8/7/2019 Morning News Notes: 2011-03-31

1/2

Thursday, March 31, 2011my comments are in italics

Initial Jobless Claims: Survey 380 Actual 388 Prior 382 Revised 394

Treasury now foresees profit from bailouts of ~$24B. Department of Treasury

Fed debate on exit policy appears to be heating up Hoenig and Bullard both made hawkish

remarks late in trading on Wed. Reuters says the hawkish comments from a bunch of Fed officials lately

signal that debate within the FOMC is heating up as to how quickly the bank should proceed w/its exit

policies. CNBCthe hawkish rhetoric lately from Plosser, Lacker, Hoenig, Bullard (et al) is a sideshow to

the stoic main actors, Bernanke, Dudley & Yellen. The baseline scenario is still for the Fed to finish the

$600bn asset purchases through June 2011 and to not hike rates until 2012.

Spending deal close that would avoid government shutdown according to the WSJ

Congressional leaders and the White House are close to a compromise deal on the budget that would

avoid a shutdown (recall the current temporary spending resolution expires Apr 8). The current deal

would cut ~$33B from the present budget (Republicans had been pushing for $60B). The WSJ says the

talks represent a breakthrough. WSJ

NY Fed says it has rejected the AIG offer to buy the assets from Maiden Lane II; the NY Fed said

it will conduct a competitive auction of the assets. In light of improved conditions in the secondary

market for non-agency residential mortgage backed securities (RMBS), and a high level of interest by

investors, the Federal Reserve believes that conditions are right for ML II to begin more extensive asset

sales. NY FedIf there is strong demand for these securities that could augur well for interest rates in a

post-GSE world.

ECB hotter Eurozone inflation CPI cements expectations for rate move on Apr 7 - all eyes

increasingly are turning to the ECB meeting on Thurs Apr 7. The consensus thinking is calling for a 25bp

w/o too many outlier estimates (comments from a bunch of ECB officials over the last several days have

indicated that a hike remains the game plan despite the events in Japan and the Middle East). The big

question is what type of language Trichet uses to discuss policy for the rest of 11 (i.e. is this the start of

a broader tightening campaign or just the first of ~3-4 increases). A PIMCO report Wed predicted that

the ECB would hike 100bp over the next year to get its target to 2% over the next year. The Eurozone

http://www.treasury.gov/press-center/press-releases/Pages/tg1121.aspxhttp://www.treasury.gov/press-center/press-releases/Pages/tg1121.aspxhttp://www.treasury.gov/press-center/press-releases/Pages/tg1121.aspxhttp://www.cnbc.com/id/42348534http://www.cnbc.com/id/42348534http://www.cnbc.com/id/42348534http://on.wsj.com/feV42Yhttp://on.wsj.com/feV42Yhttp://on.wsj.com/feV42Yhttp://www.newyorkfed.org/newsevents/news/markets/2011/an110330.htmlhttp://www.newyorkfed.org/newsevents/news/markets/2011/an110330.htmlhttp://www.newyorkfed.org/newsevents/news/markets/2011/an110330.htmlhttp://on.wsj.com/feV42Yhttp://www.cnbc.com/id/42348534http://www.treasury.gov/press-center/press-releases/Pages/tg1121.aspx

8/7/2019 Morning News Notes: 2011-03-31

2/2

CPI Thurs morning printed higher than expected at +2.6% (vs. the ST forecast looking for +2.3%). JPM

more euro strength (and dollar weakness) ahead? The Euro has appreciated nearly 20% from the lows

last summer.

Japan PMI: the 3.11 earthquake shock plunged March PMI mfg to 46.4 from 52.9 in February

Bloomberg PMI = Purchasing Mangers Index, which provides an overall view of manufacturing activity.

Schwarzenegger to unveil new comic book series dubbed The Governator; the character was

developed w/Spider-Man creator Stan Lee. FT

http://www.ft.com/cms/s/0/6e1b4ec6-5b38-11e0-b2a1-00144feab49a.html#axzz1I5OHx96Rhttp://www.ft.com/cms/s/0/6e1b4ec6-5b38-11e0-b2a1-00144feab49a.html#axzz1I5OHx96Rhttp://www.ft.com/cms/s/0/6e1b4ec6-5b38-11e0-b2a1-00144feab49a.html#axzz1I5OHx96Rhttp://www.ft.com/cms/s/0/6e1b4ec6-5b38-11e0-b2a1-00144feab49a.html#axzz1I5OHx96R