Recap 6-06-13


So the ECB is going down the 1990’s BoJ route. They are talking about price stability with Unemployment at 12.2% and rising. Once this wave of position liquidation in Euribor is done, there should be some great opportunities to receive positive carry there.

I don’t know what the BoJ will do on Tuesday. They announced QE just 2 months ago, but the Nikkei and USDJPY is now barely higher vs the levels prevailing then. The markets are clearly testing Kuroda. (Note that this is actually fairly common for new central bank leaders) How he reacts will speak volumes about the BoJ’s ultimate chances of success.

The SPX bounced nicely off 1600 despite position liquidation elsewhere. 10y real yields have stabilized at -10bps for a week now, which is a positive. IF history is any guide, the bulk of the sell off may be over. But it’s probably too early to make confident prognostications just yet.


  • Draghi:
  1. The Governing Council continues to see downside risks surrounding the economic outlook for the euro area.
  2. In the Governing Council’s assessment, risks to the outlook for price developments are broadly balanced over the medium term, with upside risks relating to stronger than expected increases in administered prices and indirect taxes, as well as higher commodity prices, and downside risks stemming from weaker economic activity.
  3. To sum up, the economic analysis indicates that price developments should remain in line with price stability over the medium term.

ECB Staff Projections:

  1. 2013 GDP: -0.6%
  2. 2013 Inflation 1.4%
  3. 2014 Inflation 1.3%

US Jobless Claims declined to 346k as exp vs 354k prev

BoE left policy unchanged

US Births rose less than 1 percent to 3.96 million in 2012, the first annual increase since the number tumbled from the historic high reached just as the economic recession began in December 2007,

Upcoming Data:

  • Fri: US Employment, Canada Employment
  • Mon: China Trade Balance, CPI, IP, Money Supply, Japan Trade Balance, Eco Watchers Outlook Survey, Australia Home Loans, NAB Business Confidence
  • Tue: BoJ, UK IP,
  • Wed: UK Claimant Count Rate, Canada Housing Starts, AU Employment