Recap 1-10-14


There’s been a lot written about today’s employment figures, so I won’t say too much about them except note that given the price action in the level of the yield curve, (the below chart shows that the level is only a few bps flatter than at the last FOMC meeting, but a few bps steeper than levels on the day before the Sept FOMC) tapering expectations does not seem have to changed significantly. Rather, there seems to have been an equal or larger change in the timing for the expected first hike… about a month or two delay.


  • US Employment:
  1. NFP: 74k vs 197k exp and 203k prev
  2. UER declined to 6.8% vs 7.0% exp and prev. 273k did not work due to weather
  3. Hourly Earnings +0.1% MoM vs 0.2% exp and prev
  4. Weekly Hours 34.4 vs 34.5 exp and prev

WSJ’s Hilsenrath’s Analysis: Job Report Alone Unlikely to Alter Fed’s Course

Canada Employment

  1. Employment dropped -45.9k vs 14.1k exp and 21.6k prev
  2. Unemployment jumped to 7.2% vs 6.9% exp and prev

USDA Ag report, WASDE End Stocks:

  1. Corn: 1631M vs 1843M exp
  2. Soybean: 150M as exp
  3. Wheat: 608M vs 575M exp

FRB Paper: The insensitivity of investment to interest rates: Evidence from a survey of CFOs

  1. we examine the sensitivity of investment plans to interest rates using a set of special questions asked of CFOs in the Global Business Outlook Survey conducted in the third quarter of 2012. Among the more than 500 responses to the special questions, we find that most firms claim to be quite insensitive to decreases in interest rates, and only mildly more responsive to interest rate increases. Most CFOs cited ample cash or the low level of interest rates, as explanations for their own insensitivity.
  2. Perhaps more surprisingly, we find that investment is also less interest sensitive among firms expecting greater revenue growth. These findings seem to be corroborated by a cursory meta-analysis of average hurdle rates drawn from firm-level surveys at different times over the past 30 years, which exhibit no apparent relation to market interest rates.

Upcoming Data:

  • Mon: AU Home Loans, BoC Business Outlook Survey, Japan Eco Watchers Survey
  • Tue: France, CPI, UKPPI, US Retail Sales
  • Wed: Empire Mfg, Core PPI, UK RICS House Price balance, Australia Employment
  • Thu: US CPI, Jobless Claims, Philly Fed, NAHB Housing Market Index, Bernanke Speaks