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


  • 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


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: