Recap 10-31-13


Deflation in Europe is the topic du jour. The chart is pretty ugly:

5y EU inflation swaps are now at 1.4%. The 5y5y, however, at 2.25% remains well within the historical range, so the ECB could still conceivably claim expectations are ‘anchored.’

Unemployment was also revised higher to 12.2% from 12.0% prev. This means the apparent nascent decline in UER is now looking like something of a headfake:


  • Chicago PMI surged to 65.9 vs 55 median and a 51-58.3 expectation range. This was a 10pt jump vs the previous print of 55.7 and the highest level since March 2011.
  • US Jobless Claims declined to 340k vs 338k exp and 350k prev
  • EU Unemployment rose to 12.2% in Sept vs 12.0% exp and prev on revisions
  • EU CPI declined to 0.7% YoY in Oct vs 1.1% exp. Core declined to 0.8% vs 1.0% exp
  • Canada GDP rose to +2.0% YoY in Aug vs 1.7% exp and 1.4% prev
  • Japan PMI improved to 54.2 vs 52.5 prev
  • Japan Housing Starts jumped to +19.4% vs 12.1% exp and 8.8% prev
  • UK GfK Consumer Confidence declined to -11 in Oct vs -8 exp and -10 prev
  • Australia New Home Sales rose to 6.4% MoM vs 3.4% prev
  • Australia Building Approvals jumped to 18.6% YoY in Sept vs 1.2% exp and 7.7% prev
  • RBNZ: With respect to NZD, "sustained strength…would provide the Bank with greater flexibility as to the timing and magnitude of future increases in the OCR." The RBNZ’s inflation outlook is turning less benign, as the adjective "very low" to describe changes to the price level was scrubbed

Upcoming Data:

  • Thu: AU PMI, China PMI
  • Fri: US ISM, Vehicle Sales
  • Mon: China Non-Mfg PMI, AU Retail Sales, House Prices, EU PMI, China Services PMI, RBA,
  • Tue : UK PMI Services, ISM Non-Mfg,

3 thoughts on “Recap 10-31-13

  1. Chicago PMI is a bit of a head-scratcher; it’s been pretty well behaved in the past, but this year suddenly, it’s printing all over the shop. Market seems happy enough to take it at face value, though, by and large…

    NZ is an interesting one: a test case for the proposition that a developed country can make a hike cycle stick while fretting about sky-high exchange rates, at the same time as the majors are going pedal to the metal. Colour me sceptical.

    1. Yeah, not sure if RBNZ is really going to tighten policy on their own next year. Seems quite possible that they opt for more macro prudential measures instead – and maybe the RBA will follow on that.

      But the string of decent ISM prints is pretty interesting, and consistent with stronger payrolls. If SPX puts up another 10% between now and year end, not sure how the Fed will react.

      1. Agreed; I think RBNZ’s Wheeler claiming that the LTV caps were working a mere three weeks after they’d been introduced is a bit of a tell. I think the bar for anything more than a symbolic hike is very high.

        Payrolls definitely looking like the odd one out at the moment. Everything looks rosy, except the one measure the Fed is hanging their hat on. Sets up a nice bit of tension to be resolved either way.

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