Recap 4-12-12

Main Items:

  • US Initial Jobless Claims increased to 380k last week vs 355k exp and 357k prev. This is the highest print since Jan 27th.
  • US Core PPI declined to 2.9% YoY vs 2.8% exp and 3.0% prev
  • The FOMC’s uber-doves, Yellen & Dudley, both made comments on additional easing over the past 24 hours:
  1. Yellen: I consider a highly accommodative policy stance to be appropriate in present circumstances.
  2. Dudley: More asset purchases would prompt inflation anxiety
  3. Dudley: Doing another round of Asset Purchases is not free

The IEA said Q1 supply/demand fundamentals “show a clear shift from the seemingly relentless tightening evident over the prior 10 quarters.”


  • China Money Supply in March:
  1. M2 increased to 13.4% YoY vs 13.0% exp and prev.
  2. M0 increased to 10.6% vs 10.0% exp and 8.8% prev
  3. March loans increased to 1.01 trillion yuan, higher than original forecasts of 800bn and better than recent whisper figures of 900bn.
  4. FX reserves increased to 3.3trn vs 3.2trn exp and prev

French CPI increased to 2.6% YoY in March vs 2.3% exp and 2.5% prev

Australia Employment jumped 44k in March vs 6.5k exp. This kept Unemployment unchanged at 5.2% vs 5.3% prev as the participation rate increased

South Korea Unemployment declined to 3.4% in March vs 3.6% exp and 3.7% prev

Upcoming Data:

  • Thurs: China IP, Retail Sales, GDP
  • Fri: UK PPI Output, US CPI, U Michigan Confidence
  • Mon: US Empire Mfg, Retail Sales, NAHB Housing Mkt Idx
  • Tues: UK CPI, EU CPI, German ZEW, US Housing Starts, BoC


Yellen’s and Dudley’s comments today were quite interesting. Both indicated that additional rounds of QE will require significant risk of recession. However, since Operation Twist is slated to stop at the end of June, it may be prudent to wait until early June before initiating treasury shorts.