May 20. Bernanke in front of JEC Wednesday, hint of QE reduction?

–BBG “Japanese Economy Minister Akira Amari said further losses in the currency would threaten to negatively affect people and the government’s job is to minimize that.”  The yen has bounced, but the Nikkei is up 1.5% (nominally above DJIA) and JGB yield is up a few bps to 84.  Silver plunged at the open last night to take out mid-April lows, though gold is holding above April’s low so far.  US interest rate futures marginally lower in spite of precious metals and other factors that are somewhat supportive, for example N Korea missile tests.
–The big news of the week will be Bernanke’s appearance before the Joint Econ Committee Wednesday.  FOMC minutes also released later that day. Reuters adds to the QE chorus: “Job market gains could lead Fed to taper QE3 early”, mostly citing SF Fed’s Williams comments from last Thursday.  If Bernanke echoes those sentiments Wed, the one percent handle in tens will become a distant memory.
–“This year, big U.S. companies have given the go-ahead for $286 billion of buybacks, up 88 percent from the same period last year, according to Birinyi Associates,”  If QE is dialed down, could buybacks lessen the impact with respect to stocks?
–Chicago Fed National Activity Index for April released today, last at -0.23 and three month moving average edged into negative territory.
–Reuters opinion piece says that the dramatic improvement in the deficit makes political cooperation on difficult structural problems even more unlikely.  However, plans are still floated.  For example, (HuffPost), “The plan sponsored by Sen. Kirsten Gillibrand (D-N.Y.) would force the U.S. Secretary of Education to automatically refinance most government [student] loans carrying interest rates above 4 percent into fixed, 4-percent loans. Roughly nine of 10 federally-backed loans would be affected, saving nearly 37 million borrowers billions of dollars in annual interest payments.”  We’ll see if this idea has legs by watching whether Sallie Mae (SLM) pulls back from multi-year high set Friday…

Posted on May 20, 2013 at 5:27 am by alexmanzara · Permalink
In: Eurodollar Options

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