Recap 4-20-12

Main Items:

· Canadian Core CPI declined to 1.9% YoY as exp vs 2.3% prev. The headline measure declined to 1.9% vs 2.0% exp and 2.6% prev

Overseas:

  • German IFO Business Climate increased to 109.9 in April vs 109.5 exp and 109.8 prev
  • UK Retail Sales ex Fuel jumped to 2.8% YoY in Arch vs 1.3% exp and 1.0% prev

Upcoming Data:

  • Mon: China HSBC Flash PMI, EU PMIs, Australia CPI,
  • Tues: Swiss Trade Balance, Canada Retail Sales, US Consumer Confidence, New Home Sales, Apple Earnings after Mkt Close
  • Wed: UKGDP, US DGO, FOMC + Fed projections
  • Thurs: EU Confidence, German CPI, ChicagoFed, US Jobless Claims, Pending Home Sales, Japan CPI
  • Fri: BoJ, German GfK Consumer Confidence, Spanish Retail Sales, Unemployment, Swiss KOF LEI, UMichigan Confidence

Commentary:

It appears that the Nylon-12 resin shortage may have a substantial impact on auto production. The German factory that makes it is directly & indirectly responsible for 50% of global production. According to the WSJ, stockpiles of Nylon-12 is down to less than a months’ worth, and a spokesperson has said the factory will take 3 months to be repaired.

Separately, the chart below shows the net speculative positioning in CME Yen futures. As the chart shows, JPY shorts are at unusually extended levels. Note that the late 2006 / early 2007 episode coincided with massive inflows into carry trades and the last time the BoJ hiked.

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