FURTHER WEEKEND READING
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This post by the FT’s US economics editor Robin Harding is cross-published from FT Money Supply.
The Fed has made that question very difficult to answer – not least because opinions differ within the institution. “Substantial improvement in the outlook” has turned out to be a dismal bit of communication: every word needs a definition. For example, does it refer to a level of the unemployment rate or the speed of change? What if the unemployment rate was expected to fall to 7 per cent but then get stuck? Is that a substantial improvement? Read more
The market mood was sharply brighter on Friday after the May payrolls failed to produce any fresh shocks. But there was more evidence of the damage already done to investor confidence.
The latest data from fund flow specialists EPFR suggest $12.5bn was pulled from bond funds globally last week — the highest dollar value of net redemptions in the 12-year history of the data series. The sell-off seems to have been across the board, but particularly aggressive amongst high yield and emerging market paper. Read more
Like other Europe-focused strategists, William Porter at Credit Suisse has had some fun scrolling through the IMF’s mea culpa on Greece.
He notes that the IMF now admits that its actions were affected by a fear of market contagion, a misunderstanding of how to do a restructuring within a currency union and, most importantly perhaps, a dysfunctional dynamic within the Troika itself. Read more
The employment situation report superficially appears as mixed as the other recent US labour market indicators: payrolls reasonably higher in the establishment survey, the unemployment rate ticks up in the household survey.
But the tickup in the unemployment rate is the result of a slight increase in the labour force participation rate; employment growth in the household survey actually climbed 319,000. Read more
Live markets commentary from FT.com
Japan’s giant pension fund to buy more stocks || Draghi lauds ‘most successful’ ECB action || Soros returns to Japanese stocks || Glaxo’s Avandia scores FDA victory || LME chief Abbot plans to leave after $2.2bn takeover || Tech firms deny knowledge of secret US government efforts to tap their central servers for users’ data || Prosecutors to bring charges over Libor Read more
Just a short note from economist Jan Hatzius of Goldman Sachs reminding us that Friday’s employment situation report isn’t the only labour market indicator in town — and the others have revealed “a fairly mixed picture this month”:
1. Slightly better jobless claims. During the employment survey period (the week including the 12th of each month), initial jobless claims declined by 11,000 on a spot basis and 22,000 on a 4-week moving average basis. Continuing jobless claims were also down slightly. Read more
Bear market for the Nikkei. The index entered bear territory after the strong yen pushed it down more than 1.3 per cent on Friday, bringing the decline since its May 23 peak to around 20 per cent. (Wall Street Journal) The Topix is down 18 per cent from its May high, but remains up 22 per cent for 2013.
Japan’s finance minister ruled out immediate intervention in the yen despite its 2.2 per cent jump against the dollar on Thursday and continued strength on Friday. “We are carefully watching, but we don’t have any immediate intention of taking any action, such as intervention,” Taro Aso said. (Bloomberg) The US dollar had at one point on Thursday dipped 3 per cent against the yen, a sell-off attributed to investors reversing views on how long the Fed will maintain QE3. (Financial Times) Read more