Recap 6-07-13


Payrolls were inline, which means that today’s price moves may give us an indication of where the path of least resistance is. A generalized observation may be that carry trades are still under significant pressure. White Euribors were off ~3bps today. This could mean that rates products in the higher rated EM countries may continue to be sold as well, with a concurrent effect on FX. Note also that Gold suffered its worst sell off since April 15th and silver closed at a new low. FTAV notes that the latest data from fund flow specialists EPFR suggest $12.5bn was pulled from bond funds globally last week — the highest dollar value of net redemptions in the 12-year history of the data series.


  • Payrolls increased by 175k vs 163k exp and 165k prev. Unemployment ticked higher to 7.6% vs 7.5% exp and prev, as the participation rate rose to 63.4% vs 63.3%.
  • Hourly earnings were flat MoM vs 0.2% exp and prev. Weekly Hours increased to 34.5 as exp vs 34.4 prev
  • WSJ’s Hilsengrath: Federal Reserve officials are likely to signal at their June policy meeting that they’re on track to begin pulling back their $85-billion-a-month bond-buying program later this year, as long as the economy doesn’t disappoint.
  • Canada Employment jumped 95k last month vs 15k exp and 12.5k prev. This took the Unemployment rate down to 7.1% vs 7.2% exp and prev. This was despite the fact that the participation rate jumped to 66.7 vs 66.5 exp and prev
  • German IP rose 1.0% YoY in April vs -0.7% exp and -2.5% prev.
  • Standard & Poor’s revises its outlook on long-term ratings for Brazil’s sovereign debt to negative from stable.
  • Japan Headlines:
  1. Japan’s finance minister Taro Aso was asked about intervention in the yen. “I am watching it, but I have no intention to intervene or take action immediately just because of that.”
  2. Economy minister Akira Amari: “Markets have been moving sharply lately due to external factors, but I believe volatility will decrease as the government implements growth strategy measures swiftly.”
  3. PM Abe said “I don’t want to comment on market movements.”
  4. The Government Pension Investment Fund in Japan said that it will increase the weighting of foreign bonds in its portfolio to 11% from 8% and of foreign stocks from 9% to 12%. It will also increase its holdings of domestic stocks from 11% to 12%. It decreases its holdings of JPY bonds to 60% from 67%. The net increase in foreign holdings comes to around USD 70bn.

Turkey – Erdogan stays defiant as he returns from a trip to North Africa; he accused financial speculators of trying to weaken his country and economy – Bloomberg

Upcoming Data:

  • 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