European Central Bank Mario President Draghi was masterful once again as he convinced the world that the ECB was getting ready to start purchasing mortgage backed securities without actually having to do so.
It is "whatever it takes" the sequel. Even though this open-ended planning with no set time table for a start is allowing the ECB to once again have its cake and eat it to. Still despite keeping the market guessing he still managed not to disappoint a market that because of the well telegraphed cut in their benchmark interest rate to 0.15% and the deposit rate to -0.1pc. could have set up to be disappointed. Once again Draghi proved that he is one of the most market savvy central banker on the globe and know how to get the most out of doing the least.
Still the target on the LTRO and targeted bank lending immediately increased the demand expectations for Brent crude (NYMEX:SCQ14). With banks being enticed to lend more money a lot of that lending should inspire deals that should lead to an uptick in oil demand. That led to a widening of Brent over the weakening WTI oil (NYMEX:CLN14). Are we finished? The answer is no," said Mario Draghi, "If required, we will act swiftly with further monetary policy easing" or not.
Today the main mover of the day will be Jobs. Expectations are for nonfarm payrolls to increase by:+215,000 and private payrolls up by 210,000. The unemployment rate should come in at 6.4% and average Hours Earnings: +0.2% month-over-month, +2% year-over-year. Yet even if we hit these numbers it is hard to believe that that will be viewed as good news. The ADP was pathetic and the plunging labor force participation rate, which fell to 62.8%, the lowest level since 1978 is showing that we are not really creating jobs but just replacing them. Far from the type of rebound we should be getting at this stage of the so called recovery.
Natural Gas (NYMEX:NGN14) did a double take after a bearish week over week report that still raises issue with the long term picture. The EIA reported that US gas supply rose by a more than expected 119 bcf but was still a far cry from the type of whopper injection that the market will need to see to get comfortable about the longer term storage picture.
In the UK the story is different and it is a good thing as the threat of a cutoff of supply from Russia to the Ukraine possibly still looms. Bloomberg News reported that U.K. natural gas futures headed for their biggest weekly drop in more than four years as parts of Europe face record heat and planned pipeline maintenance cuts exports to mainland Europe. The benchmark front-month contract fell 1.7 percent on the ICE Futures Europe exchange, extending its weekly decline to 10 percent, the biggest drop since November 2009. Temperatures in Paris and Amsterdam are set to rise to records for this time of year tomorrow while Berlin may see new highs at the start of next week, according to Commodity Weather Group.
Feeder cattle ran up 7 days in a row and for the first time in history eclipsed $2.00 a pound. Supply is tight and cheap corn is driving this move, not to mention the die- hard American Griller!
Gold and silver is getting a Draghi bounce out of its low volatility maiase. Platinum and Palladium are on the risng as strike talks break down. The Bullion Desk reports "Growing optimism that a deal could be brokered between striking miners and domestic producers pushed platinum to $1,418 per ounce on Wednesday, its lowest since May 2.
But reports that the militant Association of Mineworkers and Construction Union (AMCU) has rejected the latest wage deal has propelled the metal higher again – it was .last trading at $1,448/1,453 per ounce, up $5 on Thursday's close. It peaked earlier in the session at $1,454, its highest since May 30.