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Thursday, January 3

3rd Jan - US Close: Fed minute rage


Plenty of stuff now...estimates for Friday's payrolls have been revised upwards, Fed minutes give the impression that QE is not forever and the thresholds on the low unemployment targeting might be seen faster than expected, perhaps already in 2013. Also, it is realized that the US fiscal cliff was really not solved, and the debt ceiling will be on us after just a couple of months.

Previously on MoreLiver’s:                  

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Roundups and Commentary
Markets – Between The Hedges
The Closer – alphaville / FT

Roundup – Kiron Sarkar / The Big Picture
Tomorrow’s Tape: Here Comes Another Jobs Friday WSJ
US: Stocks To VWAP As Bond Yields Spike To 8 Month HighsZH

Reference
Debt crisis live – The Telegraph
The Euro Crisis Blog – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
European 10yr Yields and Spreads – MTS indices
Economic Calendar – Forexpros

EUROPE
EuropeDr. Ed’s Blog
These extraordinary declines weren't triggered by any improvement in the sorry state of state finances in the euro zone. Rather, they started when ECB President Mario Draghi declared in late July of last year that he would do “whatever it takes”… Draghi’s fairy dust also stopped the massive capital outflows out of Spain and Italy into Germany, as evidenced by the flattening of TARGET2 balances since last summer

UNITED STATES
  FED
Wait, QE Won’t Last Forever?MarketBeat / WSJ
Minutes of the Fed’s latest policy meeting last month showed central-bank officials were divided about when to stop all of the quantitative easing that is flooding the markets with liquidity.

Fed says it’s running out of bulletsMarketWatch
For the first time since the financial crisis started five years ago, the Federal Reserve has at last made its first signal that its extraordinary loose monetary policy will start to get tougher.

FOMC Minutes: "Several" members expect QE3 to end in 2013Calculated Risk
It appears several members expect QE3 to end in 2013. Also, all but one member was in favor of economic thresholds for raising the Fed Funds rate.

The Fed isn't very bullish on '13, and five other takeawaysWonkblog / WP

FOMC minutes: hawkish hints, but not reallyalphaville / FT
These minutes are for the meeting at which the Fed announced its switch to a version of the Evans’ Rule. While that change was expected, it wasn’t expected to be made as soon as it ultimately was.

FOMC Minutes - Expectations And USD ImplicationsZH
Citi: The question is whether the Fed really meant to convey that type of hard conditionality or incipient stimulus withdrawal.



FOMC minutes: asset purchases to end in 2013Danske Bank (pdf)
 
QE3 and beyondEconoMonitor
Now that we’ve closed the books on 2012, I thought it might be useful to take a look at where monetary policy has led us over the last four years.

  PAYROLLS
Survey: US Employers Add 215K Jobs in DecemberTIME
A private survey shows U.S. businesses sharply increased hiring in December, helped by a surge of new construction jobs created to help rebuild from Superstorm Sandy.

Macro Strategy – Watch US Nonfarm payrollsNordea (pdf)
Also our second macro call of the year will be above consensus, just as ISM earlier this week. The strong market sentiment partly attributed to the recent fiscal cliff decision may lose some momentum if our model for tomorrow´s nonfarm payrolls is correct (pointing at 170k vs consensus at 150k), and the expected maturity and size of the open ended QE program is reduced.

Goldman boosts Dec jobs forecast to 200k after strong ADP dataMacroScope / Reuters

ADP: Payrolls Increased At A Faster Pace In DecemberThe Capital Spectator

ADP Private Payrolls Spike To 215K, Above Expectations On Spike In Construction Jobs - Now With InfographicZH

  FISCAL CLIFF
Forget the market rally. The fiscal cliff deal is still a drag on growth.Wonkblog / WP

How the fiscal cliff deal will affect the economy and deficits, in six chartsWonkblog / WP

Why The 2013 'Debt Ceiling' Debacle Will Be Worse Than 2011ZH
Goldman Sachs: We had previously estimated that fiscal policy at the federal, state, and local level would weigh on growth by 1.6pp on a Q4/Q4 basis in 2013; we believe the final package will be similar at around 1.5pp drag on growth.

Fiscal Cliff Loose EndsZH
Citi: The deal leaves a large number of loose ends that ensure high drama for the next two months on the US fiscal front.


OTHER
Quarterly ChartbookJP Morgan
69 pages of chart goods (or download the pdf, but you’ll miss the audio comments)

Morning Briefing (Asia): Dow Retains Gains After 'Fiscal Cliff' RallyBNY Mellon
The coming year will prove more challenging than 2012 for some policy makers

The Market's Dislocation From Fundamental Reality?ZH
The current chasm between Global Manufacturing PMI and MSCI World suggests either stocks are off in fairy-land again or there is about to be the biggest surge in the global economy since 2009

Nine Observations on Q3 Currency Reserve DataMarc to Market

Investment Outlook January 2013PIMCO
Bill Gross: Money for Nothin’ Writing Checks for Free

Economy isn't the real beneficiary of fiscal cliff dealFortune
Mohamed El-Erian: The political compromise does little to address the consistent headwinds that undermine growth, hold back corporate investment, and dampen job creation.

How are the US and Eurozone economies stacking up in 2013?tradingfloor

EMEA WeeklyDanske Bank (pdf)

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