One Minute Macro Update: I Don't Wanna Pay
Overview: Markets positive again this morning amid better than expected corporate profits while the debt crisis in Europe intensifies.
U.S.: The Fed announced yesterday that Bernanke will hold four press briefings a year to improve transparency and explain its decisions to the public. The first two sessions will be in April and June and will likely focus on providing clarity on QE2. Today will see the release of GDP estimated at 3.0% QoQ v 2.8% prior. Despite strong ISMs, it appears that the risk is to the downside with respect to other data, including yesterday’s disappointing Durable Goods and Capital Goods results. Weekly Jobless Claims continue to trend stronger. The University of Michigan’s Consumer Confidence also comes this morning: 68.0E v 68.2 prior.
Europe: German pressure pushed EU leaders to cut the amount of initial startup capital for the EFSF/ESM in 2013 from €40B to €16B, reducing Germany’s burden in the rescue mechanism. Politics at home are compounded by politics in meetings for both payer and payee countries. While the effectiveness of the fund wavered during yesterday’s EU summit, Portuguese yields continued to grow. S&P downgraded Portugal two notches to BBB and left the country on negative watch. Fitch downgraded two notches to A- also leaving the rating on negative watch. Both agencies cited the uncertainty in the area and the governmental changes in their reasoning for downgrades. Two IMF officials reported that members are discussing the use of a crisis lending pool, which will come out of the organization’s $583B credit line. The next round of German regional elections will take place on Sunday in Baden-Rhineland, which may show a further loss of control for Merkel. Austrian industrial production in January grew 8.4% YoY v 2.8% prior. French GDP grew in line with estimates, expanding 0.4% QoQ v 0.3%E and 1.5% YoY v 1.5%E in 4Q10. The March IFO survey for Germany reported a score of 111.1 v revised 111.3 prior for the business climate, 115.8 v revised 114.8 prior for the current assessment, and 106.5 v 107.9 for expectations. Italian retail sales came in at -0.3% MoM v 0.2% prior and -1.2% YoY v 0.4% prior in January.
Asia: A report from Japan’s finance ministry today showed that Japanese purchases of foreign assets was greater than sales by $3.6B during the days immediately after the earthquake, revealing that repatriation did not drive the yen’s recent spike. Singapore industrial production grew 4.8% YoY in February v revised 11.0%.
From Brian Yelvington of Knight Capital