Economic Calendar

Tuesday, April 27, 2010

Daily Financial Market Outlook

Daily Forex Fundamentals | Written by Lloyds TSB | Apr 27 10 04:07 GMT |

The euro remained under pressure yesterday, as concerns about the Greek economic situation intensified, particularly on conditions that may be attached to the IMF-EU bailout package. €/£ fell to a 3-month low of 0.8607, with sterling also shaking off last week's weak first estimate of Q1 GDP and ongoing concerns about a hung parliament.

Ahead today, the key data releases are the UK CBI distributive trades, BBA loans and US Conf. Board consumer confidence surveys. We expect the CBI survey's reported sales balance to have fallen to 10 in March, but basically remaining in line with the long-term average. We should get a rise in BBA loans for house purchase. In the US, the Conf. Board consumer confidence index has underperformed the Univ. of Michigan sentiment survey recently and may rise to around 55.

Chart: UK confidence among retailers has improved, according to both the CBI and our own in-house surveys

Lloyds TSB Bank

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Germany Proving To Be The Last Hurdle In Greek Bailout Plans

Daily Forex Fundamentals | Written by AC-Markets | Apr 27 10 06:11 GMT |

Market Brief

EURJPY weakened 0.2% to 125.51 as the JPY rose against all of its major counterparts and Asian stocks declined as concern about Greece's bailout plan and the effect of tightening measures in China drove investors away from higher-yielding assets and after reports that BOJ may upgrade its 2011 CPI forecast on April 30. Investor sentiment turned bearish after German Chancellor Angela Merkel said she won't release funds for Greece until the nation has a 'sustainable' plan to reduce its deficit. The USDJPY traded near its strongest level in almost three weeks to 93.81, the most since April 6 on speculation the Fed is moving closer to withdrawing stimulus as the US economic recovery gathers momentum. After the market closed, US Senate Republicans blocked Democrats from advancing their plan to overhaul Wall Street regulation, saying they want to force changes before beginning full debate.

The NZDJPY fell to 67.53 after trading 68.31, the highest since Jan. 14 and AUDJPY fell to 86.76 after touching 87.77 yesterday, the strongest since Sept. 29, 2008 on concerns the EU aid package for Greece won't keep the deficit crisis from spreading, damping demand for higher-yielding currencies. The AUDJPY also retreated from an 18 month high as Asian stocks dropped. The NZDUSD dropped to 0.7201 after it reached 0.7256, the most since Jan. 20 while AUDUSD traded 0.9251 after German Chancellor Angela Merkel yesterday said she won't release Greek rescue funds until the country shows it's got a 'sustainable, credible' plan to cut its budget deficit. Australia's producer prices index gained 1% in Q1 (prev. -0.4%) as cost of petroleum refining advanced 8.1%, building construction prices gained 0.6% while utilities rose 3.3%.

The EURUSD may weaken to less than 1.3000 this year should the Fed start raising interest rates before the ECB, according to market estimates. If the Fed does hike before the ECB, BOJ and BOE, the USD could become a growth currency again rather than a safe haven suggesting EURUSD and GBPUSD remain at risk in 2010 of falling well below estimated targets of 1.3000 and 1.4800. The FOMC will probably hold its target rate at a range of zero to 0.25% on April 28. USDKRW strengthened 0.5% to 1,103.80 to a 19-month high before a report forecast to show the nation's GDP expanded 7.5% in Q1 annualized, the most since Q4 2002. Yuan forwards climbed 0.1% to 6.6065, reflecting speculation that China's currency will strengthen 3.3% and it's expected that the government will allow it to gain this year with a 5% revaluation narrowing the US trade deficit with China by $61 billion.


Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.


Technical Analysis for Major Currencies

Daily Forex Technicals | Written by | Apr 27 10 06:31 GMT |


The pair managed to breach resistance line for the descending channel that has currently turned into support at 1.3355. We expect some fluctuation to rid of the negative signs evident on momentum indicators, before resuming the expected bullish intraday direction that targets levels 1.3445 then 1.3495. It is vital that 1.3290 remain intact so these expectations may prevail.

The trading range for today is among the key support at 1.3290 and the key resistance at 1.3495.

The short term trend is to the downside as far as 1.4410 remains intact with targets at 1.2450.

Support: 1.3355, 1.3290, 1.3225, 1.3190, 1.3115
Resistance: 1.3400, 1.3445, 1.3495, 1.3570, 1.3635

Recommendation Based on the charts and explanations above our opinion is buying the pair from 1.3355 targeting 1.3445 and stop loss below 1.3290, might be appropriate.


Resistance level of 1.5475 is still a strong barrier in front of the pair's attempts to ascend. Through the image above, we find that the pair has stabilized above the breached pivotal resistance that has currently turned into support at 1.5410, supported by Stochastic which is approaching oversold areas; thus, encouraging us to expect more bullish intraday movement where its key targets start at 1.5555. This scenario requires 1.5325 to remain intact.

The trading range for today is among the key support at 1.5325 and the key resistance at 1.5555.

The short term trend is to the upside as far as 1.4850 remains intact with targets at 1.7000.

Support: 1.5410, 1.5365, 1.5325, 1.5280, 1.5255
Resistance: 1.5475, 1.5500, 1.5555, 1.5605, 1.5665

Recommendation Based on the charts and explanations above our opinion is buying the pair from 1.5410 targeting 1.5555 and stop loss below 1.5325, might be appropriate.


The pair has been bearishly correcting since yesterday, while it approaches the retesting level from the previously breached neckline at 93.45. The stochastic is showing positive signs that support continuing the expected bullish direction over an intraday basis; requiring the retest level to maintain its stance to head towards 94.80 mainly.

The trading range for today is among the key support at 93.20 and the key resistance at 94.80.

The short term trend is to the downside as far as 101.65 remains intact with targets at 82.60.

Support: 93.45, 92.70, 92.25, 91.60, 90.90
Resistance: 94.00, 94.80, 95.55, 96.00, 96.35

Recommendation Based on the charts and explanations above our opinion is buying the pair from 93.45 target 94.80 and stop loss below 92.70, might be appropriate.


The pair has returned to trade below the ascending channel's support level, while a sign of a bearish technical target is appearing where its neckline is at 1.0715. These signs point to a bearish intraday direction that will start with a clear breach of the neckline to pave the way towards 1.0605 then 1.0565. These expectations require the four-hour candlestick closing to remain below 1.0760 to prevail.

The trading range for today is among the key support at 1.0605 and the key resistance at 1.0850.

The short term trend is to the downside as far as 1.1095 remains intact with targets at 0.9910.

Support: 1.0705, 1.0670, 1.0605, 1.0565, 1.0505
Resistance: 1.0740, 1.0790, 1.0850, 1.0895, 1.0945

Recommendation Based on the charts and explanations above our opinion is selling the pair from 1.0715 targeting 1.0605 and stop loss above 1.0790, might be appropriate.


The pair continues its sideway trading, while it nears this range's resistance at 1.0045 and therefore meets with MA 100. We still see that chances of a bearish trend over an intraday basis remains intact and requires the breach of support between 0.9950 – 0.9930 to head towards 0.9805. It is vital that trading remain below 1.0120 to achieve these expectations.

The trading range for today is among the key support at 0.9805 and the key resistance at 1.0120.

The short term trend is to the downside as far as 1.0780 remains intact with targets at 0.9705.

Support: 0.9950, 0.9930, 0.9865, 0.9805, 0.9750
Resistance: 1.0045, 1.0120, 1.0200, 1.0240, 1.0320

Recommendation Based on the charts and explanations above our opinion is selling the pair from 1.0045 targeting 0.9930 and stop loss above 1.0120, might be appropriate.


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Asian Currencies Halt Gains Near 2008 Highs on Greece Concern

By Lilian Karunungan

April 27 (Bloomberg) -- Asian currencies halted gains near the highest levels in at least 19 months after German Chancellor Angela Merkel said a rescue package for Greece wasn’t guaranteed, reducing demand for emerging-market assets.

A technical gauge for the Bloomberg-JPMorgan Asia Dollar Index signaled the measure was poised to fall after rallying to a 20-month high yesterday. Regional stocks declined after Merkel said yesterday she won’t release funds for Greece without a “sustainable” plan to cut the shortfall. The Standard & Poor’s 500 Index dropped yesterday on concern about a proposed overhaul of the U.S. financial system.

“Currencies are in a consolidation phase as mostly these have factored in the Greece financial issue,” said Mirza Baig, a foreign-exchange analyst at Deutsche Bank AG in Singapore. “The overnight weakness in equities, including the U.S. markets,” affected Asian currencies, he said.

The won weakened 0.6 percent to 1,110.90 per dollar as of 2:12 p.m. in Seoul, according to data compiled by Bloomberg. The currency yesterday touched 1,102.85, its strongest level since Sept. 12, 2008. The Philippine peso dropped 0.2 percent to 44.275 and the Malaysian ringgit fell 0.1 percent to 3.1835.

The Asia Dollar Index, which tracks the region’s 10 most- traded currencies excluding the yen, was little changed after yesterday reaching 113.29, the highest level since August 2008. Its 14-day relative-strength index touched 69 yesterday, just shy of the 70 level that signals the gauge may reverse direction. The MSCI Asia-Pacific index of regional shares dropped 0.3 percent today.

Korea’s currency extended losses after the government said recent gains in the currency were “excessive.” We will take measures to counter herd behavior in the foreign-exchange market, Kim Ik Joo, director-general at the Ministry of Strategy and Finance, said by phone today.

Korea GDP

Asian currencies have rallied this year, led by Malaysia’s ringgit and the won, as the region’s economic recovery attracts global investors to local assets. Prospects China will revalue the yuan are also bolstering demand.

The ringgit reached 3.1710 per dollar yesterday, the highest level since May 2008, and the peso touched 44.158, the strongest since August of that year.

South Korea’s gross domestic product growth exceeded analysts’ estimates in the first quarter. GDP increased 1.8 percent from the final three months of last year, when it rose 0.2 percent, and beating the median forecast for a 1.5 percent rise in a Bloomberg News survey.

“Strong gross domestic product data was good but the market will be dominated by sentiment factors,” said Thomas Harr, senior currency-strategist at Standard Chartered Plc in Singapore.

Europe Woes

Germany’s reluctance to guarantee aid for Greece has led to concern a rescue package headed by the International Monetary Fund may stall. Yields on Greece and Portugal’s bonds have surged on concern the country’s credit woes will spread to other nations in the European Union.

“Investors are nervous about the contagion risk from the Greek situation, whether the other euro countries like Portugal will also be similarly affected,” said Penn Nee Chow, an economist at United Overseas Bank Ltd. in Singapore. “They are just waiting to see how things will play out. Asian currencies are still looking strong because of the very positive economic indicators in Asia.”

Taiwan’s dollar rose to a 20-month high as overseas investors increased holdings of the island’s stocks to take advantage of a planned trade accord with China.

Funds based abroad bought NT$26.8 billion ($857 million) more local shares than they sold yesterday, the biggest net purchases since Sept. 10. Taiwan President Ma Ying-jeou said April 25 that the next round of talks with China will likely be held before the end of the month or early in May.


A trade agreement with China “will help Taiwan’s exports and the economy,” said Tarsicio Tong, a foreign-exchange trader at Union Bank of Taiwan in Taipei. Capital inflows “will test the defenses of the central bank” to prevent the currency from rising beyond NT$31, he said.

The currency strengthened 0.2 percent to NT$31.290 against its U.S. counterpart, according to Taipei Forex Inc. It reached NT$31.269, the highest level since August 2008, the same month the island’s dollar last broke NT$31.

The Philippine peso declined on concern investors will trim holdings of the nation’s assets in the run-up to next month’s general election.

Presidential frontrunner Benigno Aquino yesterday said only fraud can stop him winning at the polls and such an event would trigger unrest comparable with the protests that swept his mother to power 24 years ago.

Philippine Election

Benigno Aquino, the 50-year-old son of former president Corazon Aquino, has led opinion surveys since entering the race last year and criticized how a switch to electronic voting machines is being implemented.

“Everyone is staying liquid as the election nears,” said Yvette Marquez, who helps manage 470 billion pesos ($10.6 billion) at BPI Asset Management in Manila. “It’s always better to be safe and hold off from investing until people are convinced elections are credible.”

Elsewhere in the region, the Singapore dollar and Indonesian rupiah were little changed versus the U.S. currency at S$1.3680 and 9,006, respectively. The Thai baht was unchanged at 32.24 and China’s yuan traded at 6.8266.

To contact the reporter on this story: Lilian Karunungan in Singapore at at


Euro Near 3-Month Low Versus Pound on Greece Aid Plan Concern

By Yasuhiko Seki and Ron Harui

April 27 (Bloomberg) -- The euro traded near a three-month low against the pound on concern a European Union-led 45 billion euro ($60.2 billion) aid package for Greece won’t stop the deficit crisis from spreading.

Demand for Europe’s currency weakened before Greek transport workers go on strike today and after German Chancellor Angela Merkel said she won’t release funds for Greece until the nation has a “sustainable” plan to reduce its shortfall. Australia’s dollar fell from a 19-month high against the yen as Asian equities declined, damping the appetite for riskier assets.

“There is concern that the German government may delay the extension of financial aid for Greece,” said Akane Vallery Uchida, a currency strategist at Royal Bank of Scotland Group Plc in Tokyo. “This led to resumed selling of the euro.”

The euro traded at 86.59 pence as of 6:58 a.m. in London from 86.58 pence yesterday in New York, when it declined to 86.04 pence, the lowest since Jan. 28. The 16-nation currency was at 125.60 yen from 125.73, and traded at $1.3373 from $1.3383. The dollar was at 93.95 yen from 93.96 yen.

Australia’s dollar fell 0.2 percent to 86.90 yen and slipped 0.2 percent to 92.51 U.S. cents.

“I’ve said for weeks that Greece must do its homework first,” Merkel said yesterday, drawing applause from an audience in Soest in North Rhine-Westphalia, where state elections are due on May 9.

No Decision

There will be no decision on aid for Greece until the International Monetary Fund works out a plan of cuts with the government in Athens, Merkel told reporters earlier yesterday in Berlin. Germany will assist Greece only after it agrees to take “tough” measures, she said.

Greece has 8.5 billion euros of bonds maturing 10 days after the regional election and the extra yield investors demand to hold its 10-year bonds over German bunds jumped 93 basis points yesterday to 652 basis points.

Greek Prime Minister George Papandreou will today brief lawmakers on the nation’s economic outlook. Transport workers are expected to hold a strike and a civil service union plans to stage a rally.

The yen and dollar strengthened against higher-yielding currencies as the MSCI Asia Pacific Index lost 0.3 percent.

“Lingering woes over Greece’s debt crisis seem to be dragging down Asian equities,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “This is causing safe- haven buying of the yen and the dollar.”

The yen typically strengthens in times of financial turmoil as Japan’s trade surplus frees the nation from dependence on overseas capital. The dollar benefits as the world’s main reserve currency.

Japan’s Economy

Japan’s currency also gained after the Nikkei English News reported, without saying how it obtained the information, that the central bank may upgrade its fiscal 2011 consumer price index forecast. BOJ policy makers will release their semiannual economic forecasts after their April 30 meeting in Tokyo.

“The Nikkei report on a possible upgrade in the BOJ’s forecasts suggests an improvement in fundamentals,” said Hideki Amikura, deputy general manager of foreign exchange at Nomura Trust & Banking Co. in Tokyo. “This is a yen-buying factor.”

‘Impetus’ for Dollar

The dollar advanced on speculation U.S. reports this week will show the nation’s economic recovery is gathering momentum, backing the case for the Federal Reserve to move closer to withdrawing stimulus.

The S&P/Case-Shiller home-price index in the U.S. climbed 1.3 percent in February, the first increase since December 2006, according to a Bloomberg survey before today’s report. Consumer spending increased at a 3.3 percent annual rate last quarter, more than double the 1.6 percent pace the previous three months, according to a separate survey before the April 30 report.

“The recent set of good U.S. data will fuel speculation about rises in interest rates there, providing some impetus to the dollar,” said Shuzo Kakuta, a senior foreign-exchange adviser at Tokyo Tomin Bank Ltd.

Futures on the CME Group Inc. exchange show a 72 percent chance the Fed will raise its benchmark rate by at least a quarter-percentage point by its December meeting, compared with 60 percent odds a week ago.

To contact the reporter on this story: Yasuhiko Seki in Tokyo at; Ron Harui in Singapore at


Gold Approaches One-Week High as Greece Woes Spur Haven Demand

By Kim Kyoungwha

April 27 (Bloomberg) -- Gold advanced to near the highest level in more than a week on speculation Greece’s budget woes will prompt investors to seek a refuge in safer assets.

Gold for immediate delivery rose 0.2 percent to $1,155.75 an ounce at 8:23 a.m. in Singapore, after climbing to $1,160.10 yesterday, the highest price since April 16. Bullion in euro and Swiss francs rose to records yesterday on concern that a European Union-led 45 billion euro ($60 billion) aid package for Greece won’t prevent the deficit crisis from spreading.

“The price of gold has edged to just under $1,160 an ounce against the backdrop of Greece’s uncertain financial situation,” Eugen Weinberg, senior analyst with Commerzbank AG, wrote in a report. “Gold is thus showing its attraction as a safe haven once again.”

Greece needs to repay 8.5 billion euros of bonds on May 19. German Chancellor Angela Merkel warned Greece and the rest of the euro region that a bailout of the debt-stricken nation isn’t a done deal.

The Dollar Index also advanced, ending a two-day decline, Asian stocks were little changed after jumping the most since March 17 yesterday on optimism about a firmer economic recovery.

Silver increased 0.1 percent to $18.315 an ounce, and platinum added 0.4 percent to $1,751.75 an ounce, approaching a 20-month high of $1,754.85 touched on April 22. Palladium gained 0.6 percent at $568.50 an ounce, nearing the 25-month high of $572 also reached on April 22.

To contact the reporter on this story: Kyoungwha Kim in Singapore at


Asian Stocks Decline on China Real-Estate Concern; CSL Slumps

By Jonathan Burgos

April 27 (Bloomberg) -- Asian stocks declined, dragging the MSCI Asia Pacific Index lower for the third time in four days, as concern deepened that China’s steps to cool its property market will curb growth in the world’s third-largest economy.

Industrial & Commercial Bank of China Ltd. sank 2 percent in Shanghai on concern lending will slow. PetroChina Co., China’s largest oil producer, lost 1.9 percent on lower oil prices. CSL Ltd., the world’s No. 2 maker of treatments made from blood, slipped 3.7 percent in Sydney after Credit Suisse Group AG downgraded the stock. Elpida Memory Inc. dropped 2.2 percent in Tokyo as memory-chip prices declined.

The MSCI Asia Pacific Index lost 0.2 percent to 126.97 as of 2:44 p.m. in Tokyo, with two stocks falling for each one that rose. The gauge has climbed 11 percent from its low this year on Feb. 8 as better-than-estimated economic and earnings reports offset concerns Greece will default on its debt. German Chancellor Angela Merkel said yesterday a Greek bailout isn’t a done deal.

“Concerns about potential delays in financial aid for Greece as well as further monetary tightening in China continue to dampen investor sentiment,’ said Michiya Tomita, a Hong Kong- based fund manager for Mitsubishi UFJ Management Co., which holds $65 billion in assets. “Valuations are still expensive. We need to see more earnings improvement.”

China’s Shanghai Composite Index slumped 2.7 percent. Hong Kong’s Hang Seng Index dropped 1 percent. South Korea’s Kospi Index lost 0.3 percent. Japan’s Nikkei 225 Stock Average rose 0.3 percent, led by Fanuc Ltd., which climbed 9.9 percent after reporting earnings.

U.S. Earnings

Futures on the Standard & Poor’s 500 Index were little changed today. The index fell 0.4 percent yesterday in New York as concern that proposed legislation will hurt banks overshadowed improving earnings at Caterpillar Inc. and Whirlpool Corp. After markets closed, U.S. Senate Republicans blocked Democrats from advancing their plan to overhaul Wall Street regulation.

Industrial & Commercial Bank lost 2 percent to 4.44 yuan. China Vanke Co., the country’s largest listed property developer, lost 1.2 percent to 7.71 yuan in the southern city of Shenzhen after reporting a decline in first-quarter sales.

In Hong Kong, China Resources Land Ltd., a state-controlled developer, slid 1.9 percent to HK$14.18. Hang Lung Properties Ltd., a Hong Kong developer which generated 40 percent of its fiscal 2009 revenue in China, sank 2.5 percent to HK$29.25.

Capital Requirements

“The market is worried China is over-tightening,” said Grace Tam, Hong Kong-based vice president of investment services at JPMorgan Asset Management Ltd., which manages about $102 billion in Asia-Pacific assets. “The concern is that this could result in a worse-than-expected impact on China’s growth.”

China may use capital requirements for developers as a policy tool to cool the property market, Ba Shusong, deputy director general of the State Council’s Development Research Center, told Shanghai Securities News in an interview.

The Shanghai Composite Index has slumped 11 percent in 2010 as the government unwinds monetary stimulus and steps up measures to prevent a housing bubble inflated by record lending last year.

Oil producers fell after crude prices in New York lost 0.7 percent to $83.64 in after-hours trading, extending yesterday’s 1.1 percent drop. PetroChina lost 1.9 percent to 11.97 yuan in Shanghai, while Inpex Corp., Japan’s largest oil explorer, sank 1.4 percent to 689,000 yen.

Higher Valuations

The MSCI Asia Pacific Index rose 1.6 percent yesterday, its biggest gain since March 17, as speculation mounted earnings will benefit from the global economic recovery. Stocks in the index trade at 16.1 times estimated earnings, compared with 15.2 times for the S&P 500 Index, according to data compiled by Bloomberg.

Government data last week showed sales of new homes in the U.S. soared 27 percent in March, climbing the most in 47 years. Service industries in the U.S. expanded last month at the fastest pace since May 2006, indicating the U.S. recovery is spreading beyond manufacturing and starting to create jobs, data from the Institute for Supply Management on April 5 showed.

A pledge by European governments to put together a loan package for Greece has also boosted share prices. Germany is prepared to release funds to Greece, but “first I want to see the program,” the country’s Chancellor Merkel said late yesterday.

Elpida, Japan’s biggest maker of computer memory, lost 1.9 percent to 2,031 yen, while Hynix Semiconductor Inc. slumped 3.3 percent to 27,550 won in Seoul. The spot price for the benchmark dynamic random access memory chip sank 0.7 percent yesterday to the lowest level since March 22, according to Dramexchange Technology Inc.

Lower Chip Prices

Phison Electronics Corp., a maker of computer data storage devices, slumped 6.9 percent in Taipei. Chairman Pua Khien-Seng said NAND flash chip prices may decline this quarter, the Commercial Times reported. The company’s spokesman Yu Zhi-Chyang didn’t answer calls at his office.

Semiconductor Manufacturing International Corp., China’s buggest chipmaker, dropped 2.2 percent to 90 Hong Kong cents. The company reported a net loss in 2009 as sales dropped 21 percent.

CSL fell 3.4 percent to A$32.78 after Credit Suisse cut the stock to “neutral” from “outperform,” citing the impact from U.S. health-care reforms. CSL tumbled 7.3 percent on April 23 when it last traded, after larger rival Baxter International Inc. cut its 2010 earnings forecast.

Among stocks that gained, IHI Corp., Japan’s second-largest maker of heavy machinery, climbed 9.9 percent to 189 yen in Tokyo. The company said in a preliminary earnings statement its full-year net income was 17 billion yen ($180 million), compared with its forecast of 7 billion yen.

To contact the reporter for this story: Jonathan Burgos in Singapore at


U.S. Stocks Set to Fall on Deepening Unemployment: Chart of Day

By Hideki Sagiike and Masaki Kondo

April 27 (Bloomberg) -- The Standard & Poor’s 500 Index is poised to fall as chronic unemployment rises to a record among jobless Americans, according to Mitsubishi UFJ Securities Co. the brokerage unit of Japan’s biggest bank by market value.

The CHART OF THE DAY shows the S&P 500 and ratio of Americans jobless for more than 27 weeks relative to the total number of unemployed. The equities gauge has jumped 80 percent from a more than 12-year low on March 9, 2009, even as long-term joblessness surged to 44.1 percent in March, almost double the level a year earlier and highest since records began in 1948. The lower panel tracks overall unemployment, which has declined 0.4 percentage point since reaching a 26-year peak in October.

“The government’s stimulus measures have driven up stock prices” and helped disguise the unemployment problem, said Seiki Orimi, a senior investment strategist at Tokyo-based Mitsubishi UFJ. “Stocks will fall, at some point. For now, people in the market are tricking themselves” into believing in a U.S. jobs recovery.

Consumer spending accounted for about 70 percent of the world’s largest economy in the fourth quarter, when gross domestic product expanded at a 5.6 percent annual rate, the fastest pace in more than six years. Output in the three months to March probably expanded 3 percent, based on the median forecast of 60 economists surveyed by Bloomberg. The S&P 500 may fall as much as 5 percent in an “overdue” decline, according to a technical analysis this month by Thomas Schroeder, managing director at Chart Partners Group Ltd.

Jobless Benefits

The U.S. posted a budget deficit for a record 18th straight month in March, reflecting gains in government spending to boost the economy. President Barack Obama signed a bill on April 15 extending jobless benefits for hundreds of thousands of Americans to June 2, and urged Congress to pass another measure offering them for the rest of the year.

“Historically, people unemployed for more than six months experience a significant deterioration of vocational skills and face severe difficulties in finding their next job,” Richard Koo, chief economist at Tokyo-based Nomura Research Institute Ltd., wrote in a report on April 20.

(To save a copy of the chart, click here.)

To contact the reporter for this story: Hideki Sagiike in Tokyo at; Masaki Kondo in Tokyo at