One Minute Macro Update
US: Markets slightly positive this AM after data showed that consumer credit expanded by over $6.1B in December (v $2.4BE) and consumer credit balances expanded for the first time since August 2008. Revolving credit rose $2.3B in December. The question remains one of jobs. Consumer electing to spend on holiday purchases for the first time since the crisis is a good sign, as is the makeup of the GDP gains we have seen which reflect an increasingly less timid consumer. Without jobs growth, however, we are merely getting a more levered consumer after some debt retrenchment. In the aftermath of a credit crisis – and possibly on the verge of a new one at the sovereign level – is that really such a good thing?
Europe: Spreads continue to leak wider as the hope of an instantly unified Eurozone fades after reports that Friday’s meetings saw more discourse than unity. Today EU President Van Rompuy is expected to give more detail regarding the talks. Recall the main crux of the summit was energy and innovation, but the concern for investors was the lunch topic surrounding economic policy and the possibility of an expanding EFSF, both in scope and depth. German Dec Industrial Production -1.5% v 0.2%E driven mostly by weather. Irish press reporting that Irish banks receiving loans from the ECB via the Central Bank of Ireland are paying less than 3%, compared to the 5.8% Ireland is paying for its country level assistance. This is a further example of the “upstreaming” of private problems to the federal level. Portugal’s private placement cleared at 6.45% for the 5Y issuance yesterday. Portuguese 5Y debt was trading at 6.31% on Friday before the issuance. UK Treasury is set to increase the 2011 UK bank levy rate. Italy NPLs rose 32% YoY per the Bank of Italy. Italian press reporting that prosecutors will seek an immediate trial for PM Berlusconi.
Asia: China hiked rates 25bp for both of its benchmark rates. The one year lending rate will now be 6.06% and the one year deposit rate will rise to 3%. A spike in loan growth earlier this year combined with a rate spike around the “turn” period of the Chinese New Year caused some tightness in rates naturally, but apparently the PBOC is intent on slowing loan growth and avoiding a property bubble. Japan's Economic Min Yosano stating that JGB rates not yet at levels requiring government intervention. Korean press reporting that North and South Korea will hold talks today for the first time since November.
From Brian Yelvington of Knight Capital
- advertisements -