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.