Wednesday Afternoon Cheat Sheet: 3 Stories That Moved Markets
It was a shaky Wednesday for the U.S. equity markets. Early losses transformed into tepid gains by the afternoon, and by the end of the day it was just the NASDAQ that ended in the red. But all told, the markets were effectively flat.
At the close: DJIA: +0.05%, S&P 500: +0.05%, NASDAQ: -0.10%.
1) The U.S. Treasury announced that it plans to auction a total of $72 billion in securities in order to refund approximately $64 billion in securities that mature on February 15, yielding about $8 billion in new cash. The notes will be auctioned off over the course of next week.
Buried at the bottom of the Treasury’s auction announcement is a note about the current status of the debt ceiling. The note, which acknowledges the short-term suspension, urges Congress to pass a longer-term solution before the May 18 deadline. “Failure by Congress to pass a timely increase in the debt limit when the temporary suspension expires would require Treasury take certain extraordinary measures in order to provide Congress more time to act and to protect the creditworthiness of the country.”
Sound familiar? Officials said on Tuesday that they will be issuing $31 billion in debt to repay the money that it drew from retirement funds the last time the Treasury had to take “certain extraordinary measures” to provide federal financing.
2) The Congressional Budget Office released a report this week that suggests economic growth will remain painfully slow in 2013, and that unemployment could remain near 8 percent for the duration of the year. Arguing that current fiscal policy has had a tremendously negative impact on real GDP growth, the CBO projects that meaningful economic activity, spurred by slowly healing fundamentals, could begin in 2014.
Until then, unemployment remains a particularly sore spot, with the U-3 rate expected to drop below the Federal Reserve’s target rate of 6.5 percent sometime between 2014 and 2017. What’s more, the deficit, which is expected to shrink in the short-term, is projected to expand in the long-term despite financial reform because of rapidly increasing spending obligations… (Read more.)
3) While earnings took the focus on Wednesday, the markets kept tomorrow’s meeting of European Central Bank officials in the back of their mind. Most analysts believe that ECB president Mario Draghi, who has been credited with keeping the euro zone intact through global and regional crises, will avoid commenting on what many believe is a brewing global currency war.
Ahead of the meeting, the euro fell against both the dollar and the yen. At market close in New York, the euro was trading at one to 1.35 dollars, and one to 126.57 yen. National leaders and business leaders alike are calling for policies to protect the euro from irrational price movements, which have been fueled by Japan’s efforts to pull its economy out of stagnation.
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