Slipping Away

Japan posted Y2.49Tn trade deficit, the first annual negative reading since 1980. Rising fuel consumption with the closed nuke facility and a rising currency were blamed. The year is significant given the credit super-cycle overlay in the US. The ability to fund itself, let alone at near zero rates, is slipping away.

Australian CPI was middling and note yields rose roughly 10bp. The BOE indicated room for further accommodation.

The IMF is rumored to be pushing for the ECB to take a bath on their 40Bl in FGreek purchases.

Fed sources are indicating unpleasantness with the new template disclosure. I would fill any block after Dec 2012 with a big red N/A. There is little upside and the most likely outcome is getting it wrong, changing the inputs, and taking flack at Humph/Hawk.

Red/Green relationships in Eurodollars should be active out of the Fed and the supply. Green/Blue is out to 74 bp. We feel the Fed template move is silly given these well established metrics and most FOMC participants will reverse engineer their opinion from here.

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