One Minute Macro Update

US:  Markets mostly positive this AM ahead of significant 4Q10 economic releases.  GDP is widely believed to be very expansionary, but considering the disappointing numbers yesterday, a more muted number would not be a surprise.  Jobless claims printed on a (sadly) more normal run rate yesterday and the Fed’s dovish stance revealed in Wednesday’s release seems to be well founded if one chooses to ignore commodity price inflation.  Moody’s commentary on US ratings, states that the timeframe for review is shortening as the balance sheet expands. 
 
Europe:  Eurostat ruling that EFSF issuance will have to be added to the national accounts of participants’ balance sheets along with further commentary out of Berlin opposing using the EFSF to purchase government bonds has sovereign risks rising again in the early going.  The Berlin stance is no surprise given that elections are coming in March (along with significant peripheral maturities).  Demand for the recent EFSF issuance was reportedly driven by the 0% risk weighting on same currency sovereign debt – the very Basel rule that drove banks within the EMU to load up on various countries’ debt to begin with.  Eurozone M3 YoY 1.7% v 1.9%E along with Spanish 4Q10 Unemployment at 20.3% v 20.2E painting a negative picture for the region.  Recall 20.3% was the "stressed" scenario in the 2010 bank stress tests.   
 
Asia:  PBOC Governor Zhou hints at policy rate hike in 1Q11.  Japan January Tokyo Core CPI -0.2% v -0.4%E, Moody’s commentary that outlook on rating assumes reforms are undertaken.  AUD RBA’s McKibbin stating flood impacts GDP ~1%.  The Austrian reporting that RBA will need to keep rates unchanged till 2Q11 to deal with flooding impact. 

Via Brian Yelvington of Knight Capital