Treasuries drop after auction as stocks, oil erase early gains

‘Green’ Bias

“I think the bias as of recent has been consistently green on the screen,” Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which oversees $55 billion, said in a telephone interview. “We didn’t hear anything shockingly different from Obama’s speech that would have pulled investors’ enthusiasm for stocks out of the marketplace.”

U.S. companies are beating analysts’ earnings projections by the smallest margin since 2008 and most forecasts have trailed estimates in what investors should consider “warning signals,” according to Wells Fargo & Co.

Of S&P 500 companies whose earnings topped estimates this reporting season, 53% surprised by more than 1%, Wells Fargo strategist Gina Martin Adams wrote in a report dated Feb. 11. The so-called beat rate this season is poised to be the lowest since 2008 and 12 percentage points below the 10-year average. About 81% of forecasts for next quarter trailed analyst estimates, according to the note.

Euro Factories

Factory production in the euro area rose 0.7% in December from the previous month, beating the 0.2% gain forecast in a Bloomberg survey, the European Union’s statistics office said today. Italy sold 6.63 billion euros ($8.9 billion) of bonds compared with a maximum target of 6.75 billion euros.

The euro weakened against 13 of its 16 main counterparts after gaining against most earlier. Sweden’s krona strengthened against all 16 major peers, jumping 1.1% vs. the dollar. Sweden’s central bank kept the seven-day repo rate at 1%, defying expectations of a cut by nine of the 22 economists surveyed by Bloomberg.

The pound weakened 0.8% vs. the dollar after the Bank of England said inflation will remain above its 2% target for the next two years and risks to the economic recovery are weighted to the downside. The Dollar Index was little changed. Australia’s currency climbed a second day, rising 0.4% to $1.0345, after a gauge of consumer confidence surged to a two-year high.

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