S&P500 Futures – Beige Book Weighing on Risk Appetite

Summary of the Beige Book released on Janurary 16th 2013:

– Modest/Moderate growth in all 12 Districts
– Holiday sales slightly higher than 2011
– Non-financials industries improved, but Manufacturing mixed
– No change in employment conditions

Beige book highlights cautiousness in both consumers and corporations due to the Fiscal Cliff. It’ll be interesting to see if condition improves in the next Beige Book report since the resolution of the “Cliff”. Market did not interpret the content kindly, with S&P 500 futures trading lower, giving up all of its gains during US early session.

S&P 500 Futures 4 Hourly

4 hourly chart shows a Doji just above the 1,470 support/resistance level. Price is currently holding above the 1,465 support, with a break exposing 1,450.

US10Y T-Note Futures 4 Hourly

Risk sentiment also look to be retreating with the US benchmark rate giving up all the advances it has made post Fed’s “QE3 Ending” talk back in early Jan. We’re also trading above 132.75 ,the 61.8% Fib retracement (Nov ’12 high vs Jan ’13 low). With yields getting lower once again, S&P500 position above the support becomes even more shaky. Though we are still a fair distance away from 1st Jan’s levels, should we reach it, market confidence will almost certainly erode and potentially push prices even lower to send us into the red in Q1 2013.

Click here for the full Beige Book report

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