bill preventing tax increases for more than 99 percent of households.

Budget Deal Seals Breaks for Wind Farms, Puerto Rico Rum (Bloomberg)
Wind farms, motorsports tracks, global banks and other businesses won revived tax breaks in a $75.3 billion package included in a last-minute budget deal Congress passed yesterday.
he package of tax extensions survived attempts to curb them to reduce the U.S. budget deficit that has exceeded $1 trillion for four years. Their beneficiaries and lobbyists received a reprieve and a chance to bargain for another extension this year.
The breaks are “generally economically useless or harmful,” lowering General Electric Co. (GE)’s tax bill, padding accounting firms’ research-credit business and letting lawmakers repeatedly tap lobbyists and companies for donations, said Bob McIntyre, director of Citizens for Tax Justice. The Washington group favors higher taxes on companies.
“If you make them permanent, you get the campaign contribution once,” McIntyre said. “You do it every year or two, they have to ante up again and again.”
The tax-break extensions, mostly for companies, made it into the bill past Republican demands for spending cuts and Democratic resistance to benefits for businesses. Both parties have complained for years about some of the special-interest provisions.
Most of the tax breaks had expired at the end of 2011 and will be extended through 2013. The companies that benefit say the on-again, off-again breaks are important though the uncertainty makes it almost impossible to use them to plan business investments.

Congress Budget Pact Would Crimp Not Crush U.S. Growth (Bloomberg)
The U.S. economic expansion probably will be crimped without being halted by the budget deal that won approval by the House of Representatives last night after being forged by the Senate and White House.
The agreement permanently reinstates the income tax cuts for most workers that ended Dec. 31, continues expanded unemployment benefits and delays automatic spending cuts for two months. It would let a two percentage point payroll tax cut expire.
The elimination of the payroll tax cut, coupled with higher income taxes on the wealthy, will help clip growth in the first quarter to 1 percent, from 3.1 percent in 2012’s third quarter, the latest data available, according to economists at JPMorgan Chase & Co. (JPM) and Bank of America Corp. The expansion will strengthen later in the year as the housing market continues to rebound, they forecast.
“It’s going to definitely present a headwind for the economy,” Michael Feroli, chief U.S. economist for JPMorgan Chase in New York, said. “We’re looking for a downdraft in growth in the first half of the year, with the economy coming back in the second.”
The package isn’t the grand bargain on deficit reduction that lawmakers wanted when they created the tax-and-spending deadlines over the past three years. Instead, it would avert most of the immediate pain and postpone Congress’ fiscal feud for two months -- until a February fight over raising the $16.4 trillion debt limit.

Construction Spending in U.S. Unexpectedly Fell in November (Bloomberg)
Spending on U.S. construction projects unexpectedly dropped in November, restrained by declines in non-residential building and public works.
Outlays fell 0.3 percent to $866 billion annual rate after increasing a less-than-previously estimated 0.7 percent in October, the Commerce Department reported today in Washington. The median forecast of 41 economists surveyed by Bloomberg called for a 0.6 percent increase. Housing climbed to the highest level in more than four years.
The residential real-estate market will probably continue to drive spending as record-low mortgage rates, an increasing population and dwindling inventory boost construction. At the same time, the damage from superstorm Sandy and government budget battles that raise concern about the outlook for growth may curb the rest of the industry.
“There’s good, solid momentum story in the residential sector,” said Julia Coronado, chief economist for North America at BNP Paribas in New York. “We now have a construction sector that’s a modest contributor to GDP rather than a drag. This is a very gradually healing story, not a boom story.”
Also today, the Institute for Supply Management’s factory index rose to 50.7 in December from 49.5 a month earlier, the Tempe, Arizona-based group said. Economists in a Bloomberg survey projected a reading of 50.5.

Bond Tab for Biggest Economies Seen Falling $220 Billion (Bloomberg)
The world’s leading economies will have $220 billion less sovereign debt to refinance in 2013, cutting supply after every major government bond market rallied for the first time since the 2008 financial crisis.
The amount of bills, notes and bonds coming due for the Group of Seven nations plus Brazil, Russia, India and China will drop to $7.38 trillion from $7.60 trillion in 2012, according to data compiled by Bloomberg. Japan, the U.K., Germany, France, Italy and Brazil will see a decline, while the U.S., Canada, Russia, India and China will face an increase.
While high debt loads are blamed for curbing global economic growth, bond investors are encouraged by signs that some nations are starting to rein in spending as they extend the average maturity of their obligations. Instead of rising, borrowing costs are falling as supply decreases, inflation remains in check and central banks from the U.S. to Europe cut interest rates to record lows.
“The progress made in fiscal adjustments has been quite significant in a number of countries, perhaps more than the market is realizing,” said Mohit Kumar, the London-based head of European interest-rate strategy at Deutsche Bank AG, Germany’s biggest bank. “Policy will remain accommodative. I don’t expect to see a selloff in core government bonds. There will be enough demand.”

N. Korea’s 2011 China Trade Grew More Than 60 Percent (Bloomberg)
North Korea’s trade with China expanded more than 60 percent to $5.63 billion in 2011, as the totalitarian regime deepened its dependence on its main political and financial backer.
Commerce with China accounted for 70.1 percent of the North’s total $8 billion trade in 2011, up from 57 percent in the previous year, South Korea’s national statistics office, Statistics Korea, said in its annual report today in Seoul. North Korea does not report economic data. Inter-Korean trade amounted to about $1.71 billion in the same year.
China provides North Korea economic aid and serves as its diplomatic shield at the United Nations Security Council. As a veto-wielding permanent member of the Security Council, China has resisted efforts to impose fresh punishment against North Korean leader Kim Jong Un over a Dec. 12 missile launch that demonstrated a heightened ballistic capability.
Excluding a dip in 2009, trade between the two countries has increased every year since the start of 2000, when the statistics bureau started releasing estimates. Data for 2012 will be released around the end of next year.
North Korea’s economy expanded 0.8 percent in 2011 and gross national income per capita was 1.33 million won ($1,239), nearly one nineteenth that of South Korea’s 25 million won, according to the Bank of Korea. South Korea’s total nominal gross national income was 38.2 times that of the North’s 32.44 trillion won.
The regime imported 3.8 million barrels of crude oil for 2011. Power generation capacity was 6.9 million kilowatts, less than one-10th that of South Korea. Steel production was 1.23 million tons and production of chemical fertilizer production was 471,000 tons.
North Korea’s population rose to 24.3 million in 2011 from 24.2 million the previous year -- about half of South Korea’s. Population estimates were based on North Korea’s 1993 and 2008 censuses.

Singapore’s Private Home Prices Climb to Record on Sales (Bloomberg)
Singapore home prices climbed to a record in the fourth quarter after developers sold more homes, a government report showed.
The island state’s private residential property price index rose 1.8 percent to 211.90 points in the three months ended Dec. 31, according to preliminary estimates released by the Urban Redevelopment Authority today. The index advanced 0.6 percent in the previous quarter, which was also a record. Prices rose 2.8 percent in the year, compared with a 5.9 percent gain in 2011, data from the authority showed.
Prices of non-landed private residential properties increased 0.8 percent in prime districts in the quarter, the data showed. In suburban areas, prices climbed 3.4 percent.
The benchmark property index, which tracks 40 developers, gained 1 percent to 791.48 at the close of trading in Singapore, the biggest advance since Dec. 7. CapitaLand Ltd. (CAPL), Southeast Asia’s biggest developer, rose 1.6 percent to S$3.76, while City Developments Ltd. (CIT), Singapore’s second-largest developer, added 0.9 percent to S$12.99.
“Private property prices saw a rebound with the price increase in the fourth quarter contributing to more than 50 percent for the entire year,” Mohamed Ismail, chief executive officer of PropNex Realty, said in an e-mailed statement. “It is expected that the trend will continue and prices will further increase resulting in an overall 4 percent to 5 percent growth in the private property price index in 2013.”

Singapore GDP Topped Survey Last Quarter, Avert Recession (Bloomberg)
Singapore’s economy expanded more than economists estimated last quarter, averting a recession even after the central bank refrained from monetary stimulus as it sought to contain elevated inflation.
Gross domestic product rose an annualized 1.8 percent in the three months to Dec. 31 from the previous period, when it contracted a revised 6.3 percent, the Trade Ministry said in a statement today. The median of 11 estimates in a Bloomberg News survey was for a 1.6 percent expansion. The economy grew 1.2 percent last year, less than a quarter of 2011’s pace.
The World Bank last month raised its outlook for emerging East Asia nations, citing China’s recovery, even as the export- dependent region faces risks from Europe’s protracted sovereign debt crisis. The Monetary Authority of Singapore, which allowed faster currency gains in 2012 to curb price gains, may maintain its appreciation policy after last quarter’s expansion as the island grapples with persistent inflation pressures.
“Global economic conditions will remain challenging in the foreseeable future, and we are not likely to see a notable improvement” until the second half even as China may provide some support, said Leif Eskesen, an economist for HSBC Holdings Plc in Singapore. “This does not mean that the MAS is ready to pull the trigger. Despite the muted growth print and some easing in inflation over the past few months, inflation remains firm and capacity is still very tight.”

Kim Signals Warmer North Korea Ties With South (Bloomberg)
North Korea’s Kim Jong Un named improving the economy and better relations with South Korea as top policy goals for his second year as leader, signaling he may ease his country’s confrontational approach toward Seoul.
“The building of an economic giant is the most important task that comes to the fore in the present stage of building a thriving socialist country,” Kim said yesterday in a New Year address carried by the official Korean Central News Agency. “The reunification of the country is the greatest national task that brooks no further delay.”
Kim departed from the past year’s saber-rattling against South Korean President Lee Myung Bak as Lee’s successor Park Geun Hye prepares to take office Feb. 25. Park has repudiated Lee’s hard-line North Korea policy, expressing her willingness to talk to Kim and help the North join global organizations to thaw ties.
“Kim’s speech mentioned the importance of the economy at far greater frequency than the military,” Cheong Seong Chang, senior research fellow at the Seoul-based Sejong Institute, said in an e-mail yesterday. “The success of the Dec. 12 missile launch has given Kim enough confidence to not have to rely on his father’s military-first policy to garner support.
‘‘The urgency of economic issues also compounds to the North’s need to better ties with South Korea, which makes it likely that Pyongyang will aggressively engage in efforts to resume dialogue,” Cheong said.

Indonesia inflation slows a second month (Bloomberg)
Indonesia’s inflation slowed for a second month in December, supporting the central bank’s decision to hold off interest-rate increases as exports slump.
Consumer prices climbed 4.3 percent from a year earlier last month, after a previously reported 4.32 percent gain in November, the statistics bureau said in Jakarta today. The median estimate in a Bloomberg News survey of 15 economists was 4.2 percent.
Bank Indonesia has kept borrowing costs unchanged for 10 straight meetings as exports tumbled and the rupiah weakened. Price pressure in Southeast Asia’s largest economy may rise as a planned increase in electricity tariffs and minimum wages take effect, with a possible reduction in fuel subsides also weighing.
“Inflation has stabilized at its current rate,” Aninda Mitra, head of Southeast Asia economics at Australia & New Zealand Banking Group Ltd., said after the data was released. “We think that inflation is headed higher on account of several factors such as low base effects, higher wages, and impending electricity and fuel price hikes.”
Price gains may accelerate to 4.9 percent in 2013, central bank official Perry Warjiyo said last month.
The rupiah weakened 0.5 percent to 9,685 per dollar as of 2:59 p.m. in Jakarta, after reaching a three-year low of 9,785 earlier, according to prices from local banks compiled by Bloomberg. The currency declined about 6 percent last year, the worst performance in Asia after the yen among 11 most-active Asian currencies tracked by Bloomberg.
Consumer prices rose 0.54 percent last month from November. The core inflation rate was 4.4 percent, the same as the 4.4 percent pace the month before.

U.K. Manufacturing Revives as Euro Factories Struggle: Economy (Bloomberg)
U.K. manufacturing unexpectedly expanded at the fastest pace in 15 months in December as domestic demand improved, indicating some strength in the economy at the end of 2012.
A gauge of factory activity rose to 51.4 from a revised 49.2 in November, Markit Economics and the Chartered Institute of Purchasing and Supply said in London today. The median forecast of 29 economists in a Bloomberg News survey was for a reading of 49.1, unchanged from November’s initially reported level. The pound stayed higher against the dollar after gaining to its strongest level in 16 months.
The report reduces the chance the U.K. will succumb to triple-dip recession after the economy resumed expansion in the third quarter and tensions related to the euro-region debt crisis eased. Still, Markit noted that companies remain “cautious” and the Bank of England has forecast only a gradual recovery through 2013. A separate report showed euro-area manufacturing continued to shrink last month.
“The sector found some stability at the very end of 2012,” said Samuel Tombs, an economist at Capital Economics Ltd. in London. Still, “with the recession in the euro zone set to deepen and consumers at home on course to be hit by a further bout of relatively high inflation, 2013 is shaping up to be another tough year for U.K. manufacturers.”
Today’s report showed that U.K. factory output increased for a second month, with growth accelerating to a 20-month high. The improved performance was mainly due to an improvement in domestic demand, with the sharpest gains in consumer and partly finished goods. Still, Markit said the increase in the index in December “does little to change the view that the sector contracted over the fourth quarter as a whole.”

Euro-Area December Manufacturing Shrinks More Than Estimated (Bloomberg)
Euro-area manufacturing output contracted more than initially estimated in December, adding to signs a recession in the currency bloc may extend into this year as leaders struggle to tackle the sovereign-debt crisis.
A gauge of manufacturing in the 17-nation euro area fell to 46.1 from 46.2 in November, London-based Markit Economics said today. That’s below an initial estimate of 46.3 on Dec. 14. A reading below 50 indicates contraction. The gauge has been below 50 for 17 months.
The euro-area economy has shrunk for two successive quarters and economists foresee a further decline in gross domestic product in the final three months of last year. The European Central Bank forecasts contractions of 0.5 percent and 0.3 percent in 2012 and 2013.
“The euro-zone manufacturing sector remained entrenched in a steep downturn at the end of the year,” Chris Williamson, chief economist at Markit, said in the report. “The region’s recession therefore looks likely to have deepened, possibly quite significantly, in the final quarter.”
The euro was little changed after today’s report and traded at $1.3258 at 10:32 a.m. in Brussels.
With euro-area unemployment at a record, economists project the region’s GDP decreased 0.3 percent in the fourth quarter, according to the median of 22 forecasts in a Bloomberg survey.
“Manufacturers look to be in for another tough year in 2013, though prospects have brightened a little as producers should benefit from signs of stronger demand in key export markets such as the U.S. and China,” Williamson said.

20130103 0933 Global Commodities Related News.

DTN Closing Grain Comments 01/02 14:28 Grains On the Defensive Again Wednesday (CME)
After a higher start to the day, grain contracts quickly collapsed as heavy investment selling hit the sector.
General Comments:
Corn closed 7 1/2 cents lower in the March and 6 3/4 cents lower in the May.
Soybeans closed 17 1/4 cents lower in the March and 15 cents lower in the May.
Wheat closed 22 3/4 cents lower in the March Chicago, 20 cents lower in the
March Kansas City, and 24 cents lower in the March Minneapolis. The U.S. dollar
index is 0.068 higher at 79.839. February gold is $12.70 higher at $1,688.50
while March silver is $0.828 higher and March copper is $.0810 higher. The Dow
Jones Industrial Average is 235 points higher at 13,339. February crude oil is
$1.04 higher at $92.86. February heating oil is $.0129 higher while February
RBOB gasoline is $.0356 higher and February natural gas is $0.114 lower.

Corn Market Recap for 1/2/2013 (CME)
March Corn finished down 7 1/2 at 690 3/4, 16 1/2 off the high and 3 up from the low. May Corn closed down 6 3/4 at 693 1/2. This was 3 up from the low and 15 1/2 off the high.
March corn trade lower into the closing bell after an initial surge higher. Weaker trade in the soybean and wheat markets helped to pressure corn. Outside markets were mostly supportive throughout the session with crude oil, copper, and stocks trading higher after Congress reached a deal on the "Fiscal Cliff". The US Dollar erased early losses and traded higher midday which added pressure to the grain complex. South American weather remains most favorable with drier conditions in Argentina this week and showers are expected in growing regions of Brazil. Traders continue to see Brazil production near 70 million tonnes, right in line with the USDA forecast but Argentina estimates remain near 22.5-23.0 million tonnes as compared with the USDA estimate of 27.50 million tonnes. More than 20% of the crop still needs to be planted in Argentina but harvest for earlier planted corn is expected to begin in about two weeks. The trade ministry in Brazil estimated December corn exports of 2.8 million tonnes vs. 3.91 in November. Corn basis in the Gulf is slightly higher but still lower from levels Monday as farmer sales come to a halt. Export demand remains sluggish.
January Rice finished down 0.105 at 14.755, equal to the high and equal to the low.

Wheat Market Recap Report (CME)
March Wheat finished down 22 3/4 at 755 1/4, 32 3/4 off the high and 2 3/4 up from the low. May Wheat closed down 21 3/4 at 766. This was 3 1/4 up from the low and 31 off the high.
Kansas City and Chicago wheat rallied on the pit open but the market saw sell pressure shortly thereafter to close down 19-20 cents on the day. The US Dollar turned higher midday which helped to pressure the grain markets. US wheat exporters are looking ahead to Iraq's 50,000 tonne option-origin tender and Syria issued a 100,000 tonne soft wheat tender overnight. The US has a chance of doing both bits of business which could be supportive to price. Kansas and Oklahoma released state crop condition ratings on Monday. Kansas was at 24% good/excellent vs. 29% last month. Poor/very poor was reported at 31%. Oklahoma was pegged at 11% good/excellent vs. 14% last month. The western plains are expected to dry out this week after seeing decent rain and snowfall last week. Conditions have not improved for most of the growing region but significant accumulation was seen in the central third of KS which will help protect crops from winterkill.
March Oats closed down 12 at 335 1/2. This was 3 1/4 up from the low and 13 off the high.

Wheat Slumps to Six-Month Low on Slowing Exports by U.S. (Bloomberg)
Wheat futures fell to a six-month low on mounting concern that export demand is slowing for supplies from the U.S., the world’s biggest shipper.
Export sales totaled 13.2 million tons from June 1 through Dec. 20, down 13 percent from the same period a year earlier, U.S. Department of Agriculture data show. While shipments jumped 55 percent in the most recent week, the most since January 2011, more gains are needed to change market sentiment, said Frank J. Cholly, a senior commodities broker at RJO Futures in Chicago. Short positions, or bets on lower prices, exceeded longs by 11,899 wheat futures and options as of Dec. 24, the most-bearish since May, government data show.
“We need a more compelling demand story to move the market higher,” Cholly said by telephone. “Buyers have to step up to the plate sooner or later. It’s cheap enough now.”
Wheat futures for March delivery fell 2.9 percent to settle at $7.5525 a bushel at 2 p.m. on the Chicago Board of Trade, the biggest decline since Dec. 11, after touching $7.525, the lowest for a most-active contract since June 29. Prices tumbled 9.9 percent in December, the biggest drop since September 2011.
Even with the decline last month, the grain ended 2012 up 19 percent for the year, and reached a four-year high of $9.4725 on July 23 as drought cut output in countries including the U.S. and Russia.
Wheat’s fourth-quarter slump makes the commodity an attractive investment because drought conditions persist in the U.S. and may affect production next year, Cholly said.
“I’d like to own wheat after this type of correction,” he said. “We don’t have any snow here, and we’re still in a drought. We planted into dry soils. If I’m an end-user, now’s a good time to be buying.”
Wheat is the fourth-largest U.S. crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.

Soybeans Slump to Six-Week Low on South America Outlook (Bloomberg)
Soybean futures fell to a six-week low on speculation that South America will harvest a record crop this year and boost exports. Corn dropped.
A unit of the U.S. Department of Agriculture said today in a report that Brazil will harvest 83 million metric tons this year, surpassing the U.S. as the world’s largest grower and exporter. Rain expected in the next two weeks may boost yields in Brazil, while dry weather in Argentina firms muddy soils for farmers to finish planting, Overland Park, Kansas-based World Weather Inc. said.
“South American weather remains very conducive for reaching current USDA crop forecasts,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Harvesting is just beginning in Brazil and will increase available supplies.”
Soybean futures for March delivery dropped 1.2 percent to close at $13.9225 a bushel at 2 p.m. on the Chicago Board of Trade. Earlier, the price touched $13.8625, the lowest for a most-active contract since Nov. 20. In 2012, the oilseed rose 17 percent after drought cut U.S. production to the lowest in four years.
In Argentina, output may jump 34 percent to a record, the USDA said on Dec. 10.
Corn futures for March delivery fell 1.1 percent to $6.9075 a bushel in Chicago. Earlier, the price touched $6.8775, the lowest since Dec. 20. Last year, the grain advanced 8 percent, the fourth straight increase.
In the U.S., corn is the biggest crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.

Sugar Climbs on Economic Outlook; Coffee, Cotton, Cocoa Rise (Bloomberg)
Sugar advanced to an almost one-month high on speculation that demand for commodities will rise after U.S. lawmakers reached a budget deal. Coffee, cotton and cocoa also gained, while orange juice fell.
The vote in the House of Representatives broke a yearlong impasse over how to avert $600 billion in tax increases and spending cuts that threatened to send the economy back into recession. The Standard & Poor’s GSCI Spot Index of 24 raw materials jumped as much as 1.6 percent.
Commodities “are going to enjoy a nice bounce after the majority of fiscal-cliff worries are now behind us,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said in an e-mail.
Raw sugar for March delivery climbed 0.9 percent to settle at 19.69 cents a pound at 2 p.m. on ICE Futures U.S. in New York, after touching 19.75 cents, the highest for a most-active contract since Dec. 4. Prices tumbled 16 percent last year.
Also on ICE, arabica-coffee futures for March delivery rose 3.9 percent to close at $1.494 a pound, the biggest gain since Sept. 10. Prices dropped 37 percent last year.
Cocoa futures for March delivery advanced 1 percent to close at $2,259 a metric ton in New York, capping the first increase since Dec. 14. Prices rose 6 percent last year.
Cotton futures for March delivery added 0.3 percent to settle at 75.36 cents a pound on ICE. The fiber fell 18 percent in 2012.
Orange-juice futures for March delivery slid 0.6 percent to close at $1.166 a pound in New York. Prices are down 19 percent since reaching a seven-month high on Dec. 19.
Florida “didn’t get cold,” Sterling Smith, a market specialist at Citigroup Inc. in Chicago, said in an e-mail. “The market is taking out most of the frost premium. Also, the good weather in Brazil is helping crops there, adding to the bearishness.”
Brazil is the world’s largest orange grower, followed by Florida.

Natural Gas Drops Most in 5 Weeks on Forecasts of Warmer Weather (Bloomberg)
Natural gas futures in New York tumbled the most in five weeks on forecasts of moderating temperatures that may reduce demand for the power-plant fuel.
Gas fell as much as 9 percent, the biggest intraday drop in more than three years, after Commodity Weather Group LLC said cold weather in most of the U.S. this week would give way to above-normal temperatures from Jan. 7 through Jan. 11. The low in New York on Jan. 10 may be 37 degrees Fahrenheit (3 Celsius), 10 higher than usual, AccuWeather Inc. said.
“We’re going to see some warm weather across the primary gas-consuming regions,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “As we get into the new year without signs of sustained cold weather, the fundamental picture is going to force us lower.”
Natural gas for February delivery fell 11.8 cents, or 3.5 percent, to settle at $3.233 per million British thermal units on the New York Mercantile Exchange. On a settlement basis, the drop was the biggest since Nov. 26. The intraday percentage decline was the most since Sept. 11, 2009. The futures have risen 8.2 percent from a year ago.
Trading volume was 297,874 contracts at 3:19 p.m., 3.8 percent below the 100-day average.
February $3.10 puts were the most active gas options in electronic trading. They were 3 cents higher at 6.6 cents on volume of 1,270 contracts as of 3:16 p.m. Puts accounted for 53 percent of options volume.
Gas slid to $3.05 in electronic trading, the lowest price since Sept. 26, before rebounding. A 900-contract sell order at 7:52 p.m. yesterday caused the “scary” drop, Drew Wozniak, vice president of market research and analysis at ICAP Energy LLC in Louisville, Kentucky, said in a note to clients today.

Oil Slips From Highest in Three Months on Signs Gains Excessive (Bloomberg)
Oil slid for the first time in three days in New York on speculation that its surge to the highest level in three months yesterday may have been excessive.
Futures lost as much as 0.5 percent after rallying 2.6 percent in the two days through yesterday as U.S. lawmakers passed a bill to undo automatic tax increases and spending cuts that had threatened growth in the world’s biggest oil-consuming country. Crude slipped today as a technical indicator showed futures may have risen too quickly for further gains to be sustainable, according to data compiled by Bloomberg.
“We’re getting a mild sell signal and the coincidence of those levels mean that some traders will be bailing out,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “What we’re seeing is longs closing out, taking some profit.”
West Texas Intermediate for February delivery dropped as much as 42 cents to $92.70 a barrel in electronic trading on the New York Mercantile Exchange and was at $92.75 at 8:08 a.m. in Singapore. The contract yesterday advanced 1.4 percent to $93.12 a barrel, the highest settlement since Sept. 18. The volume for WTI oil contracts was 60 percent below the 100-day average for the time of day.
Brent for February settlement rose $1.36, or 1.2 percent, to $112.47 a barrel on the London-based ICE Futures Europe exchange yesterday. The North Sea grade advanced 3.5 percent in 2012, a fourth annual gain.
New York oil’s 14-day relative strength index rose to 68.1 yesterday, the highest level since Sept. 14. A reading above 70 is a signal to investors that price gains may have been excessive. It was 66 today.

Recap Energy Market Report (CME)
February crude oil prices trended higher throughout the early US trading hours, registering a new 2.5 month high in the process. The market drafted support on reports that US lawmakers were temporarily able to avert the fiscal cliff, and that was seen boosting risk sentiment. Early weakness in the US dollar and gains in global equity markets to start 2013 were seen benefiting the crude oil market. Some traders indicated that February crude oil challenged its 200 day moving average early on, but seemed to back track from those levels into the close.

Brent Crude Oil Market Report (CME)
February Brent crude oil prices trended higher throughout Wednesday's trading session, climbing to their highest level since October 17th. The market garnered an overnight lift on reports that US lawmakers agreed on a bill to temporarily avert the fiscal cliff. This was seen as a positive for risk-taking sentiment, boosted global equity markets and pressured the US dollar. Reports that China's manufacturing sector expanded for a third consecutive month was also seen as a positive demand force. The nearby Brent calendar spread expanded its backwardated pricing structure another nickel on the session.

Gold Reaches Two-Week High as Commodities Gain on Budget (Bloomberg)
Gold futures rose to a two-week high as commodities gained after U.S. lawmakers passed a budget accord. Palladium advanced to the costliest in 10 months, and silver jumped the most in eight weeks.
The Standard & Poor’s GSCI Spot Index of 24 raw materials gained as much as 1.6 percent after the House of Representatives approved a bill that prevents income taxes from rising for most U.S. workers. Industrial metals also jumped, while equities rallied.
“Markets reacted positively to news that a deal of sorts has been reached,” Steve Scacalossi, a New York-based vice president at TD Securities Inc., said in an e-mail.
Gold futures for February delivery rose 0.8 percent to settle at $1,688.80 an ounce at 1:38 p.m. on the Comex in New York. Earlier, the price reached $1,695.40, the highest for a most-active contract since Dec. 18. Floor trading was closed yesterday for the New Year’s holiday.
In 2012, the metal gained 7 percent, advancing for the 12th straight year, as central banks from the U.S. to China pledged more steps to bolster their economies.
President Barack Obama said he will sign the bill passed by Congress that makes the George W. Bush-era income tax cuts permanent for most workers while letting them expire for top earners.
The bipartisan vote in the House broke a yearlong impasse over how to head off $600 billion in tax increases and spending reductions that had been set to begin taking effect at the start of this year. Those measures may have triggered a recession, the Congressional Budget Office said.
Palladium futures for March delivery rose 0.7 percent to $707.95 an ounce on the New York Mercantile Exchange. Earlier, the price reached $718.85, the highest since March 2.
Silver futures for March delivery surged 2.6 percent to $31.007 an ounce on the Comex, the biggest increase since Nov. 6.
Platinum futures for April delivery gained 1.7 percent to $1,568 an ounce on the Nymex, the biggest gain since Nov. 23.

Copper Advances in New York Following U.S. Budget Accord (Bloomberg)
Industrial metals rallied to a three- month high, leading commodities higher, as a U.S. budget agreement that averted higher taxes and spending cuts brightened the outlook for demand.
The House approved a measure skirting income-tax increases for most households in the country, the world’s second-largest metals consumer. President Barack Obama said he would sign the bill into law. Global equities advanced, and lead, aluminum and nickel led gains on the Standard & Poor’s GSCI Spot Index (LMEX) of 24 raw materials. Copper rose the most in more than three months.
“This does help growth prospects, because if the tax increases went into play, it definitely would have taken a huge chunk out of gross domestic product,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “We’re looking for improved demand this year for industrial metals.”
Copper futures for delivery in March increased 2.3 percent to settle at $3.736 a pound at 1:22 p.m. on the Comex in New York, the biggest gain since Sept. 14. China is the largest metals consumer.
On the London Metal Exchange, copper for delivery in three months climbed 3.5 percent to $8,209 a metric ton ($3.72 a pound).
The metal advanced 4.4 percent in 2012 on the LME, the third gain in four years, helped by forecasts for supply to lag demand. Copper inventories tracked by the exchange declined 14 percent in 2012, the third straight contraction.
The LMEX Index, which tracks the six primary metals on the exchange, settled at 3,581.7, the highest since Sept. 14.
Tin surged as much as 4.7 percent today, rising to the highest since February and leading gains among the London exchange’s six main metals. Lead reached $2,439 a ton, the highest since September 2011. Aluminum, zinc and nickel also increased.

Silver Market Recap Report (CME)
The silver market began the year with a significant rally, with prices climbing far above their late December trading range by the close of Wednesday's session. Some traders felt that silver has acted more as a physical commodity than as a safe-haven asset this week, so the removal of fiscal cliff anxiety is widely felt to have provided significant strength to silver prices. Other traders noted that March silver was able to climb back above its 200-day moving average, which they felt may provide additional support for the market.

Gold Market Recap Report (CME)
The gold market was able to build on overnight strength, and started out 2013 by posting sizable gains and by rallying up to a new 2-week high. Last night's approval of the fiscal cliff bill was seen by many traders to have provided a sharp early boost to global risk sentiment that lifted gold and other metals markets, although some traders felt that gold's flight-to-quality status at the end of last year may have limited further gains during today's trading. A report that India may enact additional curbs on gold imports was seen by some traders as an additional positive factor for the market. A recovery rally in the Dollar due to ongoing Euro zone anxiety was seen by other traders to have weighed on gold prices later on during today's session.