Traders Start the Week With A Risk-On Attitude

January 17, 2012 12:14 AM

What Traders are Talking About:

* South American weather models vary. Rains fell across southern Brazil over the weekend and into Monday. Forecasts call for light, scattered rains across parts of Argentina today and Wednesday. The next chance for meaningful precip is Thursday/Friday in Argentina and Sunday/Monday in southern Brazil.

The long and short of it: While there is rain in the outlook for late this week and early next week, not all forecast models are in agreement on the amount and coverage -- and most forecasters are trending drier than they were ahead of last weekend.

* China's growth slows, but not as much as feared. China's fourth quarter GDP came in at 8.9% above year-ago, which was down from 9.1% in the third quarter and the lowest reading since the second quarter of 2009, but better than the 8.7% forecast by economists. For all of 2011, China's GDP rose 9.2% compared to growth of 10.4% in 2010. Meanwhile, China industrial growth in December accelerated to 12.8% from 12.4% growth in November.

The long and short of it: The combination of the GDP data coming in stronger than expected (although down from last quarter) and expectations China will continue to ease monetary policy amid declining economic growth supported the investment world overnight, including grain and soy futures.

* Euro-zone sentiment improves -- for now. Germany's ZEW survey of economic sentiment rose by the largest amount ever in January (from -53.8 to -21.6). Additionally, there was good demand at a Spanish bond auction. This supported the euro and pressured the U.S. dollar index overnight. But while euro-zone sentiment is up for now, there are ongoing concerns, especially after S&P downgraded the euro-zone EFSF emergency fund by one notch Monday following downgrades to France and Austria last Friday, and as Greece works to shore up the next batch of bailout funding.

The long and short of it: The improved German and Spanish data gives investors a risk-on attitude -- for today.


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