G3 Recap 1-11-11

Main Items:

  • US NFIB Small Business Optimism index declined to 92.6 in Dec vs 94.5 expected and 93.2 previously.
  • The Japanese FinMin said that they want to buy more than 20% of the EFSF bond issuance that will go to help Ireland. Some strategists think that Japan may need to sell USD from its FX reserves to buy EUR for this.

Overseas Data:

  • Chinese M2 growth accelerated to 19.7% YoY in Dec vs 19.0% expected and 19.5% previously. Also, both new loans as well as FX reserves increased more than expected.
  • China released details on its 2010 bank lending and reveals it overshot its initial target; officials promise more tightening measures in ’11; banks lent 7.9T yuan in ’10 vs. the target of 7.5T. M2 growth hit 19.7% Y/Y in Dec, above the 17% target and above analysts’ forecasts of 18.9%. Reuters

Commentary:

  • Treasuries sold off in anticipation of auctions the next couple days. If prior patterns hold, yields will hit a high tomorrow and rally on Thursday for the bond auction.
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