Nothing Ado About Much

There were some big events yesterday, but in the end, we’re back at ex ante levels. Markets are drifting this am post a strong start. The genuinely better Durables number yesterday provided a fillip for equities (although the new homes sales should have tempered things you would think) but they could not hold onto their strength; fading into the Euro close and continuing to do so post the Fed statement.The market was also shaken somewhat by comments from Republican Darrell Issa claiming the Fed was was engaged in a cover up over Merrill Lynch losses around the time of the BAC deal. It’s only speculation (although pretty plausible) at the moment but a cover up from these guys would, erm, dent their integrity to say the least. Anyhow, yields spiked as the Fed announcement made no note of the deflation threat and said it would not be expanding its QE program. They did however say that rates would be kept low for “an extended period of time” so I’m not sure they aren’t concerned by deflation. It certainly appears they aren’t overly worried by the reflation trade running away with itself any time soon.

The SNB donned its size 12s and entered the FX market again yesterday and given the moves earlier today in the Swiss crosses, there is talk it’s laced up its boots again today.

Within the equity markets, all sectors are down but the main movers are the AgChems, following on from Monsanto’s disappointing performance yesterday. It’s been a tough old couple of weeks for the sector since the NuFarm warning a couple of weeks ago, Agrium and K+S too. GFI have come out with long Wheat call today which I think is interesting. Given the feedback from these companies is that fertiliser demand is down (according to the Brazilian National Fertiliser Assoc, Q109 fertilizer consumption down 24%), and the cure for low prices is…well, it’s low prices (the converse is of course, also true!), so low prices => less supply => higher prices! And if you’re a dollar bear there is that angle too.

Today also brought another bout of cash raising, this time in the form of CBs with Abengoa, Suedzucker and SGL Carbon raising circa Eur 600m between them.

Outside of that, later on today we have the jobs numbers and the final figure for Q1 GDP and expectations are for no revisions. Equity volumes are running at 80%. Feels quiet, is quiet, is Summer.