WED US CLOSE
Roundups &
Commentary
News – Between
The Hedges
Markets – Between
The Hedges
Recap – Global
Macro Trading
The Closer – alphaville
/ FT
US: Oil Leaked, Bond
Volatility Peaked, Credit Markets Tweaked – ZH
THU EU MORNING
News roundup – Between
The Hedges
The 6am Cut London – alphaville
/ FT
Emerging Markets
Headlines – beyondbrics
/ FT
Europe Morning MoneyBeat: Another Nikkei rout – WSJ
MORNING BRIEFINGS
The market will be
eager to learn if the overall mood in the Eurozone is stabilising via today’s
update of the Economic Sentiment Index. In the US, weekly jobless claims and the Bloomberg
Consumer Comfort Index are released.
Market Preview: EU Sentiment and US GDP – TradingFloor
European markets are expected to open higher Thursday. Traders await EU
sentiment indices later today which are likely to show an improvement in
May. Also, a raft of US macro data, especially first quarter GDP, will
garner market attention.
Danske Daily –
Danske Bank (pdf)
EU Commission due to release its confidence indicators, which we expect to show some improvement in May from low levels.
EU Commission due to release its confidence indicators, which we expect to show some improvement in May from low levels.
Aamukatsaus –
Nordea
Kestääkö USA:n korkojen nousu? * Ruotsin BKT-luvut silkkoa sisältä * Komissiolta odotetusti lisäaikaa talouden tasapainottamiseen
Kestääkö USA:n korkojen nousu? * Ruotsin BKT-luvut silkkoa sisältä * Komissiolta odotetusti lisäaikaa talouden tasapainottamiseen
Aamukatsaus – Tapiola (pdf)
EUROPE
A New Chance for European Politics – Project
Syndicate
Javier Solana: Most
political leaders in Europe want the European Union to emerge from its
current crisis stronger and more united. But the only way to overcome Europe’s existential crisis, and to respond to citizens’
demands for change, is to confront the EU's domestic opponents head-on in next
year's European elections.
Low-trust societies, I
think, emerge when the norms imposed by the elite are both compulsory and also
impossible, and especially when the elite doesn’t seem to practice them itself.
You could put it another way: it’s Berlusconi’s Europe, and we’re just living in it.
The Neverending Irish Success Story – Krugman
/ NYT
Why Germans Are Shocked by Angela Merkel's
Communist Past – Foreign
Affairs
With a general
election approaching in Germany this fall, Angela Merkel finds herself mired
in a scandal about her communist upbringing. The belated reckoning with
Merkel's past reveals little about the chancellor's political sympathies -- and
plenty about the German public's historical ignorance.
COMMISSION
RECOMMENDATIONS
Commission takes steps
under the Excessive Deficit Procedure – EU
Country-specific
recommendations 2013: frequently asked questions – EU
Speech: Country
Specific Recommendations - employment and social policy aspects – EU
Country Specific
Recommendations – taxation aspects – EU
Barroso on the
Country-specific recommendations package 2013 – EU
Press Speaking Points
at the European Semester Press Conference – EU
EU shifts policy focus in quest for growth – Reuters
After three years of
deep spending cuts, the European Union confirmed a shift in policy on
Wednesday, telling countries they must focus on structural economic reforms to
boost growth, while not abandoning budget discipline.
More austerity please, you’re British – alphaville
/ FT
To the untrained eye,
this might look like the usual buzzword-soup from the European Commission (home
of “growth-friendly fiscal consolidation”):
The European Commission recommends much of the
same for the eurozone – Open
Europe
A Few Thoughts on the EU Recommendations – Marc
to Market
It is not a change in
economics that is dictating the change in tact but politics. Youth unemployment in the euro area is
nearing 25%, with updated figures due at the end of the week. Even if they are
not very organized, the populism on the right and left threatens the elites.
Six EU countries are
to be given extra time to bring down their budget deficits after the EU
commission took a lenient stance on national measures.
ECB
Statistical press release: Monetary
developments in the euro area –
ECB (pdf)
ECB Says Private Lending Contracted for 12th
Month in April – BB
European Credit Contraction Accelerates,
Spanish Loan Creation Craters –
ZH
SocGen: credit to the
euro area private sector is contracting further to -0.9% yoy from -0.7% yoy. Looking
at the country level, we still see signs of credit crunch in the peripheral
economies. In Spain, outstanding loan to non financial corporation is contracting at
-19.1%. Yet, there is little incentive to borrow given the lack of confidence
in future growth.
Press release: Financial Stability Review May
2013 – ECB
Full pdf,
key risks: 1) A further decline in bank profitability, linked to credit losses
and a weak macroeconomic environment 2) Renewed tensions in sovereign debt
markets due to low growth and slow reform implementation 3) Bank funding
challenges in stressed countries 4) Reassessment of risk premia in global
markets, following a prolonged period of safe-haven flows and search for yield.
ECB Warns Financial Weakness Could Break Best
Lull in Two Years – BB
ECB: Financial Sector In Best Condition Since
2011 – WSJ
The euro zone's
financial sector is in better health now than at any time in the last two
years, the European Central Bank said Wednesday in its half-yearly Financial
Stability Review.
UNITED STATES
Fed’s Rosengren Open to ‘Modest’ Cut in Bond
Buys in a ‘Few’ Months – WSJ
A Fed official who has
strongly supported the central bank's bond-buying stimulus efforts is willing
to see the purchases pared back sometime soon if the economy continues to
recover at its current pace.
September Looking Good – Tim
Duy’s Fed Watch
I think the Federal
Reserve is leaning toward a September policy shift. While it is as always data dependent, I think
the data will need to be pretty weak to push the Fed to December.
The Fed's tricky messaging: Tapering is not
tightening – Wonkblog
/ WP
Rosengren’s comments
signal yet another way the Fed could tailor its bond purchases to the economy
and do more with less. Maybe not only is tapering not the same as tightening,
but tapering could eventually lead to more easing.
The Fed's been keeping the economy afloat.
That's the problem – Wonkblog
/ WP
An expansion like this
one, driven heavily by Fed monetary easing, is better for those who are already
doing well than would be the case if fiscal policy were driving the recovery
train.
ASIA
Japanese Investors Step Up Foreign Bond Sales – Marc
to Market
OTHER
Bonds - When volatility is waking up – Macronomics
Stress Indicators:
Fixed income carnage? – TradingFloor
Steen Jakobsen: This week our Stress Indicators show signs of panic in
fixed income. The CRB commodity index is broken and the super cycle looks to be
confirmed while the US Index has decisively changed. Meanwhile, the IMF and EU
continue to play pretend-and-extend.
The view from Pimco – Buttonwood
/ The Economist
Artificially assisted growth and purchased financial stability may breed
shortfalls and asset bubbles * International and regional systems may fragment,
and growing income inequality may destabilize geopolitics * Supply shocks and
currency debasements may lead to higher and less stable inflation * Absent a
growth revolution, haircuts may increase over the secular horizon
A handy collateral
deck
– alphaville
/ FT
FT Alphaville attended the Sifma collateral conference last week. We
found these slides, used by Greg Lyons of Debevoise & Plimpton, to be a
very useful explainer of upcoming regulatory reforms
Gane: The Federator– WSJ
“Jetpack lowers the interest rate” :)