Recap 7-6-12

Main Items:

  • US Payrolls declined to 80k last month vs 100k exp and 69k prev. Unemployment was stable at 8.2% as exp. Participation rate was unchanged.
  • Hourly Earnings increased 0.3% MoM vs 0.2% exp and 0.1% prev. Weekly hours improved to 34.5 vs 34.4 exp and prev
  • Canadian Unemployment declined to 7.2% in June vs 7.3% exp and prev


  • Swiss CPI declined to -1.1% YoY in June vs -1.0% exp and prev.
  • UK PPI Output Core declined to 2.0% as exp vs 2.1% prev

Upcoming Data:

  • Fri: Swiss CPI, UKPPI, US Payrolls, Unemployment, Canada Unemployment
  • Mon: Japan Trade Balance, China CPI, Japan Eco Watchers Survey, Sentix Investor Confidence, AU NAB Business Confidence, China Trade Bal
  • Tues: US NFIB Small Business Optimism, Jults Job Openings
  • Wed: FOMC Minutes, AU Employment,
  • Thurs: BoJ, US Jobless Claims, China IP, GDP, Retail Sales

Commentary & Links:

The weak payrolls figure was attributed by some to weather related payback. The improvement in earnings and hours worked also help mitigate this effect. Broker reports appear to broadly agree on the view that this is unlikely to immediate lead to Fed easing.

However, note that 2yr German yields are back to negative levels again. 10yr Spanish yields are just below 7%. Also, JPM, Goldman and Blackrock all reportedly closed their EUR money market funds today as a result of the ECB’s deposit rate cut to zero. Negative yields and money market closures do NOT happen in normal markets. In many ways, I think this is analogous to the wide USD TED spreads that started in the summer of 2007. There are some big funding stresses out there, and funding stress events have a strong tendency to end badly. Furthermore, there are no major policy meetings on the calendar for a month!


2 thoughts on “Recap 7-6-12

  1. With asset prices adjusting downward, balance sheets have to be getting ugly, from an unrealized loss perspective. This must make it hard for anyone to stomach borrowing, no matter what rates are set to.
    I think that when a path that is substantially different from the Japanese model is identified we maybe at the beginning of the road to recovery. Until then confidence in the tenets of our system may continue under pressure, like we’re see with banks, governments in the EU, libor, etc.
    That’s how things look from my lawn chair.

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