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Thursday, September 5

5th Sep - US Close

 There is so much hope now riding on "modest recovery", "euro crisis contained by OMT and existing programmes" and "tapering" that it reminds me of the previous attempt higher. So two scenarios: 1) either we return to "normal times"-yield levels as all is well and Europe will become either a federal union or the PIIGS will turn into germanies - or 2) crisis makes a comeback and we will see something similar to the last time that "crisis was over".
 One monetary policy for all the European nations without a fiscal union and common backstops?



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Roundups & Commentary
Markets – Between The Hedges
Daily Risk Monitor – Global Macro Monitor
The Closer – alphaville / FT
US: Bonds And Bullion Crunched, Stocks Unch'd – ZH

EUROPE
(for ECB, see the earlier Special, which has been updated)

German elections 2013: On the Right, Eurosceptics steal Merkel’s showPresseurop

The Birth of Fiscal UnionsProject Syndicate
A fiscal union can serve as a powerful mechanism for enhancing creditworthiness, while creating a sense of solidarity among disparate countries. But such unions tend to work only when there is an unmistakable shared security interest – something that the EU lacks.

Banking Union in the Nordic contextBIS (pdf)
Keynote address by Mr Pentti Hakkarainen, Deputy Governor of the Bank of Finland, at the Nordic Opportunities/SEB Seminar, London, 3 September 2013

Low for how long? Estimating the ECB’s “extended period of time”voxeu.org
The ECB has promised to keep interest rates low for an “extended period of time”. In a broad hint to the profession, President Draghi stressed a reasonable forecast of this period could be extracted from a monetary policy reaction function. This column presents one such forecast based on published macro forecasts and a reaction function that fits the ECB’s past behaviour. The result is that ECB interest rates will rise by May 2014 at the latest.

Towards a banking union – the state of play from the ECB’s perspectiveECB
Speech by Jörg Asmussen, Member of the Executive Board of the ECB, Handelsblatt Conference “Banken im Umbruch” Frankfurt, 4 September 2013

Sweden: Selected Issues – IMF
Sweden: 2013 Article IV Consultation – IMF
Norway: Selected Issues – IMF
Norway: 2013 Article IV Consultation – IMF
Nordic Regional Report: Selected Issues – IMF
Nordic Regional Report: 2013 Cluster Consultation – IMF

UNITED STATES
What to Watch for in Friday’s Jobs Report WSJ
Anticipating Friday’s Employment Reportdshort
Employment Situation Preview Calculated Risk

You can’t believe everything Larry Summers says – Wonkblog / WP
If he raises a concern, or asks what seems like a loaded question, you can’t infer that he favors a specific course of action. He loves to think out loud, ponder every side of a question.

The Market Impact of FOMC MinutesFED
http://www.newyorkfed.org/newsevents/news/research/2013/rp130905.html

  AUGUST SERVICE ISM
Hits Highest Level Since It Was Created in 2008 – WSJ
Soars To 58.6, Highest Since 2005, Second Biggest Two Month Surge In History – ZH
Hits Highest Level Since 2005! – Bespoke
ISM surprise, other data point to solid employment report tomorrow – Sober Look
Faster Growth Than Forecast – dshort
58.6 in August, much stronger than expected – Handelsbanken
58.6 indicates faster expansion in August – Calculated Risk

ASIA
The pictorial Indian FX swapalphaville / FT

OTHER
This Day in Crisis History: Sept. 5, 2008 WSJ

Emerging Markets FX: Time for a pauseNordea

EMEA Weekly, Week 37Danske Bank (pdf)

  TRIENNIAL CENTRAL BANK SURVEY
FX and derivatives market activity in April 2013 – BIS
Interest rate derivatives turnover in April 2013 – BIS

Global FX trade jumps more than a third in 3 years to $5.3 trillion a day: BISReuters
Trading in foreign exchange markets jumped by more than a third in the past three years to $5.3 trillion a day, or around 90 percent of Japan's entire annual economic output, a leading central bank survey showed on Thursday.

The $5.3 Trillion a Day Currencies Market: 5 Things You Need to KnowWSJ

Swaps and FX trading gets non-dealer boostIFRE

London’s extraordinary lead in FXalphaville / FT