July 11, 2013
Domestically stocks rose before the FOMC minutes were released, only to sell-off afterwards, with the S&P 500 down -0.24% while Treasury yields moved higher across the curve. The minutes indicated that many on the FOMC want to see stronger job gains before beginning to taper the central banks’ bond purchases, but nearly half of the 19 participants wanted to halt those purchases by year end. While speaking on economic policy in Boston after market close yesterday, Bernanke called for maintaining accommodation just three hours after the FOMC minutes were released. “Highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy,” Bernanke said yesterday in response to a question after a speech in Cambridge, Massachusetts.
Sentiment is higher this morning after Bernanke’s speech yesterday that came after market close in which he called for maintaining accommodation, with S&P 500 futures higher by +1%. The dollar is lower versus 21 of 23 major peers, weighed by market participants scaling back extreme long positions after the FOMC minutes were released yesterday; the dollar index is trading down by -1.2% . Most commodities, save crude oil and natural gas, are catching a bid on the day. Treasuries are gaining as are most sovereign bonds globally, with tens falling -4bps to 2.59%.
Today’s Economic Data Lineup (EST)
8:30am: Import Price Index, M/m, June, est. 0.0% (prior -0.6%)
8:30am: Import Price Index, Y/y, June, est. 0.4% (prior -1.9%)
8:30am: Initial Jobless Claims, week of July 6, est. 340k (prior 343K)
8:30am: Continuing Claims, week of June 29, est. 2.995m (prior 2.933M)
9:45am: Bloomberg Consumer Comfort, week of July 7 (prior -27.5)
11:00am: Fed’s Tarullo testifies on regulation to Senate
11:00am: Fed to purchase $1b-$1.5b TIPS in 7/15/2017-2/15/2043 sector
1:00pm: U.S. to sell $13b 30Y bonds in reopening
2:00pm: Monthly Budget Statement, June, est. $100B
- U.S. and EU officials broke a deadlock over rules for the $633 trillion global swaps market. The CFTC and European Commission say the deal will allow banks to comply with one set of standards for at least some aspects of swaps trading, while staving off the threat the euro-area clearinghouses could be cut off from U.S. markets. Under today’s deal, the CFTC agreed to accept some EU rulemaking as “essentially identical” to U.S. standards, which will allow companies to apply only the rules of the jurisdiction where they are based.
- Fed funds futures are pricing in the first +25bp rate increase in March 2015.
- Germany’s Bundesbank’s Jens Weidmann said the ECB’s forward guidance to keep rates at current levels or lower for an extended period of time “shouldn’t exclude that the benchmark rates will be raised in the future if inflation pressure becomes apparent”
- The BOJ stuck with a pledge to expand the monetary base by 60-70 trillion yen ($704B) as anticipated, maintaining its course of unprecedented stimulus while upgrading its view of the economy, referring to a recovery for the first time since before the 2011 earthquake. “We believe we have taken sufficient measures to achieve the price stability target of 2% in a time horizon of two years,” Governor Haruhiko Kuroda told reporters today in Tokyo. “I’m confident we can achieve the target although we may need to address upside and downside risks.”
- Unemployment in Australia rose to the highest level since Sept. 2009, with the jobless rate climbing to 5.7% in June, up from a revised 5.6% a month earlier as more people sought work. The number of people employed advanced by 10.3K from May when employers cut a revised 700 workers, as full-time jobs declined by 4.4K and part-time employment increased by 14.8K, the report showed.
“What’s money? A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do.”