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Wednesday, April 16, 2008

US Market Summary on April16th, 2008

USD rose vs key rivals after data showed rising U.S. inflation and improved manufacturing activity, which suggest the Federal Reserve may not lower interest rates much further; after starting weaker USD rose on a report showing New York manufacturing activity rebounded in April from a record low in March.

Another report showed U.S. wholesale prices surged in March. "Producer prices rose nearly twice expectations, accentuating elevated inflationary pressures as U.S. producers are facing higher fuel, food, and raw materials costs," said Wells Fargo Bank strategist Evan Mahoney. He added that the release "suggests the Fed may be limited in the extent to which it can cut rates this month." Late in New York, EUR/USD was at 1.5780 from 1.5811 late Monday, while USD/JPY was at 101.59 vs 101.04. EUR/JPY was at 160.28 vs 159.76, GBP/USD at 1.9615 vs 1.9761, USD/CHF at 1.0067 vs 1.0005. Treasurys sank on the report showing producer prices soared on rising food and energy costs; 2-year yield +9.4 bps to 1.84%, 10-year yield +8.4 bps to 3.59%.

Stocks rose as financials like Citigroup clawed back losses, while oil's record price run helped Exxon Mobil even as it damped enthusiasm about an airline merger. After Wachovia rattled the sector Monday, financial-service concerns such as Charles Schwab and M&T Bank helped alleviate some fears about the ongoing financial crisis with their 1Q earnings. Dow +0.5%, Nasdaq +0.5%, Philly Semicons down 0.2%. Nymex May crude settled up $2.03 or 1.8% at a new record of $113.79/bbl in a spate of buying set off by supply headaches. June Comex gold was up $1.50 to $930.60 but came off its high despite record crude oil prices and the surge in wholesale inflation.

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