Macro Man is a bit pressed this morning, so he's reduced to offering up a few quick-hit bullet point thoughts:
* It's a trifle amusing, n'est-ce pas, that despite the well-publicized problems in the PIGS countries and Herr Steinbreuck's denial of a credit crisis in Germany, the ECB's contribution to credit easing (the purchase of up to €60 bio of covered bonds) appears to be singularly designed to support German banks while ignoring the "more vulnerable" parts of the Eurozone? !Viva el realpolitik!
* Surprise, surprise, the stress test results were leaked in advance, particularly the one bit of bad news i.e. Bank of America. The US really has turned into a banana republic, hasn't it?
* Government bonds suddenly look like they've got no friends, don't they? Treasuries barely budged on a strong ten year auction earlier in the week, and sagged markedly to fresh post-QE lows after yesterday's tepid 30-year auction. Gilts and bunds don't look much better. Remember when we all thought that the US government was targeting 4.5% 30 year mortgage rates? We're not far from that level on 30-year Treasury yields! Then again, a high-quality mortgage borrower is probably a better credit risk than Uncle Sam these days...
* Today's payroll data will be the usual put-luck crapshoot. The only question is whether Minitrue decides to print it at the consensus forecast or the level implied by the ADP. Regardless, it would be churlish not to observe that claims data has improved. The issue from here is whether it's a secular peak or merely a local one; with auto-sectort job losses likely in the pipeline, risks are still skewed to the latter, a la the beginning of the year.
* It's a trifle amusing, n'est-ce pas, that despite the well-publicized problems in the PIGS countries and Herr Steinbreuck's denial of a credit crisis in Germany, the ECB's contribution to credit easing (the purchase of up to €60 bio of covered bonds) appears to be singularly designed to support German banks while ignoring the "more vulnerable" parts of the Eurozone? !Viva el realpolitik!
* Surprise, surprise, the stress test results were leaked in advance, particularly the one bit of bad news i.e. Bank of America. The US really has turned into a banana republic, hasn't it?
* Government bonds suddenly look like they've got no friends, don't they? Treasuries barely budged on a strong ten year auction earlier in the week, and sagged markedly to fresh post-QE lows after yesterday's tepid 30-year auction. Gilts and bunds don't look much better. Remember when we all thought that the US government was targeting 4.5% 30 year mortgage rates? We're not far from that level on 30-year Treasury yields! Then again, a high-quality mortgage borrower is probably a better credit risk than Uncle Sam these days...
* Today's payroll data will be the usual put-luck crapshoot. The only question is whether Minitrue decides to print it at the consensus forecast or the level implied by the ADP. Regardless, it would be churlish not to observe that claims data has improved. The issue from here is whether it's a secular peak or merely a local one; with auto-sectort job losses likely in the pipeline, risks are still skewed to the latter, a la the beginning of the year.
6 comments
Click here for commentsMM - I agree with you, someone has been leaking like a sieve which, morally, just isn't right.
ReplyOn the other hand, if they had just announced out of nowhere that BoA needs $34 billion, plus the others, it would probably have destroyed what confidence is returning in the system. Is it a case of the lesser of two evils?
Chris
(Incidentally I am not sure that I agree with my own argument, but playing devil's advocate)
And the spoos march on...
Replyand @CL. Man I'm taking the toys out of the sandbox and heading home early.
ReplyMM,
Replycool format, highly readable. You should do more quick hits.
The nepotism between PIMCO, Blackrock, Goldman and the US Treasury has reached levels that would embarrass most banana republics.
ReplyIn addition to being completely unethical and unfair -- its also very short sighted for the Obama administration.
Not only is the US kleptocracy obvious to you folks in London-- it is equally obvious to people in Beijing, Riyadh, Dubai, and Tokyo. The people with real savings (as opposed to Fed credit) that Uncle Sam desperately needs to borrow.
I am a little surprised that it took this long for the Chinese to come to grips with this ... they usually exhibit much better long term thinking.
There is absolutely zero chance China can get its wealth back in real terms -- someone is going to be doing a lot of squirming and tap dancing to explain losses at future People's Party meetings
i feel so much better that we have bottomed in a V. There's nothing like stability in an unstable world.
ReplyI'm betting on a nice big fat juicy humongous "W". I don't bulls. I just want to return to some normalcy...someday. This has been more lunacy than on the way down. At least it seems that way.