Recap 4-04-13


Japanese equities look likely to go (even more) parabolic. The situation has lots of similarities to internet stocks. You can make up any EPS figure and it could be justifiable.

BoJ policy actions likely to increase demand for risk free rate products elsewhere. Demand could well spill over into ‘not so risk free’ products in Europe as well. The French OAT auction was very strong, and 10y French yields closed the day a full 12 bps lower in yield! In addition, EU rates got a further boost from Draghi, who appeared to imply that the ECB will continue with fixed rate tenders with full allotment for as long as necessary.


  • BoJ: Buying 7trn of JGB’s per month, with an average maturity of 7yrs, up to 40yrs. They will also buy 1trn a year of ETFs, and made clear that they want to achieve the 2% inflation target within 2 years. The vote on the policy action was surprisingly unanimous
  • US Jobless Claims jumped to 385k last wee vs 353k exp and 357k prev. Easter seasonality may have had an effect
  • Italy Services PMI improved to 45.5 vs 43.3 exp and 43.6 prev
  • Draghi:
  1. Weak economic activity has extended into the early part of the year and a gradual recovery is projected for the second half of this year, subject to downside risks. Against this overall background our monetary policy stance will remain accommodative for as long as needed
  2. We are also closely monitoring money market conditions and their potential impact on our monetary policy stance and its transmission to the economy. As said on previous occasions, we will continue with fixed rate tender procedures with full allotment for as long as necessary.
  3. This economic outlook for the euro area remains subject to downside risks.

UK Services PMI improved to 52.4 vs 51.5 exp and 51.8 prev

Upcoming Data:

  • Fri: US Employment, Canada Employment,
  • Mon: Japan Currency Acct, Japan Eco Watchers Survey, BoC Senior Loan Officer Survey, Business Outlook Survey
  • Tue: Swiss Unemployment, German Trade Balance, Swiss CPI, Canada Housing Starts, Building Permits,
  • Wed: China Money Supply, Trade Balance, Australia Employment,
  • Thu: US Jobless Claims, Canada New House Price Index