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Waiting

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  • The European Central Bank has put markets in a wait and see mode. There was a slightly more dovish tone to the press conference (along with some wonderfully caustic comments about the botched Cyprus bailout) which leaves investors looking at high frequency data flow as a signal for possible easing.
  • Japanese government bonds had a fairly turbulent day (moving in a yield range from a little over 0.3% to a little over 0.6%). Japanese banks own Japanese bonds. Japanese banks will not lend if their balance sheets weaken. Bank lending is critical to Abenomics succeeding. This is worth looking at.
  • The US employment report is seen coming in with a consensus like 190,000 non farm payrolls, but a non consensus decline in the political important unemployment rate. Sequestration will be a drag, but should not be too severe a drag on employment.
  • France's finance minister has been reasserting the forecast of +0.1% French GDP growth this year. We see -0.3% which may add to fiscal issues. The US will also offer us consumer credit growth (not seen as a focus) and Germany has manufacturing orders data.

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