Week Apr 13 2012 – Weekly Recap & The Week Ahead
“I always keep these seasonal patterns in the back of my mind. My antennae start to purr at certain times of the year.” Kenneth Ward.
1. China Consumer Prices Rise Faster-Than-Estimated 3.6% — Bloomberg News reported that China’s inflation accelerated more than forecast in March on a pickup in food prices, signaling that policy makers may exercise caution in adding stimulus to boost growth.
2. Servicers Face More Rules — WSJ reported that The Consumer Financial Protection Bureau plans to propose new rules that would force mortgage servicers to be far more transparent about the costs faced by homeowners and to provide warnings before any interest rate changes. The rules, if approved, would affect such giants as Wells Fargo (WFC), Citigroup (C), BofA (BAC) and JPMorgan (JPM), as well as the smaller mortgage servicers.
3. Santorum quits White House race — trailing in polls and fundraising, the conservative former Pennsylvania senator suspended his campaign and cleared the way for Romney to clinch the nomination to face President Barack Obama in the November 6 general election.
4. Germany, Italy suffer poor bond auctions — Germany has experienced very weak demand at an auction of 10-year Bunds, able to move just €3.87B of paper vs. a target of €5B. The bid-cover ratio was just 1.1. The notes were priced to yield 1.77% – a record-low for an auction. Italian yields jumped in an auction of €11B of 12- and 3-month paper as Spain’s budget woes hit other vulnerable countries.
5. Spain Default Insurance Costs Hit Record — the cost of insuring Spanish government debt against default via instruments known as credit default swaps, or CDS, hit an all-time high Friday as worries mounted over the country’s banking sector. The spread on five-year Spanish CDS widened to 505 basis points from 476 basis points, according to data provider Markit. Spanish banks’ borrowings from the ECB jumped nearly 50% in March to €227.6B, as they took up 29% of the central bank’s late-February LTRO. “A consequence of the (LTRO) is that the correlation between sovereign risk and banking risk increased all over Europe.”
6. Growth in China cools down — Chinese Q1 GDP grows 8.1% Y/Y vs. expectations for 8.3% and 8.9% growth in 2011 Q4. Industrial production: +11.9% Y/Y vs. estimates of 11.4%, and retail sales +15.2% vs. 15.1%.
The week ahead — Economic data from Econoday.com:
