Recap 2-20-13


NB: There will be no updates tomorrow.

FOMC Minutes did not at all seem concerned with the current level of inflation breakevens, BUT ‘many participants’ seem uncomfortable with further asset purchases.

  • Noted in several instances that “measures of longer-run inflation expectations remained stable.”
  • “a number of participants thought that the growth of potential output had been reduced in recent years”,
  • “several others expressed concern about the potential for excessive risk-taking and adverse consequences for financial stability.”
  • “Many participants also expressed some concerns about the potential costs and risks arising from further asset purchases.”
  • “A number of participants stated that an ongoing evaluation of the efficacy, costs, and risks of asset purchases might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred.”

The interpretation here is that while the FOMC leadership is likely committed to continuing QE for the foreseeable future, the rank and file is much more sanguine. Optically, the minutes are likely to stoke further fears of gradual QE withdrawal.

Chartwise, the S&P has broken below the 1514 level, which has been a pivot for most of February:

Separately – this awesome: (thanks Ajay!)


  • BoE Minutes were quite a surprise. 3 votes went for more 25bn QE vs just 1 expected. King was one of the voters, which was at odds with his recent comments.
  • US Housing Starts dropped to 890k in Jan vs 920k exp and 954k prev, although Building Permits were stble
  • UK Jobless Claims declined -12.5k in Jan vs -5.5k exp and -12.1k prev
  • New Zealand’s central bank governor said “the kiwi is not a one-way bet” and that he is “prepared to intervene to influence the kiwi.”
  • Rumors of a commodity hedge fund blowup sent commodities lower across the board today
  • Foxconn has frozen hiring across China. Foxconn said the freeze is not because of the iphone 5 slowdown

Upcoming Data:

  • Thu: EU PMI, US CPI, Jobless Claims, Markit Preliminary PMI, Philly Fed, Existing Home Sales, Oil Inventories
  • Fri: German IFO, Canada CPI, LTRO2 Repayment Announced (~125bn is exp)
  • Mon: China HSBC Flash Mfg PMI
  • Tue: US Consumer Confidence, New Home Sales