Chillin' out till it needs to be funded
With the Employment Situation Report holding a firm ticket to 200,000 new jobs and thus a better unemployment rate, the die will be cast today for another Equity rally as the Liquidity Withdrawal accelerates thru the remaining period till the Fed deadline of June 2014. The Ten year yields will not stop at the 3% reached yesterday, or the indices after yesterday’s rally with the S&P 500 starting off at 1650 to even 1700 on FOMC day except for salutory corrections to the tuned swansong of QE.
The ECB’s strong improved management apart nothing has changed on the ground in Europe. Bank credit growth in all maturities is negative and householder credit has grown by a barebones 0.5%. This despite the zone’s money supply has increased to 7.5%/7.1%(M3/M1) The strong pickup in growth near its high is near the top of the candlebra as well and nothing is going to change for the as the Euro however winds down the euphoria in the currency levels after yesterdays policy meeting
The key challenge in the wihdrawal era would be for the Central Banks incl BoE and ECB to dissociate rising bond yields from the overnight rate and keep Fed dunds rate low at 0-0.25% as both Carney and the Fed have promised resectively. The Federal Reserve has employed a new Repo instrument for the same for any deficient balances in the overnight market, an automatic issuance covering it after market hours and hopefully controlling to distance from long term yields
The Services Index at 58.6 on Thursday underwrites the news from the Private Payrolls report as almost 180,000 additions were reported in Services only. The Employment indices of the Services ISM number are at a record 57 and the Business Activity a record 62. Services holding the jobs data highr last year that have more influence on OECD marketss even otherwise include Hospital workers, REstaurants and Transport and Travel related jobs apart from the regular Construction jobs and the patchy but always positive Financial Sector counteracting ‘shrinking government’ as public jobs continue to reduce on spending cuts
Somewhere in there are Manning’s 7 TDs in a record NFL opener after CBS also got Monday Night Football rolling to $2 per subscriber in New York LA and Dallas in time for the season. Grunge games (Buffalo v Patriots, Rams v Cardinals, Giants v Cowboys ) on Sunday also show us if the Hawks can indeed do it again and this time to the dome.
The Mexicans are still holding out in the Global currency melee down less than 5% in the months since May 21 and the Thai Baht in Asia while US Trade has ticked to a surplus with at least 5 of its major partners excluding China of course. The deficit of $39.1 Bln now includes a Services surplus of $19.4 Bln same as last month.