Morning Market Recap: Markets Shirk at GDP Misses and Jobless Claims

Market Updates | Written by CEP News | Jul 31 08 12:56 GMT |

(CEP News) - Growth figures in the United States and Canada were weaker than expected while jobless claims shot higher, sending equity futures reeling and North American currencies scrambling. The advance U.S. GDP report came in lower than expected in the second quarter of 2008, rising by 1.9% against expectations of 2.3% growth, according to the Bureau of Economic Analysis. At the same time, the fourth quarter of last year was revised to -0.2% from +0.6%. Canada's gross domestic product took a small dip in May, falling 0.1% from the previous month. Economists had been looking for a 0.2% increase following the previous month's +0.4% reading. At the same time, initial claims for unemployment benefits in the United States climbed to 448,000 in the week ending July 26 - the highest since April 2003. S&P futures were up three points before the data but were down eight points following the data. Similarly, Dow futures were up 10 points before tumbling 94. The Canadian and U.S. dollars traded in a relatively tight range before and after the releases but both tumbled against the euro. The euro climbed to 1.5669 from 1.5613 against the greenback and to 1.6070 from 1.5969 against the loonie. In fixed income, U.S. 10-year yields fell to 3.96% from 4.04%. In Canada, 10-year yields fell to 3.74% from 3.81%. U.S. two-year yields are down 11.3 bps to 2.52%, with five-year yields down 10.9 bps to 3.26%, 10-year yields down 8.0 bps to 3.96% and 30-year yields down 6.1 bps to 4.58%. The Eurodollar March 09 contract is up 9.5 ticks to 96.96. The yield curve is steeper, with the 10/2-year spread up 3.1 bps to 144.47 bps. Yields on two-year Canadian government bonds are down 9.7 bps to 2.97%, with five-year yields down 9.8 bps to 3.28%, 10-year yields down 8.4 bps to 3.74% and 30-year yields down 5.2 bps to 4.12%. The December 08 BAX contract is up 8.0 ticks to 96.98. The Canadian 10-year note is yielding 22.67 bps less than the U.S. 10-year note. In Germany, returns on two-year German bonds are down 3.1 bps to 4.28%, with five-year yields down 4.3 bps to 4.31%, 10-year yields down 2.8 bps to 4.39% and 30-year yields down 1.6 bps to 4.68%. Yields on UK two-year bonds are down 2.5 bps to 4.80%, with five-year yields down 2.2 bps to 4.79%, 10-year yields down 3.0 bps to 4.82% and 30-year yields down 0.6 bps to 4.52%. U.S. equity market futures are lower with contracts on the Dow Jones industrial average down 94 points to 11486, the S&P 500 down eight points to 1276 and the Nasdaq down 14 points to 1843. European stock markets are mixed, with the Eurostoxx down five points to 2877, the UK FTSE 100 down 14 points to 5406 and the German DAX up 12 points to 6473. Asian markets were higher, with the Japanese Nikkei closing up nine points to 13377 and the Hang Seng Index up 41 points to 22731. The Canadian dollar is down 0.0022 to 0.9750 against the U.S. dollar (1.0254 USD/CAD) and down 0.63 to 105.07 against the yen. The U.S. dollar is down 0.38 to 107.75 against the yen and the Dollar Index is down 0.082 to 73.240. The euro is up 0.0093 to 1.5669 against the U.S. dollar, up 0.0134 to 1.6070 against the Canadian dollar, up 0.0028 to 0.7887 against the pound sterling and is higher by 0.43 to 168.84 against the yen. The pound sterling is up 0.0051 to 1.9868 against the U.S. dollar and up 0.0100 to 2.0375 against the Canadian dollar. WTI crude oil is down $0.41 to $126.36. The front month gold contract at the Chicago Board of Trade is up $11.70 to $923.90 per ounce. All data taken at a.m. EDT. By Adam Button, abutton@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, ngirgis@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News. A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.