TOP
Japan earthquake leads it to post first trade deficit in 3 months -463bn YoY(vs EXP -703). Japanaese Exports down 12.5 pct yr/yr, roughly in line with forecasts, whiule imports were up 9%. Exports to China fall 7%, to US down 23%
European leaders are pushing to impose measures that would ensure the Greek government lives up to its promise to deliver €50bn ($70bn) in privatisation proceeds, amid scepticism that Athens can carry out the sell-offs. The privatisation plan, spelt out in detail for the first time by the Greek government on Monday, has become a central issue in Europe-wide deliberations over how to overhaul Greece’s faltering €110bn bail-out programme.
U.S. lawmakers are weighing $1 trillion in deficit-cutting measures as part of a possible deal that would allow an increase in the country’s borrowing authority, Vice President Joe Biden said. Adds that tax hikes need to be part of the deal.
EUROPE
French FinMin Lagarde wins EU backing and is set to announce her candidacy later today. Meanwhile the BRICSs have sharply criticised EU officials for suggesting the next IMF chief should automatically be European
Europe’s policy options to avert a Greek default are narrowing fast after the ECB and ratings agencies warned against even voluntary debt rescheduling and Athens highlighted its urgent need for more EU cash. Moody’s became the latest agency on Tuesday to warn of a chain reaction of severe consequences for the 17- nation euro area if Greece were allowed to default next month, when it faces a 13.4 billion euro ($18.9 billion) funding crunch.
European leaders are pushing to impose measures that would ensure the Greek government lives up to its promise to deliver €50bn ($70bn) in privatisation proceeds, amid scepticism that Athens can carry out the sell-offs. The privatisation plan, spelt out in detail for the first time by the Greek government on Monday, has become a central issue in Europe-wide deliberations over how to overhaul Greece’s faltering €110bn bail-out programme.
Dutch FinMin Jan Kees de Jager told Reuters in an interview that Greece should set up a privatisation authority along the lines of the “Treuhand” agency that sold off state companies in the former East Germany after unification in 1990.
The ECB is ready to act if inflation remains above its 2 percent target ceiling, ECB policymaker Lorenzo Bini Smaghi told an Austrian newspaper in remarks released
UK PM David Cameron hopes Pres Obama will say something on the need for tough deficit reduction when they meet Weds, which could be read as an endorsement of his own government’s plans – initially viewed by the US administration as dangerously aggressive, the FT says
FT- One of the swing voters on the BOE monetary policy committee has said that raising interest rates could be “exactly the wrong thing to do” after a survey
showed inflation expectations fell sharply in the first quarter. Paul Fisher, charged with implementing the Bank’s money-printing quantitative easing programme, said there was “time for the economy to recover” before raising rates.
The U.K. Treasury was too optimistic about economic growth under the previous Labour government and forecasting errors were magnified during the financial
crisis, a research group said. In the first six years of the decade, the average forecast of growth one year ahead was 0.3 percentage point higher than the eventual outturn, the London-based Centre for Policy Studies said. Between 2007 and 2010, the Treasury was too optimistic by 1.6 points. The average error over the whole period was 0.75 point.
IRELAND: There is a “better understanding” in Paris of Ireland’s position on corporate tax, Minister for Foreign Affairs Eamon Gilmore said after a meeting with his French counterpart Alain Juppe yesterday, the Irish Times says
US
U.S. lawmakers are weighing $1 trillion in deficit-cutting measures as part of a possible deal that would allow an increase in the country’s borrowing authority, Vice President Joe Biden said. Adds that tax hikes need to be part of the deal.
Fed Pianalto: Given widespread concern and uncertainty about the outlook for inflation, now is “an opportune time” for the Fed to adopt an explicit, numerical inflation target. Saysa 2% medium-term inflation target would help anchor inflation expectations.
Fed Hoenig repeated his call for commercial banks to be restricted to their core lending activities. He argued that the risks associated with dealing, market making and proprietary trading are difficult to assess, monitor or control.
Fed Bullard says Europe right now not enough to be global macroeconomic shock, but could morph into that. US is in sustainable recovery and monetary policy operates with a lag of 6 to 9 months. As long as unemployment moving in right direction, Fed could remove some accommodation without hurting recovery.
The Federal Reserve Bank of New York laid out the criteria for Fannie Mae, Freddie Mac and other government-sponsored entities, or GSEs, to become counterparties it could tap to help drain the $1.5 trillion in excess reserves from the banking system.
US state tax collections grew at an accelerating pace in the first three months of the year, with a number of states seeing the upswing continue into the second quarter, the WSJ reports
State attorneys general told the nation’s five largest banks they face a potential liability of at least $17 billion in civil lawsuits if a settlement isn’t reached to address improper foreclosure practices, according to people familiar with the matter.
USD unloved by bong managers.
ASIA
Japan earthquake leads it to post first trade deficit in 3 months -463bn YoY( vs EXP -703). Japanaese Exports down 12.5 pct yr/yr, roughly in line with forecasts, whiule imports were up 9%. Exports to China fall 7%, to US down 23%
BOJ Apr 28 policy meeting minutes: BOJ Deputy Gov Nishimura proposed a further easing, largely due to higher risk of worsening sentiment. Another member also favored extension of easing measures, saying that need for further easing rising. In fact he didn’t propose a further extension, but did say that now is time to examine specifics and timing of additional easing measures. Many members said that should consider new support to rebuilding of disaster-affected parts. Output and spending might have hit bottom in March, one member said.
Tokyo Electric Power Co. said fuel rods melted in two more reactors at its Fukushima nuclear plant, indicating for the first time that damage from the March 11 earthquake and tsunami is matching worse-case-scenarios.
India stepped up its push to deepen its economic ties with Africa and emerge from the shadow of rival China by offering $5 billion to help the continent rich with minerals and commodities.
South Korea’s likely new finance minister told a parliamentary committee on Wednesday that his top priority was to rein in inflation but outlined few shifts from the pro-business policies that have seen voters desert the country’s ruling party.
A majority of South Korean businesses believe their earnings will worsen this year due to the won’s gains against the US dollar, Yonhap News reports citing a Federation of Korean Industries (FKI) survey
GE Capital, General Electric Co.’s finance unit, may announce the sale of about A$5 billion ($5.3 billion) of Australian and New Zealand mortgages as early as this week, said a person with knowledge of the matter.
The People’s Bank of China sets the dollar-yuan central parity rate at Cny6.4949 today, compared with Cny6.5038 set for the previous trading day.
China is in talks with Brazil on lifting trade barriers that would allow the Latin American country to sell it more processed agricultural goods, Brazilian
government officials have told the Financial
AUSTRALIA: The Westpac-Melbourne Institute Leading Index which indicates the likely pace of economic activity three to nine months in to the future was 5.3% in March vs 5.2% in February and well above the long term trend of 3.4%
Australia’s head of the government debt management, Robert Nicholl, said that the AUD was gaining stature as a reserve currency for foreign central banks’.
MENA & LATAM
Israeli PM Benjamin Netanyahu said explicitly for the first time on Tuesday he was prepared to give up some settlements for peace, but he laid out familiar demands unlikely to draw the Palestinians back to the negotiating table.
SAFRICA’S ZUMA PLANS TO TRAVEL TO TRIPOLI NEXT WEEK TO DISCUSS EXIT STRATEGY FOR GADDAFI – REPORT
Peru: Inflationary pressure due to high global food prices appears to be easing, but it is too soon to decide “whether or not to pause” a cycle of interest rate hikes, the president of Peru’s central bank said on Tuesday.
The United States slapped sanctions on Venezuela’s state oil giant PDVSA on Tuesday in a more aggressive U.S. effort to disrupt Iran’s fuel supplies, a move that may provoke a fierce response from Venezuelan President Hugo Chavez
Brazil’s government is using a fitting range of tools to fight inflation, Standard & Poor’s said on Tuesday, a day after nudging the country’s sovereign debt closer to a higher rating. The combination of fiscal, monetary and other measures is “an appropriate mix of policies,” said S&P analyst Sebastian Briozzo in a conference call.
OTHER MARKETS
NIKKEI 9419 (-0.6%), HANGSENG 22579 (-0.7%), S&P/ASX 4591 (-0.8%), SHANGHAI SE COMPOSITE 2755 (-0.5%), KOPSI 2045 (-0.8%) – As of 07.00GMT
TSYS: The yield on the new benchmark 2Y was last at 0.53%, with the 5Y at
1.76%, the 10Y at 3.10% and the Bond at 4.23%.
OIL: Brent crude last at 111.6 (-0.8%). WTI at 98.6 (-1%)
Gold last trades at 1522 (-0.3%). Silver at 36.45 (-0.6%)
The recent slump in commodity prices has taken the speculative froth out of the market, but fundamentals are still strong given tight supplies and buoyant demand from emerging markets, Glencore International said
COMING UP TODAY( times GMT/ET)
0500/0100 Japan: weekly gasoline prices
0610/0210 Germany May-11 GfK consumer sentiment
0700/0300 Spain Apr-11 PPI
0800/0400 Italy Mar-11 retail sales
0830/0430 OECD releases economic outlook
0830/0430 UK Q1-11 Business Investment
0830/0430 UK Q1-11 GDP 2nd Estimate
0830/0430 UK Apr-11 Index of Services
0830/0430 UK Apr-11 BBA Mortgage Approvals
0830/0430 UK Q1-11 Household Consumption
0830/0430 UK Q1-11 Government Spending
0830/0430 UK Q1-11 Capital Formation
0830/0430 UK Q1-11 Exports/Imports
1100/0700 BOE’s Paul Tucker speech at the Wincott Foundation Lunch
1100/0700 US 20-May MBA Mortgage Application Index
1200/0800 US Apr-11 Building Permits Revision
1215/0815 ECB Governing Council members Mario Draghi, Erkki Liikanen, and German Chancellor Angela Merkel speak at at conference of the CDU Wirtschaftsrat, in Berlin
1220/0820 Treasury Secretary Tim Geithner conversation with Mike Allen at the Newseum in Washington
1230/0830 US Apr-11 Durable Goods Orders
1240/0840 UK BOE MPC Andrew Sentance Speech
1300/0900 Mexico Apr-11 Trade balance
1300/0900 Mexico 1Q-11 Current account
1330/0930 Brazil Apr-11 Current account
1400/1000 US Mar-11 FHFA Home Price Index
1430/1030 US 20-May EIA Crude Oil Stocks
1430/1030 ECB Executive Board member Juergen Stark speech at conference of the CDU Wirtschaftsrat, in Berlin
1500/1100 Mexico Mar-11 Conf Board Leading Indicators
1600/1200 France Apr registered jobseekers
1700/1300 US Treasury auctions $35.0 bln in 5-yr notes
1700/1300 Minneapolis Federal Reserve Bank President Narayana Kocherlakota speech to the Chamber of Commerce in Rochester, Minnesot
1800/1400 Treasury Fiscal Assistant Secretary Richard Gregg testifies on efforts to eliminate improper payments to the Federal Financial Management
HSBC Global Research