G3 Recap 3-23-11

Main Items:

  • Japan: A Japanese agency reported that workers that the number 3 and 4 plants were told to evacuate. TEPCO said cooling systems are expected to come back online in the next few days at some of the most damaged reactors at Daiichi – DJ/FT
  • The Federal Reserve reportedly objected to BAML’s 2011 dividend hike.
  • US new home sales fell to the lowest level on record last month. Seasonality likely again played some role.
  • The IMF is crafting a plan that would make it a major lender of last resort during financial crisis, essentially assuming a lot of the responsibilities now unofficially held by the Fed. Among the many proposals being formulated, the IMF would provide short-term FX swaps to CBs during periods of stress. The move hopefully would encourage countries to accumulate less FX reserves and would remove a burden from the US Fed (during the peak of the crisis the US extended nearly $600B worth of FX swap lines). The US, along w/other G20 nations, are backing the plan. WSJ
  • The Portuguese parliament rejected the government’s austerity measures as expected.

Overseas Data:

  • MPC minutes showed that the BoE voted 6-3 again to not hike. It was more dovish than expected. The MPC now sees ‘significant risk’ of CPI rising above 5% in the near term. The market interpreted this acknowledgment as meaning that a majority of the committee are willing to tolerate such high levels. The MPC reiterated that the ‘balance between the upside and downside risks’ to inflation had ‘probably not shifted significantly over the month.’

Commentary:

  • None.
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