One Minute Macro Update

US:  The markets have a more bullish tone globally as further support for the Euro region comes from comments out of Japan and China.  LIBOR-OIS tops 13bp as bank CDS traded wider yesterday.  Today features a smattering of data including NFIB Small Business Optimism, but eyes will be on Europe and tomorrow's Beige Book, Import Price data, and Monthly Budget Statement for market direction.
Europe:  Sovereign credit a bit better this morning on renewed pledges for support from Asia.  Spain announcing they have arranged for a direct (non-auction) pre-sale of €6B in 10Y bonds.  Italy completed a sale of €7B in 1Y bills at a yield of 2.067% (+2bp from prior) and a b/c of 1.63x (v 2.00x prior).  Italy, along with Belgium, has very high sensitivity to refi risk over the upcoming year.  Prospects of a bailout situation for Portugal seem to be on the rise as their refi ability is questioned by other EMU members.

Asia:  China M2 Money Supply 19.7% YoY v 19.0%E.  December new Yuan loans 480.7B V 360.0BE (a 1 year low, but still above expectations).  Loan growth has still not moderated in China despite other tightening measures, thus the artificial demand continues and the potential for a hard landing is put off.  Japan Finance Minister Noda stating that it is appropriate for Japan to buy Irish bonds and that Japan may buy about 20% of EFSF bonds to be issued later this month.

From Brian Yelvington of Knight Capital


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