Recap 12-17-13



Also, note that net speculator positioning in WTI is now at the highest level ever:


  • UK CPI declined to 2.1% vs 2.2% exp and prev. The Core metric rose to 1.8% as exp vs 1.7% prev
  • Germany Zew jumped to 62 vs 55 exp and 54.6 prev. This was the highest reading since April 2006
  • Sweden’s Riksbank cut repo rates from 1% to 0.75%. “Inflation has been unexpectedly low and, despite the recovery, inflationary pressures over the coming year are expected to be much lower than in the most recent forecast in October. To contribute to inflation rising towards 2%, the executive board of the Riksbank has decided to cut the repo rate.”
  • US CPI rose to 1.2% YoY vs 1.3% exp and 1.0% prev. The core measure was stable at 1.7% exp and prev
  • NAHB Housing Index jumped to 58 vs 55 exp and 54 prev
  • RBA Minutes:
  1. Overall, growth of the economy was expected to continue at a below-trend pace over the next year, picking up thereafter.
  2. There had been further signs of the stimulatory effects of low interest rates, most notably in the housing market, and additional effects were still likely to be coming through. At the same time, inflation remained within the target.
  3. While the exchange rate had depreciated over the month, members agreed that it remained uncomfortably high and a lower level would likely be needed to achieve balanced growth in the economy.
  4. The Board’s judgement remained that, given the substantial degree of policy stimulus that had been imparted, it was prudent to hold the cash rate steady while continuing to gauge the effects of earlier reductions, but not to close off the possibility of reducing it further should that be appropriate to support sustainable growth in economic activity,

A Federal District Court judge ruled the NSA collection and retention of phone call metadata likely violates the Constitution and ordered the practice halted pending an appeal.

BOJ’s Kuroda: “I think I can say we are half way. The latest statistics show that the inflation rate has reached 0.9%. But there is still a long way to go.” He adds: “It’s no good just to touch on the 2%t and then go down to 1%.” He notes: “We envisage basically three channels through which the quantitative and qualitative easing would affect the economy. The first is the massive amount of purchases of Japanese government bonds, which would suppress long-term interest rates over the entire yield curve. The second channel is a ‘portfolio rebalancing effect’. Banks, companies and households would shift their portfolios, now dominated by fixed income assets, towards riskier assets, including lending to the economy. The third channel is shifts in expectations.”

Upcoming Data:

  • Tue: Japan Trade Balance
  • Wed: German IFO, MPC Minutes, UK Jobless Claims, US Housing Starts, FOMC, RBA FX Transactions
  • Thu: UK Retail Sales, US Philly Fed, Existing Home Sales, GfK Consumer Confidence
  • Fri: Quadruple Witching, BoJ, Canada CPI, Retail Sales
  • Mon: CanadaGDP, US Personal Income, U Michigan Confidence,
  • Tue: US Durable Goods, New Home Sales