Recap 3-9-12

Main Items:

  • US Payrolls increased 227k in Feb vs 210k exp and 243k prev. Last month’s print was revised 41k higher.
  • US Unemployment was stable at 8.3% as exp. The participation rate surprisingly increased 20bps to 63.9%.
  • Average Hourly earnings rose 0.1% MoM vs 0.2% exp. Weekly hours were stable at 34.5 as exp.
  • Canadian Employment declined -2.8k in Feb vs +15k prev and 2.3k prev.
  • Canadian Unemployment declined to 7.4% in Feb vs 7.6% exp and prev as the participation rate declined to 66.5 vs 66.7 exp and prev
  • Greek PSI deal had a 85.8% tender rate. After use of CACs on domestic law bonds, total participation is expected to hit 95%. The EU said the Greek PSI has been a resounding success. Germany said the Euro group may release two parts of Greek aid today.
  • ISDA declared that a credit event has occurred for Greece. Citi: "the aggregate amount payable would, in Greece’s case, be 75% of $3.2bn: $2.4bn. Furthermore, statistics indicate that, on average, 70% of derivatives exposure is collateralized and the level of CDS collateralization is likely to be even higher as over 90% of CDS transactions (by numbers of trades) are collateralized. Wade through all those percents and ISDA is saying that CDS underwriters will lose 10% of 75% of $3.2bn = $240mn, not a big amt."
  • China Car Sales have the worst start since 2005. Wholesale deliveries of passenger automobiles declined 4.4 percent to 2.37 million units in January and February, vs a projected fall of 3 percent. – BBG

Overseas:

  • China Data in Feb:
  1. M2 grew 13.0% YoY vs 12.9% exp and 12.4% prev. M1 growth increased to 4.3% exp vs 6.1% exp and 3.1% prev
  2. CPI declined to 3.2% vs 3.4% exp and 4.5% prev. PPI was flat vs +0.1% prev.
  3. Retail Sales YTD YoY declined to 14.7% vs 17.6% exp and 17.1% prev
  4. Fixed Assets Inv declined to 21.5% YTD YoY vs 20.5% exp and 23.8% prev

India unexpectedly cut its cash reserve ratio 75bps

Japan M2 growth slowed to 2.9% YoY in Feb vs 3.0% exp and prev

BoE /GfK Inflation Expectations Survey declined to 3.5% in Feb vs 4.1% prev

UK PPI Output Core increased to 3.0% YoY vs 2.5% exp and 2.45 prev

Upcoming Data:

  • Weekend: China Trade Balance
  • Mon: UK RICS house price balance
  • Tues: FOMC, BoJ, ZEW Survey, US Retail Sales
  • Wed: UK Unemployment, EU CPI,
  • Thurs: SNB, EU Employment, US PPI, Jobless Claims, Philly Fed

Commentary:

The following couple of charts from JPM shows how rich high yield bonds are relative to equities. IMO, it says more about the effects of QE rather than equity cheapness:

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