While you were sleeping: It's about the economy, stupid

President Obama: tonight's address eagerly awaited

All eyes are on US President Barack Obama's annual State of the Union address, the first in his second term in office, tonight (NZT).

In afternoon trading in New York, the Dow Jones Industrial Average and the Nasdaq Composite Index dipped 0.20 percent, while the Standard & Poor's 500 Index slipped 0.09 percent. The Dow fell from the highest close in 12 years on Friday, while the S&P 500 slid from a five-year high.

US Treasuries were also steady, with the 10-year bond yield last up 1 basis point to 1.96 percent.

President Obama should focus on the economy in his address, according to 35 percent of American voters in a nationwide survey by Quinnipiac University released today.

Another 20 percent listed the federal deficit as the top priority, with 15 percent citing gun policy and 12 percent listing health care. More than half, 53 percent, said the US economy is in a recession.

"Voters trust President Obama more than congressional Republicans on the economy and most other issues, but they are more closely divided on who would do a better job on the deficit and on gun control," Peter Brown, assistant director of the Quinnipiac University Polling Institute, says in a statement.

"And by 48 to 39 percent, voters trust Republicans in Congress more than Obama to cut federal spending," he notes.

US Treasury debt auctions this week should meet solid demand. The government is set to sell $US32 billion of three-year notes later today, $US24 billion in 10-year debt tomorrow and $US16 billion in 30-year bonds on Thursday.

"I expect us to back up a bit going into the auctions," Brian Edmonds, head of interest rates at Cantor Fitzgerald in New York, one of 21 primary dealers that trade with the Federal Reserve, told Bloomberg News. "These are fairly attractive yields. Threes should go great. Tens and bonds will go fine."

Shares of Google fell, last down 1 percent to $US777.86, after the company said chairman Eric Schmidt is planning to sell as many as 3.2 million shares, or about 42 percent of his stake in the company.

In Europe, the Stoxx 600 Index ended the day with a 0.6 percent decline from the previous close. Germany's DAX also fell, closing 0.2 percent weaker. The UK's FTSE 100 rose 0.2 percent and France's CAC 40 advanced nearly 0.1 percent.

Data due on Thursday might show the worst drop in the eurozone economy since the first quarter of 2009. Gross domestic product shrank 0.4 percent in the fourth quarter, according to the median of 45 estimates gathered by Bloomberg News.

The Group of Seven may release a statement to reaffirm support for "market-determined" currency rates around the time G20 finance ministers and central bankers meet in Moscow on Friday and Saturday, Reuters reported.

(BusinessDesk)

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