One Minute Macro Update
US: Futures lower as the disappointing (relative to expectations) jobs data combines with further EMU pressure. Municipal planning will likely capture headlines this week as Texas, California, and New Jersey among others are set to shed light on their near term budgets. The fallout from fiscal spending cuts will ultimately be felt in the equity markets, as earnings began to show in the 4Q10. The upcoming week also features PPI, CPI, the Beige Book and production/utilization data.
Europe: More headlines pushing Europe around as periphery names are wider. The week is scheduled to see issuance from Greece, Italy, Portugal, and Spain, putting the risk of bad auctions foremost on the table. The German Banking Association (BDB) has commented that there is no need to increase European rescue funds, does not rule out Eurobonds if crisis worsens. Following last week’s commission commentary release and the now-disproven stress test, we expect further attention to be paid to the holdings of Eurozone banks. We believe much of the CDS action over the past twelve months stems from bank hedging, not speculation. ECB meeting on Thursday, UK MPC meeting on Wednesday and Thursday.
Asia: PBOC comments that USD comprises too high a level of reserves. China December trade balance $13.1B v $20.8BE, an eight month low.
Submitted by Brian Yelvington at Knight Capital
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