Daily Market Color
8/23/2012
Economic
Front Last Night
·
Existing Home Sales came in below
estimates @ 4.47m Vs 4.50m
o
M/M rise of 2.3% & Y/Y rise of 10.4%
o
All regions showed gains except for the
West
o
The report had a short lived effect on
US equities yesterday
·
According to the FOMC Minutes released
yesterday at 2:30pm, many members
feel QE3 is necessary unless incoming information proved otherwise, via
Bloomberg.
o
The dovish
minutes pushed Treasuries higher, I went long one future contract on the 10yr treasury
note and plan to close it before Jackson Hole
o
The FOMC policy
decision on 9/12/12 will be conditional upon August non-farm payrolls report
and GDP
o
Whether the
FOMC decides to do QE3 or not, I expect volatility in treasuries on 9/12/12 and
I plan to capitalize on it
·
Germany released
flash manufacturing/services PMI data, they beat manufacturing consensus and
missed services consensus, but both numbers were below 50 which signifies a contraction
·
Germany
also released GDP data that was in line with consensus, growing 30bps
·
EMU
released flash manufacturing/services PMI data, they beat manufacturing
consensus but missed services consensus, these numbers were also below 50
o
Despite
the whimsical numbers, the Euro continued to climb higher against the dollar
o
Market
participants seem to be anticipating Mario Draghi’s commentary at the Jackson
Hole symposium in addition to the ECB’s policy announcement on September 6th
o
I will
be looking to short the Euro on any surprise to the downside because the
markets are rallying into expectations that I don’t expect to be met
Headlines
· According
to the Congressional Budget Office (CBO) 2013 economic forecast released
yesterday, US GDP will drop 50bps and the jobless rate will be above 9% if
scheduled policy changes go through
o
The
2012 deficit is expected to be 1.1trn, 100bn less than their forecast in March
of this year
·
Greek
Prime Minister is asking the Troika for more time to implement reforms
o
If
Greece do not receive additional time that could push the Euro lower
·
Japanese
trade deficit came in larger than expected, Actual (-517bn) Vs Estimates (-300bn)
o
The
Yen rallied nearly 100bps on the report, its coming into resistance at 1.280
o
I am
looking to short the Yen against the dollar because there is a low probability
of future events within the next week to sustain the rally