Recap 5-10-13: Thoughts


Assets prices are moving, and some of them are getting interesting.

  • USDJPY, Nikkei have both obviously moved a lot. Broker consensus is for another 5-10% on the FX by YE. The sky appears to be the limit for the Nikkei.
  • The Australian Dollar broke parity w/ the USD early this morning. The RBA cut appears to have been the catalyst, but it’s not clear if this is *it* for the currency. Mining CapEx is projected to increase (and probably peak) in the 2013/14 fiscal year, which suggests that corporate hedging of mining profits aren’t likely to accelerate for a while yet.
  • We’ve gotten a sizable sell off in EU rates the past week, following the ECB meeting. Looks like a lot of momentum player stop-outs, given the speed of the move and lack of fundamental catalysts. Some prices are starting to look interesting again, although it’s worth noting that these sell offs usually take a bit longer to work themselves out.
  • 10yr French OAT yields are up a sharp 30bps from the month’s lows. They are now just below where they were before the BoJ meeting! Speculators are looking at the fundamentals and using it as a short leg vs the other peripheral countries.
  • The Mexican Peso had an OK week, but IMHO, it’s getting very rich here, and is proving to be quite a headwind for the economy. The Mexican stock market has underperformed the S&P by a full 18% in local currency terms this year! Although some other issues were admittedly at play early in the year, (America Movil) this trend has persisted essentially this entire year.
  • Wacky price action in oil the past few weeks. Over the past 4 weeks we’ve seen a full $10 down and up move in WTI. Not sure exactly what’s going on there, but the longer term outlook for the entire oil complex looks increasingly bearish, although Brent appears to be taking the brunt of it so far.
  • Gold sold off further today, but a lot less than you’d think given the sell off in treasuries. Spec positioning is very short and producer positioning very long. Silver is actually up on the day.


  • Canada Employment rose 12.5k in Apr vs 15k exp. Unemployment was stable at 7.2% as exp, but the participation rate surprisingly dropped to 66.5% vs 66.7 exp and 66.6 prev.
  • Japan Eco Watchers Outlook Survey improved to 57.8 in Apr vs 57.5 exp and prev.
  • China M2 growth improved to 16.1% YoY vs 15.5% exp and 15.7% prev. M1 was stable at 11.9% vs 11.0% exp

Upcoming Data:

  • Mon: Japan M2, Australia Home Loans, NAB Business Conditions, China CPI, Retail Sales, US Retail Sales
  • Tue: EU IP, German Zew,
  • Wed : Japan Consumer Confidence, UK Jobless Claims, EU 1Q GDP, BoE Inflation Report, US Empire Mfg, NAHB Housing Mkt Index, Japan 1Q GDP,
  • Thu : EU Trade Balance, US CPI, Jobless Claims, Housing Starts,
  • Fri : Canada CPI, MexicoGDP, US Umichigan Confidence,