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One Minute Macro Update - European Inflation Taking Hold

Submitted by Tyler Durden on 04/04/2011 08:04 -0400

U.S.: The debate over the future of QE2 continues, this time with
dovish comments out of NY Fed President Dudley on Friday. Economic
releases are light today after Friday’s positive labor data. Look ahead
to inflation numbers later in the week with PPI on Thursday and CPI on
Friday. We are now experiencing a slew of firms downgrading growth
forecasts in FY2011, which should put even more pressure on the job
market to drive Fed policy.

Europe: The IMF has officially denied any reports that the organization had pushed for a haircut on Greek sovereign debt. Euro zone PPI increased 0.8% MoM v a revised down 1.3% prior and 6.6% YoY v a revised down 5.9% prior. Food and energy prices led the increase, but the rise was seen across most goods. These new inflation rises set the stage for Thursday’s ECB Council Meeting which is widely believed to result in an interest rate hike for the region. Mounting debt pressures in Portugal, Ireland, and Greece, make the proposed rate increase highly contested. EURIBOR-OIS has risen, moving up 22.8bp v 19.0bp last week. The recent rise in the EURIBOR also does not help matters in Spain, where the majority of mortgages are tied to the rate. Meanwhile, Spain’s PM announced on Saturday that he will not seek a third term next year, making budget cutting efforts a much more challenging task given his party’s declining popularity. Spanish unemployment in March grew by 34K claims v 68.3K prior. Consumer confidence in the country followed suit, falling to 68.3 v 73.4 prior. U.K. PMI construction fell only slightly to 56.4 v 54.8E and 56.5 prior.

MENA: Libya’s conflict moved to negotiations as rebels called for a cease fire on Friday. Reports out yesterday indicate that two of the Libyan leader Qaddafi’s sons are calling for an end to the conflict, proposing a transition to democracy that would push their father out of power.

Asia: New Zealand’s budget deficit was narrower than expected when excluding the costs of the country’s February 22nd earthquake, according to a report released by the country’s treasury. A breakdown of Japan’s Tankan manufacturing survey released this morning showed that expectations for the sector are negative with confidence dropping to -2 this June from 6 in March. The Japanese government approved a plan to allow the Fukushima power plant to release water with low levels of radiation into the sea. The power plant has run out of space to store the contaminated water used to cool the reactor. Australia saw a rise in inflation in March with the TD Securities Inflation Gauge rising rose 0.6% MoM v 0.2% prior.

From Brian Yelvington of Knight Capital

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Mon, 04/04/2011 - 08:13 | 1131730 depression

Sell Your Silver Bitchez !!!

Mon, 04/04/2011 - 08:18 | 1131738 Dr. Impossible

don't you mean "sell yout dollars bitchez"?

Mon, 04/04/2011 - 08:16 | 1131737 Josephine29

Those who follow European inflation might be interested in what is happening in UK inflation today. Look at what Notayesmanseconomics is reporting is happening in the UK..

Another problem for the Bank of England thesis that inflation is an external problem which is cannot influence has come from the price of a humble postage stamp. The price of a first class stamp has risen from 41 pence to 46 pence this morning for a rise of just over 12% and the price of a second class stamp has risen from 32 pence to 36 pence for a rise of 12.5%. These prices are for small letters as a few years ago some new sizes were increased as a way of again raising the price. Following this trend a first-class, large letter stamp has risen from 66 pence to 75 pence which is 13.5% and a second class one from 51 pence to 58 pence for a rise of 13.7%. According to the BBC part of the Royal Mail explanation is this.

With the sharp declines in mail volume, our revenues are falling.

Only a monopoly can think like this! Anybody else would be concerned about the effect of raising prices on the mail volume which is now likely to fall further. By this logic you could justify increases until in the end only one stamp is posted as they get so expensive!

http://t.co/WY7Fk5y

Mon, 04/04/2011 - 08:32 | 1131775 Herman Strandsc...

That's 14 First Class Stamps for the price of a gallon of petrol. I'd be interested to know the equivelent in the USA and elsewhere?

Mon, 04/04/2011 - 08:54 | 1131819 Rogerwilco

Only 9 first-class stamps needed to buy a gallon (3.8 liters) here in Amerika.

Mon, 04/04/2011 - 08:21 | 1131745 baby_BLYTHE

Futures are green

You cannot make this stuff up!

Mon, 04/04/2011 - 08:26 | 1131756 Josh Randall

Time for more Japanese and Chinese backed bond purchases to keep things floating along this summer

Mon, 04/04/2011 - 08:28 | 1131759 unwashedmass

why, tyler, do you refer to "positive employment data" in the article? Shouldn't we call it what it is, every single time, rather than defer to the propaganda ......its monday, everyone has forgotten friday now, and if even we start referring to the fake numbers as real by monday, we're falling prey to what the government is trying to pull off....like everyone else...

either put the "positive" in quotes, or just start referring to it as fake or massaged data. every time.

Mon, 04/04/2011 - 08:26 | 1131760 unwashedmass

either put the "positive" in quotes, or just start referring to it as fake or massaged data. every time.

Mon, 04/04/2011 - 08:33 | 1131771 earnulf

So if the outlooks for GDP are falling, doesn't that put the 100% of GDP vs National Debt into this year? CBO was calculating a 4.6 YoY in GDP, if we are falling to 2.5 and adding 1.5Trillion to the Nat. Debt then we will surpass GDP before we enter the new fiscal year.

Mon, 04/04/2011 - 08:57 | 1131829 Rogerwilco

Non-Ponzi GDP growth is a negative number, and has been since 2007.

Mon, 04/04/2011 - 09:08 | 1131882 packman

6.6%??? Pfffft.

- Signed, Argentina (estimated at 25% now)

There was an article in yesterday's WaPo that Argentina's inflation is running about 25% (despite official government numbers at 9.8%)

http://www.washingtonpost.com/rw/WashingtonPost/Content/Epaper/2011-04-0...

Mon, 04/04/2011 - 09:23 | 1131967 99er

/ES

Update.

http://www.zerohedge.com/forum/99er-charts-0

Sun, 04/10/2011 - 01:00 | 1154474 thames222

Europe is completely F'ed, if Ireland and Portugal weren't recent confirmations then I don't know what is...All I know is that we can't waste any of our time or money helping those bastards out. They deserve it.

One Minute Macro Update - European Inflation Taking Hold

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