Recap 1-30-12

Main Items:

  • US PCE Core Deflator increased to 1.8% YoY in Dec
  • Personal Income increased to 0.5% in Dec vs 0.4% exp, and 0.1% prev. However, Personal Spending declined to 0.0% vs 0.1% exp and prev
  • Dallas Fed Mfg Index jumped to 15.3 in Jan vs 1.5 exp and -3.0 prev.
  • Bonds in Portugal hit new all time highs in yield. Five year paper is trading at ~€ 50.00. Portugal is expected to run into funding difficulties by Q3. JPM estimates that an additional 40bn is needed for the second aid package. Official holdings represent ~1/3rd of total debt stock.
  • Fed Senior Loan Officer Survey showed that for the first time since 2009, banks tightened credit, albeit marginally.


  • EU Industrial Confidence declined to -7.2 in Jan vs -6.8 exp and -7.1 prev
  • German CPI declined to 2.0% in Jan as exp vs 2.1% prev
  • Italian Business Confidence declined to 92.1 in Jan vs 92.3 exp and 92.5 prev


Canadian rates have staged a rally inline with US rates. However, the macro data still suggests the 0 hikes priced out thru 3Q13 is wrong. In particular, two BoC surveys on labor and output shortages are both already near trend levels. Historically, when the average of the two series breaks above 40, the BoC has started its hiking cycles. This metric suggests that hikes may not be so far away:


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