Recap 5-29-13

Commentary:

The sell off in US treasuries spread to the front end of the EUR curve today, with Euribor whites off a couple bps. ECB hikes are now priced in by 4Q 2014!

Asset prices globally are now looking a lot more interesting. But at the same time, everyone should be a bit more wary. This move in yields is different from the others we’ve seen the past few years. This chart of the US 5y real yield illustrates:

It’s certainly a good time to have a shopping list prepared. But it may be prudent to wait for this move in yields to slow first. We got some evidence today that some buyers are back. The 5y Treasury auction had the highest percentage of direct bidders on record. (23.3%)

Notable:

  • German unemployment increased by 21k in Apr vs 5k exp and 4k prev. Unemployment was stable at 6.9% as exp.
  • Italy Business Confidence improved to 88.5 vs 88.1 exp and 87.6 prev
  • Die Welt reported that Draghi is losing support in the ECB executive board. Weidmann, Asmussen and Mersch are said to oppose ABS purchases.
  • EU M1 growth improved to 8.75 YoY, the highest since 2010
  • BoC kept policy unchanged as exp.

Upcoming Data:

  • Wed: South Korea Business Survey, Australia Building Approvals, Private Capex expectations.
  • Thu: US Jobless Claims, Japan Markit Mfg PMI, CPI, Australia Private Sector Credit
  • Fri: Month End, UK Money Supply, EU CPI Estimate, Unemployment, CanadaGDP, US Personal Spending, PCE Deflator, Chicago PMI
  • Mon: Japan Capital Spending, Australia New Home Sales, Retail Sales, China Non-mfg PMI, HSBC Mfg PMI, EU PMI, US ISM, Australia Current Account
  • Tue: RBA, UK Construction PMI, Australia 1Q GDP
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